FTC to Crack Down on Companies Taking Advantage of Gig Workers

The Federal Trade Commission has announced enforcement priorities to fight for consumers who work in jobs that are part of the gig economy. In a new policy statement adopted today, the Commission outlined a number of issues facing gig workers, including deception about pay and hours, unfair contract terms, and anticompetitive wage fixing and coordination between gig economy companies.

“No matter how gig companies choose to classify them, gig workers are consumers entitled to protection under the laws we enforce,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We are fully committed to coordinating our consumer protection and competition enforcement efforts within the FTC as well as working with other agencies across the government to ensure gig workers are treated fairly.”

“Technological advances and novel business models are no license to commit unfair, deceptive, or anticompetitive practices,” said Elizabeth Wilkins, Director of the FTC’s Office of Policy Planning. “We will use all our tools to protect gig workers and promote fair and competitive market practices in the gig economy.”

The statement highlights studies showing that gig work accounts for hundreds of billions of dollars in economic activity each year. According to a Federal Reserve report cited in the statement, 16 percent of Americans report earning money through a gig company, and another report shows that more than half of gig workers say the money they earn is essential or important for meeting their needs. Additionally, as noted in the Commission’s recent Serving Communities of Color report, many gig workers come from communities of color. The statement makes clear that, while gig companies may seem novel, traditional principles of consumer protection and competition still apply to them.  

In the statement, the Commission notes multiple areas where there is potential for harm to workers in the gig economy, including:

• Misrepresentations about the nature of gig work: While gig companies promote independence to potential workers, in practice these firms may tightly prescribe and control their workers’ tasks in ways that run counter to the promise of independence and an alternative to traditional jobs.

• Diminished bargaining power: Workers have little leverage to demand transparency from gig companies, even in the face of unclear information about when work will be available, where they will have to perform it, or how they will be evaluated.

• Concentrated markets: Markets populated by gig companies are often concentrated, resulting in reduced choice for workers, customers, and businesses. These companies may be more likely to exert their market power in anticompetitive ways that harm workers’ wages, job quality, and other aspects of gig work.

The policy statement makes clear that the FTC’s authority to enforce both competition and consumer protection laws in the gig economy is not affected by how companies choose to classify the consumers who perform gig work. In the statement, the Commission names multiple areas where the Commission will aim to prevent harm to consumers:

• Holding companies accountable for claims and conduct about costs and benefits: Gig companies must not be deceptive in their claims to prospective gig workers about potential earnings, and they must be transparent and truthful about costs borne by workers.

• Combating unlawful practices and constraints imposed on workers: Gig companies using artificial intelligence or other advanced technologies to govern workers’ pay, performance, and work assignments are still required to keep promises they make to workers. Companies must also ensure that any restrictive contract terms, including those limiting workers from seeking other jobs, do not violate the FTC Act or other laws.
• Policing unfair methods of competition that harm gig workers: The FTC will investigate evidence of agreements between gig companies to illegally fix wages, benefits, or fees for gig workers that should be open to competition. The FTC will also investigate exclusionary or predatory conduct that could cause harm to customers or reduced compensation or poorer working conditions for gig workers.

The policy statement notes that companies that fail to follow the laws governing unfair, deceptive, or anticompetitive practices could be obligated to pay consumer redress and civil penalties and may be ordered to cease unlawful business practices. The Commission also notes in the statement that it will partner with other governmental agencies to protect gig workers.

The Commission voted 3-2 at an open meeting to adopt the policy statement, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting in the negative.

Workers who believe that their labor rights have been violated can call 1-844-762-6572 for assistance filing an unfair labor practice charge. Or they can contact their closest National Labor Relations Board Field Office or submit a charge on the NLRB’s website.