The Federal Trade Commission’s broad authority to crack down on unfair competitive practices gives it an opening to police alleged worker misclassification by gig companies differently than traditional labor regulators.
Critics allege that gig companies wrongly designate workers as independent contractors not eligible for the benefits and protections of employment laws. The agency laid out its legal rationale for its ability to attack unfair conduct by gig companies in a recent policy statement.
The commission’s focus on consumer protection and competition law allows it to examine “unlawful business practices and harms to market participants holistically, complementing the efforts of other enforcement agencies with jurisdiction in this space,” the FTC said.
Section 5 of the FTC Act empowers the commission to crack down on unfair competition and deceptive practices, giving it the tools to challenge alleged misclassification, legal observers said. Instead of arguing that a company is misclassifying its workers, the agency could contest particular company practices.
“Effectively, the FTC does have the authority to require appropriate classification, but indirectly. They aren’t enforcing laws regarding employment status,” said David Seligman, executive director of the nonprofit legal organization Towards Justice.
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