The Federal Trade Commission simply introduced that it’s going to put gig economic system companies in its crosshairs by cracking down on employee misclassification and different alleged antitrust misdeeds – the second such assault by the identical company in the previous couple of months. The FTC’s new coverage assertion, launched on September 15, introduced that the company would use the total portfolio of legal guidelines it enforces to forestall “unfair, deceptive, anticompetitive and otherwise unlawful practices” affecting gig employees. Specifically, the FTC stated it can tackle companies that misrepresent employees’ potential earnings, wrongfully use synthetic intelligence to consider employee productiveness, and interact in wage-fixing with different gig firms, generally seen as basic antitrust conduct that’s getting elevated consideration beneath the Biden administration. “No matter how gig companies choose to classify them, gig workers are consumers entitled to protection under the laws we enforce,” stated an company consultant. What do gig economic system companies want to find out about this newest antitrust shot throughout the bow from the federal authorities?
Federal Trade Commission Enters the Arena
Gig economic system firms have develop into fairly accustomed to sweeping assaults launched by federal and state governments over the previous decade, every of which may pose an existential risk to their very existence. These assaults have primarily sprung from wage and hour, unemployment, and insurance coverage authorities, and have virtually all the time centered on employee classification allegations.
In the previous couple of months, nevertheless, a brand new risk has emerged: the Federal Trade Commission. While most affiliate the company with shopper safety exercise, its mission additionally includes civil antitrust enforcement. And it has made it recognized that it desires to enter the gig economic system area in an enormous manner. As we famous again in July, the FTC just lately introduced a proper collaboration with the National Labor Relations Board to improve their info sharing and cross-agency consultations, coaching, outreach, and training – all within the title of cracking down in opposition to gig economic system companies. Last week’s announcement is simply the newest instance of presidency oversight that ought to however all gig firms on discover.
Policy Statement Makes Promises to Investigate Gig Economy Companies in 3 Key Areas
The FTC’s new coverage assertion makes clear that that the company views “gig workers as consumers entitled to protection under the laws we enforce.” The 17-page launch factors out that 16% of Americans now earn cash via “an online gig platform,” not to point out that the gig economic system “touches nearly every aspect of American life, from food delivery to transportation to household services.” The large progress of the trade has actually caught the eye of presidency regulators who’ve highly effective instruments at their disposal.
In the assertion, the company notes a number of areas the place there’s potential for hurt to employees within the gig economic system, together with three key conditions:
- Misrepresentations in regards to the nature of gig work: While gig firms promote independence to potential employees, it turns into problematic and doubtlessly runs afoul of antitrust regulation when companies tightly prescribe and management their employees’ duties in ways in which “run counter to the promise of independence” (and primarily create misclassified employment relationships).
- Diminished bargaining energy: It turns into legally troubling to the FTC when gig firms present unclear details about when work will probably be obtainable, the place employees can have to carry out it, or how employees will probably be evaluated.
- Concentrated markets: Perhaps most troublesome to the FTC is the truth that sure markets populated by gig firms are sometimes concentrated with a handful of companies (ridesharing and meals supply being the 2 that stand out), and the company claims this can lead to lowered alternative for employees, prospects, and companies. “These companies may be more likely to exert their market power in anticompetitive ways,” says the company, alleging that this might trigger “harm to workers’ wages, job quality, and other aspects of gig work.”
The 3 Ways that the FTC Will Act Against Gig Businesses
The FTC says it isn’t in any respect dissuaded by the truth that most gig employees are categorized as unbiased contractors. It claims that its authority to implement each competitors and shopper safety legal guidelines within the gig economic system is not going to affected by alleged misclassification.
It factors out three pathways that it’s going to take in opposition to gig economic system firms that run afoul of antitrust regulation in its view:
- Holding firms accountable for claims and conduct about prices and advantages: The FTC warns gig economic system firms not to be misleading of their claims to potential gig employees about potential earnings. It additionally advises companies to be clear and truthful about prices borne by employees.
- Combating illegal practices and constraints imposed on employees: Gig firms that use synthetic intelligence or different superior applied sciences to govern employees’ pay, efficiency, and work assignments are significantly focused by the FTC’s coverage assertion. These AI capabilities is not going to be an excuse for antitrust conduct in accordance to the company.
- Policing unfair strategies of competitors that hurt gig employees: The FTC says it can examine proof of agreements between gig firms to illegally repair wages, advantages, or charges for gig employees that must be open to competitors. The FTC additionally notes that it’s going to examine exclusionary or predatory conduct that might trigger hurt to prospects or lowered compensation or poorer working circumstances for gig employees.
What Should You Do About It? An Action Plan for Gig Economy Companies
It goes with out saying that antitrust allegations aren’t any joke. They carry severe penalties and enforcement exercise – and will even blossom into prison prosecutions. So what can gig economic system firms do to keep away from the eye of the FTC?
- Step one all the time includes the right classification of your employees within the particular areas through which you use. Work intently along with your gig economic system lawyer to guarantee you have got correctly audited your workforce in gentle of your particular work actions.
- Make certain you might be clearly clear in your communications to potential and current employees about job circumstances, compensation, bills, and different key components of the job.
- Be cautious of any restrictive contract phrases, together with these limiting employees from looking for different jobs, as they may run afoul of antitrust legal guidelines.
- Audit your AI practices regularly to guarantee they don’t unfairly punish employees or in any other case create unfair working circumstances.
- Tread with warning when it comes to any form of communication with peer organizations in your trade – and practice your managers to observe your lead when it comes to interacting with different companies.