The Texas Attorney General’s office secured a $13.4 million settlement from retail giant Walmart in a case over unpaid wages and stolen tips associated with the company’s Spark Driver Program. 

Under the program, Walmart contracts with drivers who use their own vehicles to deliver packages to customers. 

In its case, the FTC said Walmart has been misleading customers by saying that all tips would go to drivers and that drivers had been misled on incentive pay, tips and base pay. The allegations focus on deception of consumers rather than a wage enforcement case, though. 

“Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection. 

Texas did not join 11 other states in the FTC settlement but its findings largely mirror the FTC’s investigation. The state found drivers were told they would receive a full-order tip even if they delivered one piece, but that the company was instead dividing the tip among all the drivers for an order, according to the petition filed in mid-June. Walmart also altered base pay and other incentives after a driver had accepted a delivery.

“Walmart frequently told drivers that they would receive tips that, in fact, they did not receive because Walmart removed orders and associated tips from the accepted Offer, often without notifying the Drivers,” the state said, adding such action violated Texas consumer protection laws.

Walmart did not admit wrongdoing as part of the settlement, but Attorney General Ken Paxton hailed the settlement as a victory.

“I have secured millions of dollars for delivery drivers from Walmart to ensure that these hardworking Texans receive the tips and wages they deserve,” he said.  

The company has paid $6.7 million to drivers. The other half will go to the attorney general’s office as a civil penalty and for attorneys fees. 
 
Walmart said it would disclose accurate payment details and offers to drivers going forward, that it will refrain from modifying or changing earnings or tips stated in an offer after a driver has accepted barring several carveouts. It said it would operate a compliance program for 10 years.