Commissioner Alvaro M. Bedoya of the Federal Trade Commission recently addressed a key tension brewing in the consumer protection and antitrust spaces since the rise of the app-based gig economy: whether gig workers classified as independent contractors can organize and collectively bargain for better wages or hours without violating antitrust law. Speaking for himself and not the agency, Commissioner Bedoya answered the question in the affirmative.

As a general matter, antitrust law prohibits competitors from colluding to increase prices. When the price at issue is a laborer’s wage, however, it may be excepted from this prohibition by the so-called “labor-dispute” exemption, which excuses certain legitimate labor-related conduct from antitrust liability under the Clayton Act and Norris-LaGuardia Act. See generally 15 U.S.C. § 17; 29 U.S.C. §§ 104, 105. Historically, legal authorities—including federal courts and agencies like the FTC—have interpreted this exemption narrowly, readily applying it to labor activity by employees but finding independent contractors ineligible for its protection. See, e.g., Los Angeles Meat & Provision Drivers Union, Loc. 626 v. United States, 371 U.S. 94 (1962); United States v. Women's Sportswear Mfg. Ass'n, 336 U.S. 460 (1949); Brief for the United States & FTC as Amici Curiae Supporting Appellant at 2, 8, Chamber of Commerce v. City of Seattle, 890 F.3d 769 (9th Cir. 2018). As a result, gig workers classified as independent contractors may arguably be susceptible to antitrust scrutiny for organizing and collective bargaining efforts.

In his April 10 comments, Commissioner Bedoya stated that, contrary to this precedent, Congress intended that independent contractors be able to avail themselves of the labor-dispute exemption when collectively seeking improvements in wages and benefits from the companies contracting for their services. Tracing the antitrust laws’ legislative history as early as 1889, Commissioner Bedoya noted numerous senators’ concern that the Sherman Act would undermine the ability of “workingmen” to organize in pursuit of better wages. He also pointed to attempts by Congress to shield such groups—whether employees or not—from antitrust exposure through the labor-dispute exemption, first in the Clayton Act and then the Norris-LaGuardia Act. Through the express language of the Norris-LaGuardia Act (29 U.S.C. § 113(c)), Commissioner Bedoya argued, Congress made clear that a worker’s employment status is immaterial to the exemption’s applicability, because it did not condition the existence of a “labor dispute” on “whether or not the disputants stand in the proximate relation of employer and employee.”

Commissioner Bedoya applauded the First Circuit’s decision last year in Confederacion Hipica de Puerto Rico, Inc. v. Confederacion de Jinetes Puertorriquenos, Inc., a case which adopted a similar view, unlike other federal courts that have considered the issue. See 30 F.4th 306 (1st Cir. 2022). The case involved horseracing jockeys in Puerto Rico who went on strike to demand higher pay in 2016, because they had not had an increase since 1987. The horse owners and racetrack for whom the jockeys worked sued under the Sherman Act, arguing that the jockeys were prohibited from striking collectively because of their status as independent contractors. While the district court agreed, the First Circuit reversed. Relying on the Norris LaGuardia Act’s language and Supreme Court precedent, the Circuit found that “[t]he key question [wa]s not whether the jockeys [we]re independent contractors or laborers but whether” they were seeking “compensation for their labor.” Id. at 314 (citing Columbia River Packers Ass'n v. Hinton, 315 U.S. 143 (1942)). Because the jockeys’ strike was ultimately a “dispute[] about wages for labor,” the Circuit reasoned, the strike “f[e]ll within the exemption” irrespective of the jockeys’ employment status. Id. at 314, 316. While the Supreme Court denied the horse owners’ and racetrack’s petition for certiorari—leaving the First Circuit’s reasoning intact—Confederacion Hipica still represents a minority view in the courts.

Commissioner Bedoya’s endorsement of Confederacion Hipica comports with other statements by the FTC promising to clarify the contours of the labor dispute exemption and shift enforcement priorities away from collective bargaining by independent contractors. In a letter to Congress on September 28, 2021, FTC Commissioner Lina Khan stated that the FTC would work with the Department of Justice’s Antitrust Division (“DOJ”) to provide guidance to courts regarding the exemption of “worker organizing activities from antitrust.” A year later, on September 15, 2022, the FTC’s Policy Statement on Enforcement Related to Gig Work noted that the FTC would no longer “focus” enforcement on organizing by gig workers in light of Confederacion Hipica. Echoing this reasoning that same day, FTC Commissioner Rebecca Kelly Slaughter opined that “there is a case to be made that even properly classified independent contractors should get the benefit of the labor exemption for labor organizing efforts.”

In recent litigation, DOJ has approached this question from a slightly different angle. In an amicus brief dated February 10, 2022 submitted in a case before the National Labor Relations Board (“NLRB”), DOJ advocated for a new definition of the term “employee” under the National Labor Relations Act that is broad enough to cover gig workers. While the adoption of a new definition in this case would not necessarily be binding on courts, DOJ argued that it would help to alleviate “any ambiguity in interpreting the NLRB’s ‘employee’ standard.” “Given the close practical relationship between the NLRB’s definition of ‘employment’ and the availability of these antitrust exemptions,” DOJ asserted, such ambiguity “may have significant consequences for antitrust enforcement, to the detriment of workers and employers alike.” The NLRB case—which concerns a dispute between the Atlanta Opera and a make-up artist and hair stylist union—is still pending. See Atlanta Opera, Inc., Case No. 10-RC-276292.

Commissioner Bedoya’s comments reflect the FTC and DOJ’s recent interest in strengthening workplace protections and investigating employer conduct that can harm gig workers, such as deception about pay and hours, no-poach agreements, and anticompetitive wage fixing. (Our most recent coverage of DOJ’s no-poach and wage-fixing prosecutions can be found here.). We will continue to follow trends in this area.