The Federal Trade Commission’s September 15 policy statement is the latest in a series of actions signaling the Commission’s continued focus on competition and labor issues in the gig economy. The policy statement — and the FTC’s focus on the gig economy — will likely have implications for companies that rely on non-traditional, part-time, gig workers, whether or not those workers are classified as employees.
Key points to remember
The Federal Trade Commission (FTC or Commission) issued a policy statement on September 15, 2022 on gig economy enforcement. [1] The 17-page policy statement, which was approved by Democratic commissioners in a 3-2 vote, begins by outlining the ‘rapid’ growth of the gig economy and the FTC’s ‘priority’ of protecting gig economy workers against ‘unfair, deceptive, and anti-competitive practices.
At the outset, the policy statement outlines the gig economy, the gig work model, and the nature of gig work/services. Next, it identifies three main aspects of the gig economy market that engage both the consumer protection and competition missions of the FTC: (1) concerns about representations and control of gig workers by concert undertakings without concomitant liability to such workers; (2) concerns about diminished bargaining power between gig workers and gig companies in collective bargaining; and (3) concerns about market concentration.
It should be noted that the Commission makes clear that it is ready to exercise the ‘full portfolio’ of laws and tools available to protect on-demand workers – whom it considers to be in the same category as consumers who the subject of its consumer protection regime – regardless of their job classification.
The Board’s policy statement lists three key enforcement priorities:
- Hold companies accountable for claims and conduct regarding costs and benefits. The Commission has indicated that it will focus on unfair or misleading claims regarding potential earnings, benefits, costs (for example, start-up costs and training costs) and working conditions, including failure to disclose material information regarding these matters. It should be noted that the Commission has said it is prepared to regulate income claims made in gig work “as it would in any other business or money-making opportunity”. [2]
- Fight against illegal practices and constraints imposed on workers. The Commission has indicated that it is prepared to sue the gig companies for unlawful conduct, including failing to disclose data collection practices and surveillance methodologies involving artificial intelligence. The Commission’s policy statement specifically identifies algorithm-based decision-making as an area ripe for investigation and enforcement, noting that the execution of certain algorithms “requires the collection of sensitive data from workers, which increases the importance of the FTC’s rules governing data security.” [3] In addition, the policy statement notes that the Commission will review potentially restrictive or unfair contract terms and restrictions on worker mobility.
- Control unfair methods of competition that harm gig workers. The policy statement provides that the Commission “will focus its resources on investigating potential illegal behavior by or among gig businesses.” [4] Specifically, the Commission said it is prepared to (a) investigate potential agreements between gig companies to unlawfully fix wages, benefits, or fees for gig workers; (b) review – and possibly challenge – proposed mergers and other combinations of live music businesses that could result in anti-competitive market consolidation and/or monopolization; and (c) investigate exclusionary or predatory behavior by dominant firms (for example, the use of exclusive contracts, predatory pricing, or other forms of monopolization) that could harm consumers or to gig workers.
And after: our reflection
The policy statement should be seen as another reminder that the FTC is watching the gig economy closely and is prepared to hold companies accountable for taking advantage of gig workers.
Earlier this year, the Commission announced a regulatory proposal notice for a potential tax reporting rule, prompted in part by concerns about the effects of misreporting of income by gig saving platforms. [5] Additionally, the policy statement follows the FTC’s July 2022 partnership with the National Labor Relations Board (NLRB), which was intended to facilitate cooperation between the two agencies in areas of mutual interest, chief among them developments related to the concert. the economy and the protection of on-demand workers.
The Commission is not alone in focusing on on-demand economy issues. In June 2022, the Consumer Financial Protection Bureau (CFPB) issued a request for information on workers’ experiences with employer debt, including debt incurred as a result of employer-required trainings , purchase of equipment and supplies, and other commonly associated aspects. with concert work. [6] The U.S. Department of Justice (DOJ) has also taken an interest in gig economy issues, recently voicing its view that gig economy workers should be allowed to unionize without violating antitrust law. . [7]
At the Commission’s public meeting held on September 15, 2022, Commissioner Wilson (while voting against the publication of the policy statement) expressed her support for providing concrete and tangible help to consumers and on-demand workers. [8] While expressing reservations about the antitrust elements of the policy statement, Commissioner Wilson’s statement reflects the Commission’s uniform support for responding to unfair and anti-competitive practices in the gig economy with increased enforcement action.
In the months ahead, we can expect the Commission to pursue more aggressive and direct efforts to hold companies accountable for harms to gig workers, both independently and in conjunction with other government agencies such as the NLRB, the CFPB and the DOJ. In anticipation of these efforts, it would be prudent for employers to take steps to (1) monitor and document their compliance with consumer protection laws (e.g. substantiating tax returns and claims); (2) update their privacy and data security policies; and (3) document active engagement in pro-competitive conduct toward employees and competitors, recognizing that their conduct in these areas is subject to scrutiny.
