FTC Policy Statement on Enforcement Related to Gig Work

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American workers deserve fair, honest, and competitive labor markets. Over the past

decade, internet-enabled “gig” companies have grown exponentially, and gig work now

composes a significant part of the United States economy.1 One study suggests the gig economy

will generate $455 billion in annual sales by 2023.2 The rapid growth of the gig economy is

made possible by the contributions of drivers, shoppers, cleaners, care workers, designers,

freelancers, and other workers. Protecting these workers from unfair, deceptive, and

anticompetitive practices is a priority, and the Federal Trade Commission (“FTC” or

“Commission”) will use its full authority to do so.3 As the Commission’s past work and current

initiatives illustrate, the agency’s broad-based jurisdiction and interdisciplinary approach to

market harms make it well positioned to confront the challenges this model can pose to workers.4

See, e.g., Ben Zipperer et al., Econ. Pol’y Inst., National Survey of Gig Workers Paints a Picture of Poor Working

Conditions, Low Pay, at 1 (June 1, 2022) (“While the concept of nontraditional, short-term, and contract work has

been around since well before the digital age, it wasn’t until the 2010s that digital platform companies like Uber,

DoorDash, Instacart, and TaskRabbit began to rise to prominence and shape the way we define gig work today.”).

Mastercard & Kaiser Assocs., Mastercard Gig Economy Industry Outlook and Needs Assessment, at 2 (May 2019).

While this Statement focuses on potential harms to gig workers and how the Commission might address them,

misconduct against any consumer—customers who use services offered through the platform, workers who supply

labor, and businesses on or off the platform—is prohibited. See, e.g., Decision & Order, In re Uber Techs., Inc., Dkt.

No. C-4662 (FTC Oct. 25, 2018) (requiring Uber to implement a comprehensive privacy program to protect personal

data collected from both riders and drivers); Decision & Order, Amazon.com., Dkt. No. C-4746 (FTC June 10, 2021)

(requiring Amazon to refund Amazon Flex drivers $61.7 million in tips that Amazon promised drivers but failed to

pay); Compl. ¶¶ 61–69, In re HomeAdvisor, Inc., Dkt. No. 9407 (FTC Mar. 11, 2022) (FTC challenging a leadgeneration platform’s alleged misrepresentations to small businesses about the platform’s effectiveness); see also

Letter from Protect Our Rests. to Fed. Trade Comm’n (July 21, 2021) (explaining how various practices that result

in diners paying higher prices to food delivery platforms also harm small businesses).

This Policy Statement elaborates on principles adopted by the Commission in individual cases and rules over the

course of many years. This Policy Statement does not confer any rights on any person and does not operate to bind

the FTC or the public. In any enforcement action, the Commission must prove the challenged act or practice violates

at least one existing statutory or regulatory requirement. In addition, this Policy Statement does not preempt federal,

state, or local laws. Compliance with those laws, however, will not necessarily preclude Commission law

enforcement action. Pursuant to the Congressional Review Act, 5 U.S.C. §§ 801 et seq., the Office of Information

and Regulatory Affairs designated this Policy Statement as not a major rule, as defined by 5 U.S.C. § 804(2).

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Background on Gig Work

The gig economy touches nearly every aspect of American life, from food delivery to

transportation to household services. Gig work involves activity where people earn income

providing on-demand work, often through a digital service like an app.5 Ride-hailing companies

recruit workers to drive customers in the worker’s personal vehicle. Food delivery services find

workers to deliver items from restaurants, grocery stores, and other merchants to customers.

Service apps connect workers with customers seeking help with cleaning, home repair, and other

temporary jobs. The gig work model is expanding into healthcare, retail, and other segments of

the economy.6 Demand for some services gig workers provide grew during the COVID-19

pandemic.7 Demand for other gig services, particularly transportation, decreased during that

same time and caused financial struggles for some workers, illustrating the precarious nature of

gig work.8

Sixteen percent of Americans report earning money through an online gig platform.9 Gig

workers live throughout the United States, in urban, suburban, and rural areas.10 As highlighted

See, e.g., Internal Revenue Serv., Gig Economy Tax Center (last updated Mar. 15, 2022); Elka Torpey & Andrew

Hogan, Working in a Gig Economy, U.S. Bureau of Labor Stat. (May 2016). Gig work also may be referred to as

“crowdwork,” contract work, on-call arrangements, or temporary work. See Gallup, Inc., Gallup’s Perspective on

the Gig Economy and Alternative Work Arrangements, at 7 (2018).

See, e.g., Fiona Greig & Daniel M. Sullivan, The Online Platform Economy Through the Pandemic JPMorgan

Chase Inst. (Oct. 2021) (reporting that some gig workers “transport people or goods” while other workers “offer a

growing variety of services including dog walking, home repair, telemedicine, and many others”); see also U.S.

