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Amazon Increases Some Workers’ Pay So Its Bonus-Cutting Minimum-Wage Plan Won’t Lower Their Wages

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Amazon’s recent move to raise the minimum wage of its directly employed and contracted workers to at least $15 an hour led to some employees calculating they would earn less with the elimination of bonuses and stock awards. The company said today it plans to adjust wages and bonuses to ensure those workers don’t receive lower wages as a result.

Senator Bernie Sanders, critical of large firms paying low wages, praised Amazon’s initial announcement, then questioned the company after reports indicated some workers would have lower annual income.

A company spokesperson told Fortune that all hourly employees “will see an increase in their total compensation as a result of this announcement.” Amazon said it has worked “site by site and person by person” to adjust wages.

For warehouse workers at lower pay tiers in particular, routine productivity bonuses that the company offered, and which were increased around the holidays, could add hundreds or thousands of dollars a year in income. Amazon cut these bonuses as part of its rise in base pay, but said the higher hourly rate would “more than compensate” for the difference. “Because it’s no longer incentive-based, the compensation will be more immediate and predictable,” a spokesperson said.

The company also formerly issued warehouse workers restricted stock units (RSUs), which vest on their employment anniversary, after which point employees own the shares and may retain or sell them. Workers received 1 RSU for each anniversary and an additional one to mark five years with the company. Existing grants that vest in 2019 and 2020 remain in place, and those employees will receive the stock if they remain employees to those anniversaries, while also receiving increased wages.

In lieu of stock, Amazon will pay a cash bonus of $1,500 at five years, and $3,000 at each subsequent five-year employment anniversary. An Amazon share is worth nearly $1,755 on Oct. 10. Warehouse workers making below $15 an hour currently will receive raises that amount between $2,000 and $7,000 more a year, depending on location, length of employment, and position.

In a particularly apt remark given today’s stock market decline, especially among tech stocks, Amazon said that while employees “have benefited from a bull market and the unusually strong appreciation of Amazon’s stock price in recent years,” it’s not guaranteed to continue. However, Amazon will offer a direct stock purchase plan for employees starting in 2019.

The Seattle Times and other outlets interviewing workers by name and anonymously have found that information about the $15-an-hour minimum wage and other wage and bonus changes have been unevenly communicated to workers.

Credit: Fortune

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