FTC sets its sights on 'unfair, deceptive, and anticompetitive practices' in gig economy

·4 min read

The Federal Trade Commission is looking into the complex 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 tactics that hurt workers.

To be clear, a "statement of policy" like that issued today is not a new rulemaking or law. It is what it sounds like, but you might think about it more as a statement of priorities. The FTC has been aware of and indeed working against unfair labor practices in the gig economy for years — the salad days of exploitation (as of so many things) was before the pandemic, even.

But today's circumstances and the particular pro-labor interests of this administration, and FTC chair Lina Khan, mean it has climbed up the old to-do list by a few notches. (I've asked the FTC for a little more information on how they might put it and will update his post if they get back to me.)

The policy statement itself, which you can download here, is a very straightforward enumeration of the various pros, cons, and actual cons involved in the gig economy. It's only 17 pages and very readable (this isn't a legal document, though it is copiously footnoted), but I'll just bullet the main complaints here:

  • Control without responsibility: Roles are often defined to maximize risk on the worker and minimize responsibilities or expenses by the employer.

  • Diminished bargaining power: A lack of transparency, a decentralized work environment, and legal recourse waivers limit the ability of workers to take action against employers.

  • Concentrated markets: Network effects and subsidized costs can stifle competition and lock workers into a handful of platforms.

  • Deceptive or unfair pay practices: Misleading claims about pay structures and policies may lure workers under false pretenses or prevent accurate comparisons between opportunities.

  • Undisclosed costs or terms of work: Fees and expenses associated with the work are frequently elided or downplayed, inflating apparent net pay.

  • Unfair or deceptive practices by an automated boss: Automated distribution of work and pervasive surveillance can be misleading or manipulative, changing pay, ratings, or giving employers opportunities to push out unwanted workers.

  • Unfair contractual terms and restrictions on mobility: Contracts are hardly ever negotiable, often barring workers from using competitors, speaking out, or suing.

  • Wage-fixing and coordination: Gig economy practices may purposely — or as an effect of shared market power — lead to wage fixing, benefit reduction, and other coordinated anti-worker behavior across employers.

  • Market consolidation and monopolization: Lessened competition may lead to monopolies, monopsonies, predatory pricing, and so on, in violation of antitrust laws.

The FTC does not name names, though a few come up in the footnotes, but it's hard not to think of certain service providers when you read about things like deceptive pay practices. How many times over the last few years have we seen wage theft, suppression of employee complaints, coverups of crimes, and so on, by billion-dollar gig economy companies?

One recent example Commissioner Rebecca Slaughter notes in a statement accompanying the policy:

In 2021, we brought suit against Amazon for allegedly keeping a portion of drivers’ tips. As alleged in the complaint, Amazon actively concealed its conduct and only stopped after becoming aware of the FTC’s investigation. The FTC recovered over $60 million from Amazon to pay back the more than 140,000 Amazon Flex drivers whose tips were withheld.

Amazon, (allegedly) exploiting their lowest tier of workers? Shocking! (Here's some more details.)

It's doubtful whether one of those "honest mistakes" or "accounting bugs" as they were no doubt spun at the time, would have led to any large charge or settlement. Sadly, due to the way these companies keep their policies and data proprietary, there is rarely much anyone can do beyond publicly shaming them to the point where consumers' disgust overtakes their desire for grocery delivery.

Nevertheless, the FTC "will address any such harms through robust law enforcement, community outreach, and new initiatives to better understand and address the impact of emerging technologies in the gig economy and elsewhere on historically underserved communities." It also just formalized a new partnership with the National Labor Relations Board, so this is a cross-agency effort.

Can you help? Why, yes, you can: Next time you see some weird practice, like "your tip has been rounded down and the remainder added to our slush fund!" you should report it here. The FTC is a reactive agency — its mission is to investigate complaints, and the more it has in a given area of the industry, the fatter the folder it has when it walks into the Justice Department lobby.