FTC to Take Action Against Businesses Exploiting Gig Workers

2 mins read

The Federal Trade Commission is looking into the complicated and potentially unfair economics and policies of the gig economy for “deceptive, unfair, and otherwise unlawful acts and practices.” Whether it’s forced arbitration, labor misclassification, or algorithmic pay and job distribution, the agency says it will go after any dubious strategies that hurt workers.

A “statement of policy” like the one released today is not a new rule or legislation, to be clear. It does exactly what it says, although you may consider it more of a statement of priorities. Since many years ago, the FTC has been aware of and actively combating unfair labor practices in the gig economy.

The statement makes it plain that, despite the fact that gig businesses may appear unusual at first, they are nevertheless subject to the standard rules of consumer protection and competition.

The Commission lists several instances in which employees in the gig economy may suffer, including:

Misinformation about the nature of gig work: While gig companies advertise freedom to prospective employees, in reality these businesses may strictly prescribe and regulate their employees’ responsibilities in ways that go against the promise of independence and a substitute for regular employment.

Reduced negotiating power: Even in the face of ambiguous information about when work will be available, where they will have to execute it, or how they will be rated, workers have limited capacity to demand openness from gig organizations.

Market concentration: Gig economy-dominated marketplaces often exhibit market concentration, which limits the options available to employees, clients, and enterprises. These businesses could be more prone to use their market dominance in anticompetitive ways that are detrimental to employees’ pay, the quality of their jobs, and other elements of gig employment.

The policy statement is explicit in stating that how businesses choose to categorize customers who conduct gig labor has no bearing on the FTC’s ability to enforce consumer protection and competition laws in the gig economy. The Commission identifies a number of areas in which it will work to protect consumers in the statement:

Holding businesses responsible for statements made and actions taken on costs and benefits: Gig firms must not mislead potential gig employees about their potential earnings and must be open and accurate about the expenses faced by workers.

Combating illegal practices and restrictions placed on employees: Gig firms still have to abide by the agreements they make with their employees, even if they use artificial intelligence or other cutting-edge technology to control workers’ pay, performance, and job assignments. Companies must also make sure that any restrictive contract clauses, such as those that prevent employees from looking for other employment, do not contravene the FTC Act or other legal provisions.

Enforcement of anti-gig worker unfair competition practices: The FTC will look into any evidence of agreements between gig businesses to fix unlawfully salaries, benefits, or other costs for gig workers that should be subject to competition. The FTC will also look at practices that might hurt consumers, result in lower pay for gig workers, or result in worse working conditions.

In accordance with the policy statement, businesses that engage in unfair, deceptive, or anticompetitive practices may face civil fines, consumer restitution obligations, and orders to stop their illegal business practices. In the statement, the Commission also says that in order to safeguard gig workers, it will collaborate with other governmental organizations.

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