The Federal Trade Commission will get tough on gig economy firms that take advantage of gig workers, the agency reported last week. In its announcement, the FTC also released a policy statement that outlined issues facing gig workers, such as deception about pay and hours, unfair contract terms and anticompetitive practices by gig economy firms.
“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.
The FTC’s definition of gig economy firms appears to encompass online marketplaces such as talent platforms that connect workers with companies and work services platforms that connect workers with clients wanting a specific task completed. Workers at these firms are often independent contractors.
“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.”
Gig workers face possible harm in several areas, according to the FTC:
- 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, according to the FTC. 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 FTC also listed several areas where it will aim to prevent harm to workers:
- 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.