FTC Announces Policy Statement on Demand Work Enforcement

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Recognizing that “the rapid growth of the gig economy is made possible by the contributions of drivers, buyers, cleaners, social workers, designers, freelancers and other workers”, and making clear that the protection of these workers is a priority, the FTC has announcement his Policy statement on the application of the law relating to on-demand work. The policy statement is based on the principle that although online concert platforms are new, traditional legal principles of consumer protection and competition apply to them, allowing the FTC to use ” all of the laws it enforces to prevent unfair, deceptive, anti-competitive, and other illegal practices affecting gig workers.

As noted in the statement, 16% of Americans say they make money in the gig economy, and half of those workers depend on that income for their basic needs. Gig workers live in all parts of the country and are disproportionately people of color.

Recognizing the “promises and pitfalls” of the gig economy, the FTC highlighted three key features of the gig economy that implicate the FTC’s consumer protection and competition missions: control without responsibility due to employers misclassifying their workers as independent contractors; reduced bargaining power because “ever-changing algorithms can dictate fundamental aspects of workers’ relationship with a given company’s platform, leaving them with an invisible and impenetrable boss”, as well as mandatory arbitration and waivers of remedies collective in their terms; and concentrated markets allowing companies in the gig economy to “cut wages below competitive rates, reduce job quality or impose onerous conditions” on their workers.

The policy statement outlines the FTC’s willingness and authority to intervene to resolve these issues in accordance with its traditional authority, as follows:

  • Misrepresentation and Non-Disclosure: The FTC can intervene if an employer discloses wages, earnings, or opportunity costs to workers in a misleading or deceptive manner.
  • Unfair practices: This could include an employer withholding key information about working conditions or subjecting workers to onerous contract terms and arbitrary evaluation requirements. Unfair practices could also include an employer surreptitiously using surveillance technology to monitor its employees or algorithm-based decision-making that results in unexpected or unexplained negative performance ratings or pay cuts. An employer’s use of unbalanced, non-negotiable contracts with strict non-competition or non-disparagement provisions, or provisions that restrict a worker’s ability to sue the employer, could also trigger the intervention of the FTC Injustice Authority.
  • Anti-Competitive Activity: The types of contractual provisions noted above that may affect a worker’s ability to seek alternate employment may also potentially affect market competition and involve antitrust laws. The same provisions that restrict “the ability of workers to obtain competitive offers for their services from existing companies, leading to lower wages and poorer working conditions” can also prevent new companies from entering the market and harm consumers. The policy statement says the FTC will review wage-fixing and non-poaching agreements in this context, as well as market consolidation and monopolization.

It is a broad and sweeping statement of authority and intent with far-reaching implications. The FTC will seek to protect a wide range of workers in new and very meaningful ways, examining their working conditions and the agreements they make with their employers, as well as the practices their employers use to hire, pay and to watch. For construction workers left behind by lawmakers who haven’t been able to benefit from union organizing efforts, the FTC’s efforts could be a game-changer.

It might even be a game-changer for the rest of us.

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