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Amazon to put $450M into delivery program for driver retirement, tuition matches, better pay

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An Amazon delivery van in front of the company’s Seattle headquarters. (GeekWire File Photo / Kurt Schlosser)

Amazon will further test the limits of its relationships with the independent companies that deliver its packages throughout much of the country and increasingly the world, funding a series of programs totaling more than $450 million intended to benefit the drivers those companies employ.

The new investment in the Delivery Service Partners program, announced Tuesday morning, follows reports of difficult working conditions and pay inequities faced by delivery drivers. It comes as national union leaders express interest in figuring out a way to help Amazon delivery drivers organize.

From a legal perspective, the challenge for Amazon is not getting so involved in the DSP businesses as to effectively change its relationship with them. The independent status of these companies shields Amazon from many of the financial and legal liabilities that would come from employing drivers directly.

The announcement Tuesday includes three primary components:

  • A new program called Next Mile will give employees of participating delivery companies up to $5,250 per year for their academic studies.
  • Amazon will add a 401(k) plan to “the suite of services available to DSPs,” providing the companies will an estimated $60 million over the first year of the program to help them match employee contributions.
  • The company says it will provide “additional rate increases for DSPs to offer competitive pay to their drivers.”

Amazon last month released new numbers about the growth of the Delivery Service Partners program, saying 3,000 independent companies now deliver more than 10 million packages for Amazon each day, employing 275,000 people and generating a combined $26 billion in revenue in the last four years.

One pending lawsuit challenges the legal classification of Amazon’s DSP companies, saying they are effectively treated as franchisees without the benefits they would realize from being officially given that status.

Previously: Delivery partners touted by Amazon received millions in U.S. financial aid, records show

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