Recognizing that “the rapid growth of the gig economy is made possible by the contributions of drivers, shoppers, cleaners, care workers, designers, freelancers, and other workers,” and clearly stating that protecting such workers is a priority, the FTC has announced its Policy Statement on Enforcement Related to Gig Work. The Policy Statement is premised on the principle that, although online gig platforms are new, traditional legal principles of consumer protection and competition apply to them, allowing the FTC to use “the full portfolio of laws it enforces to prevent unfair, deceptive, anticompetitive, and otherwise unlawful practices affecting gig workers.”

As noted in the Statement, 16% of Americans report earning money in the gig economy, and half of such workers rely on that income for their basic needs.  Gig workers live in all parts of the country, and are disproportionally people of color. 

Recognizing the “promise and pitfalls” of the gig economy, the FTC highlighted three of the gig economy’s prominent features that implicate the FTC’s consumer protection and competition missions: control without responsibility due to employers misclassifying their workers as independent contractors; diminished bargaining power because “ever-changing algorithms may dictate core aspects of workers’ relationship with a given company’s platform, leaving them with an invisible, inscrutable boss,” as well as mandatory arbitration and class-action waivers in their terms; and concentrated markets allowing for gig economy companies to “suppress wages below competitive rates, reduce job quality, or impose onerous terms” on their workers.

The Policy Statement outlines the FTC’s willingness and authority to step in to address these issues pursuant to its traditional authority, as follows:

  • Misrepresentations and Lack of Disclosure: the FTC can step in if an employer discloses pay, earnings or opportunity costs to workers in a misleading or deceptive way.
  • 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 workers or algorithm-based decision-making that results in unexpected or unexplained negative performances ratings or pay drops.  An employer’s use of lop-sided and non-negotiable contracts with stringent non-compete or non-disparagement provisions, or provisions that curtail a worker’s ability to bring an action against the employer, could also trigger the FTC’s unfairness authority to step in.
  • Anti-competitive activity: the types of contract provisions noted above that may affect a worker’s ability to seek other employment can also potentially affect competition in the marketplace and implicate antitrust laws.  The same provisions that restrict “workers’ ability to obtain competitive offers for their services from existing companies, resulting in lower wages and degraded working conditions” may also keep new companies from entering the market and hurt consumers.  The Policy Statement says that the FTC will be looking at wage-fixing and no-poaching agreements in this context, as well as market consolidation and monopolization.  

It is a broad and sweeping statement of authority and intent with vast implications. The FTC will be seeking to protect a broad swath of workers in new and very significant ways, looking at their working conditions and the agreements they enter into with their employers, as well the practices used by their employers in hiring, paying and monitoring them.  For the gig workers left behind by law makers, and who haven’t been able to benefit from unionization efforts, the FTC’s efforts could be a game-changer. 

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