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 that signal 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 — is likely to have an impact on companies that rely on on-demand part-time workers, regardless of whether those workers are classified as employees.

THE CENTRAL THESIS

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

The policy statement begins by providing an overview of the gig economy, the gig work model and the nature of gig work/services. Next, three key aspects of the gig economy market are identified that doubly imply the FTC’s consumer protection and competition responsibilities: (1) Concerns about gig workers’ representation and control by gig companies without concomitant accountability to them workers; (2) concerns about reduced bargaining power between gig workers and gig companies in collective bargaining; and (3) market concentration concerns.

Notably, the Commission is making it clear that it stands ready to use the “full portfolio” of available laws and tools to protect gig workers – who it sees as being in the same category as the consumers who are the subject of its consumer protection regime – regardless of their employment classification .

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The Commission’s policy statement identifies three main priorities for enforcement:

  1. Holding companies responsible for claims and conduct related to costs and benefits. The commission signaled that it will focus on unfair or misleading claims related to potential earnings, benefits, costs (e.g. start-up costs and training fees) and working conditions – including the non-disclosure of essential information relevant to these issues. Notably, the commission said it was willing to regulate earnings claims related to gig work “just like any other business or money-making.” [2]
  2. Combating unlawful practices and restrictions imposed on workers. The commission signaled that it stands ready to prosecute gig companies for unlawful conduct, including failure to disclose data collection practices and artificial intelligence surveillance methods. The Commission’s policy statement specifically identifies algorithm-based decision-making as an area ripe for investigation and enforcement, noting that the operation of certain algorithms “requires the collection of treasury sensitive data from workers, demonstrating the importance of the FTC’s rules on data security.” elevated”. [3] In addition, the policy statement indicates that the Commission will examine potentially restrictive or unfair contractual terms and restrictions on worker mobility.
  3. Monitor unfair competitive practices that harm gig workers. The policy statement provides that the Commission “will focus its resources on investigating potentially unlawful conduct by or between gig companies.” [4] In particular, the commission stated that it stands ready to (a) investigate potential agreements between gig companies to illegally set wages, benefits or fees for gig workers; (b) reviewing – and possibly challenging – mergers and other proposed mergers of gig companies that could lead to anti-competitive market consolidation and/or monopoly; and (c) investigate exclusionary or crowding-out behaviors by dominant companies (e.g., use of exclusivity, predatory pricing, or other forms of monopoly) that could harm consumers or gig workers.
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WHAT’S NEXT: OUR THINKING

The policy statement should be seen as another reminder that the FTC is keeping a close eye on the gig economy and stands ready to hold companies accountable for exploiting gig workers.

Earlier this year, the Commission announced a pre-announcement of proposed rulemaking for a potential profit claims rule, prompted in part by concerns about the impact of false profit claims by gig economy 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 collaboration between the two agencies on areas of mutual interest – primarily Gig-related developments deals with economics and protection of gig workers.

The Commission does not focus solely on gig economy issues. In June 2022, the Consumer Financial Protection Bureau (CFPB) issued a request for information about workers’ experiences of employer-related debt, including debt incurred as a result of employer-required training, equipment and supplies purchases, and other general related aspects with gig work. [6] The US Department of Justice (DOJ) has also taken an interest in gig economy issues and recently expressed its view that workers in the gig economy should be allowed to unionize without violating antitrust laws. [7]

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At the Commission’s open session on September 15, 2022, Commissioner Wilson (while voting against issuing the policy statement) expressed her support for providing concrete and tangible relief for consumers and gig workers. [8] While Commissioner Wilson expresses reservations about the antitrust elements of the policy statement, his statement reflects the Commission’s unanimous support for stepping up enforcement action to respond to unfair and anti-competitive practices in the gig economy.

In the coming months, we can expect the commission to make more aggressive and direct efforts to hold companies accountable for damages to gig workers, both independently and in collaboration with other government agencies like the NLRB, CFPB, and DOJ. In anticipation of these efforts, it would be wise for gig employers to take steps to (1) monitor and document their compliance with consumer protection laws (e.g., proof of income and claims reports); (2) update their privacy and data security policies; and (3) document active engagement in pro-competitive behavior with respect to both employees and competitors, recognizing that their conduct in these areas is likely to be subject to increased scrutiny.

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