Federal Trade Commission Focuses on Gig Work

Morgan Lewis

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—are likely to have implications for companies that rely on nontraditional workers on a part-time, on-demand basis, regardless of whether those workers are classified as employees.

KEY TAKEAWAYS

The Federal Trade Commission (FTC or Commission) issued a policy statement on enforcement relating to the gig economy on September 15, 2022. [1] The 17-page policy statement, which was approved by Democratic commissioners in a 3-2 vote, begins by describing the “rapid” growth of the gig economy, and the FTC’s “priority” of protecting gig economy workers from “unfair, deceptive, and anticompetitive practices.”

At the outset, the policy statement provides an overview of the gig economy, the gig work model, and the nature of gig work/services. Next, it identifies three primary aspects of the gig economy market that dually implicate the FTC’s missions of consumer protection and competition: (1) concerns about representations to, and control of, gig workers by gig companies without concomitant responsibility to those workers; (2) concerns about diminished bargaining power between gig workers and gig companies in labor negotiations; and (3) concerns about market concentration.

Of note, the Commission makes clear that it is ready to exercise the “full portfolio” of available laws and tools to protect gig workers—who it regards as in the same category as the consumers that are the subject of its consumer protection regime—regardless of their employment classification.

The Commission’s policy statement enumerates three key enforcement priorities:

  1. Holding companies accountable for claims and conduct about costs and benefits. The Commission signaled that it will focus on unfair or deceptive claims relating to potential earnings, benefits, costs (e.g., startup costs and training fees), and terms of work—including failure to disclose material information relevant to those issues. Of note, the Commission stated that it is prepared to regulate earnings claims made in the context of gig work “just as it would in any other business or money-making opportunity.” [2]
  2. Combating unlawful practices and constraints imposed on workers. The Commission signaled that it is prepared to pursue 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 running of certain algorithms “requires collecting troves of sensitive data from workers, which heightens the importance of FTC rules governing data security.” [3] Further, the policy statement notes that the Commission will scrutinize potentially restrictive or unfair contract terms and restrictions on worker mobility.
  3. Policing unfair methods of competition that harm gig workers. The policy statement provides that the Commission will “focus its resources on investigating potential unlawful conduct by or among gig companies.” [4] Specifically, the Commission stated that it is prepared to (a) investigate potential agreements between gig companies to illegally fix wages, benefits, or fees for gig workers; (b) review—and potentially challenge—mergers and other proposed combinations of gig companies that could result in anticompetitive market consolidation and/or monopolization; and (c) investigate exclusionary or predatory conduct by dominant firms (e.g., the use of exclusive contracting, predatory pricing, or other forms of monopolization) that could result in harm to consumers or gig workers.

WHAT’S NEXT: OUR THINKING

The policy statement should be viewed as another reminder that the FTC is keeping a close eye on the gig economy and is prepared to hold companies accountable for taking advantage of gig workers.

Earlier this year, the Commission announced an advanced notice of proposed rulemaking for a potential rule concerning earnings claims, driven in part by concerns about the effects of false earnings claims by gig economy platforms. [5] Further, the policy statement comes on the heels of the FTC’s July 2022 partnership with the National Labor Relations Board (NLRB), which was intended to facilitate cooperation between the two agencies on areas of mutual interest—the primary one being developments related to the gig economy and protection of gig workers.

The Commission is not alone in its focus on gig economy issues. In June 2022, the Consumer Financial Protection Bureau (CFPB) released a request for information on worker experiences with employer-driven debt, including debt incurred as a result of trainings required by employers, the purchase of equipment and supplies, and other aspects commonly associated with gig work. [6] The US Department of Justice (DOJ) has also taken an interest in gig economy issues, recently expressing its view that gig economy workers should be allowed to unionize without violating antitrust law. [7]

At the Open Commission Meeting held on September 15, 2022, Commissioner Wilson (while voting against issuance of the policy statement) voiced her support for the provision of concrete and tangible relief to consumers and gig workers. [8] While expressing reservations about the antitrust elements of the policy statement, Commissioner Wilson’s statement reflects the uniform support for the Commission to respond to unfair and anticompetitive practices in the gig economy through increased enforcement action.

In the coming months, we can expect the Commission to pursue more aggressive and direct efforts to hold companies accountable for harm against gig workers, both independently and in conjunction with other governmental agencies such as the NLRB, CFPB, and DOJ. In anticipation of those efforts, it would be prudent for gig employers to take measures to (1) monitor and document their compliance with consumer protections laws (e.g., substantiation for earning and claims statements); (2) update their privacy and data security policies; and (3) document active engagement in procompetitive conduct with respect to both employees and competitors, recognizing that their conduct in these areas is likely to become the subject of heightened scrutiny.

[1] Fed. Trade Comm’n, FTC Policy Statement on Enforcement Related to Gig Work (Sept. 15, 2022).

[2] Id. at 7, n.27.

[3] Id. at 10, n.47. Of note, the Commission has previously acknowledged the unfairness doctrine could be used to combat racially biased or otherwise discriminatory algorithms. See Elisa Jillson (FTC), Aiming for Truth, Fairness, and Equity in Your Company’s Use of AI (Apr. 19, 2021).

[4]Id. at 13.

[6]Press Release, Consumer Fin. Prot. Bureau, CFPB Launches Inquiry into Practices that Leave Workers Indebted to Employers (June 9, 2022).

[7]Brief for United States Department of Justice as Amici Curiae in Support of Neither Party, The Atlanta Opera, Inc. & Make-Up Artists & Hair Stylists Union, Loc. 798, IATSE, 371 NLRB No. 45 (Dec. 27, 2021) (No. 10-RC-276292).

[8]Christine S. Wilson, Comm’r, Fed. Trade Comm’n, Oral Remarks of Commissioner Christine S. Wilson at the Open Commission Meeting (Sept. 15, 2022).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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