On Sept. 15, the U.S. Federal Trade Commission issued a policy statement, titled “FTC Policy Statement on Enforcement Related to Gig Work,” highlighting the agency’s increased attention to and scrutiny of “gig” companies that utilize workers for on-demand work. The statement is not binding law and thus does not confer specific legal rights on the FTC or any person, but it indicates that one of the FTC’s enforcement priorities in the immediate future will be to closely scrutinize business practices of gig companies to ensure they comply with applicable consumer protection laws.
The FTC’s mission is broadly to protect individuals from unfair and deceptive business practices. The statement notes myriad ways in which the FTC’s mission intersects with the gig economy, including in the ride-hailing, food delivery, retail, and health care industries. The FTC notes that gig workers may be exploited because they are often misclassified as independent contractors; have diminished bargaining power because they operate from decentralized and nontransparent platforms; and often work in concentrated urban markets that allow gig companies to exert more power over workers.
Although the FTC does not have direct jurisdiction over misclassification claims—an issue within the purview of the U.S. Department of Labor—the FTC commented that misclassified workers are often promised misleading or unsupported claims about their pay, leaving workers in financial difficulty. Deceptive earning claims and opaque compensation criteria also impede competition by preventing workers from properly comparing opportunities offered by different gig companies. Similarly, gig companies often fail to properly disclose required startup payments, training fees, or other expenses borne by gig workers, thereby running afoul of FTC rules requiring upfront disclosures.
Significantly, the FTC promises to examine unlawful business practices “holistically” and to collaborate with other agencies focused on worker protection such as the U.S. Department of Justice and National Labor Relations Board. According to the FTC, an integrated approach to investigating unfair business conduct is “especially appropriate for the gig economy, where law violations often have crosscutting causes and effects.” Thus, gig companies should be on notice that the FTC will closely monitor wrongful misclassification and other deceptive behavior towards gig workers and may refer such conduct to other agencies for enforcement.
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