Census Bureau, Selected Industries That Contributed to the U.S. Gig Economy: 2019 (June 30, 2022).

See, e.g., Accenture, Platforms Work, at 21 & ex.4 (2021) (showing with Uber data that “COVID-19 suppressed

demand for rideshare and enabled strong growth in delivery”).

See, e.g., Greig & Sullivan, The Online Platform Economy Through the Pandemic (noting that drivers for rideshare

platforms were “most likely to have received unemployment insurance” during the COVID-19 pandemic).

Anderson et al., The State of Gig Work in 2021, at 3, 16; see also Fed. Rsrv. Sys. Bd. of Governors, Report on the

Economic Well-Being of U.S. Households in 219, Featuring Supplemental Data from April 2020, at 18 (May 2020)

(“Nearly one in three adults earned money from gigs.”); cf. Katherine G. Abraham et al., Nat’l Bureau of Econ.

Rsch. Working Paper 24950, Measuring the Gig Economy: Current Knowledge and Open Issues (Aug. 2018)

(explaining why precisely measuring the number of gig workers in the U.S. economy is so difficult).

See Anderson et al., The State of Gig Work in 2021, at 24 (noting that comparable percentages of adults in urban,

suburban, and rural areas have earned money through an online gig platform in the past year); see also Ctr. for Rural

Innovation & Rural Innovation Strategies, Inc., The Growing Gig Economy in Rural America, at 4 (Nov. 2021).

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in the FTC’s Serving Communities of Color report, gig workers are disproportionately people of

color11: 30% of Latino adults, 20% of Black adults, and 19% of Asian adults report having

engaged in gig work, compared to only 12% of White adults.12 Many gig workers have lower

incomes and, because they may not be covered by wage and hour laws, can earn less than the

minimum wage.13 More than half of American gig workers report that the money they earn

through the gig economy is essential or important for meeting their basic needs.14

Gig workers are paid in different ways, including weekly, in “batches” after completing

multiple gigs, or immediately upon completing a gig (for a fee).15 Many workers are heavily

dependent on customer tips.16 Gig companies may generate revenue from multiple sources,

including a “take rate”17 (a percentage of customer payments for workers’ services), customer

fees, and commissions charged to merchants.

Fed. Trade Comm’n, Serving Communities of Color: A Staff Report on the Federal Trade Commission’s Efforts to

Address Fraud and Consumer Issues Affecting Communities of Color, at 19 & n.70 (Oct. 2021).

Anderson et al., The State of Gig Work in 2021, at 5; see DoorDash, 2021 DoorDash ESG Report: Growing and

Empowering Local Economies, at 41 (Apr. 19, 2022) (nearly 40% of DoorDash gig workers identify as people of

color, 58% are women, and 15% are veterans); Uber, 2021 ESG Report, at 28 (July 2021) (about half of Uber’s U.S.

delivery personnel identify as people of color).

See Zipperer et al., National Survey of Gig Workers, at 1 (“[A] survey of gig workers reveals that these workers

often are paid low wages, in some instances less than the minimum wage [and] they face economic insecurity at

high rates . . . .”); see also Anderson et al., The State of Gig Work in 2021, at 4–5, 7, 23; Gallup, Gallup’s

Perspective on the Gig Economy and Alternative Work Arrangements, at 8.

See Anderson et al., The State of Gig Work in 2021, at 31 (reporting that 58% of current or recent gig workers said

that money earned via gig jobs has been “essential or important for meeting their basic needs”).

See, e.g., DoorDash, What Is Fast Pay? (2020); Grubhub for Drivers, What Is Instant Cashout? (2020); Uber

Techs., Inc., Your Money When You Need It (2022).

See Chris Benner, UC Santa Cruz, On-Demand and On-the-Edge: Ride-Hailing and Delivery Workers in San

Francisco, at 28 (May 5, 2020) (“Delivery workers are particularly dependent on tips, which account for 30% of

their estimated earnings.”).

See Cong. Rsch. Serv., R44365, What Does the Gig Economy Mean for Workers?, at 3 (Apr. 28, 2017); see also

Aaron Gordon & Dhruv Mehrotra, Uber and Lyft Take a Lot More from Drivers Than They Say, Jalopnik (Aug. 26,

2019, 12:04 PM).

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II.

The Market for Gig Workers

As with any evolving sector of the economy, the Commission is attuned to gig work’s

promises and pitfalls. This Statement focuses on three market features that implicate the

Commission’s consumer protection and competition missions:

Control Without Responsibility. Companies frequently promote gig work as a flexible

opportunity for people to set their own hours and work on their own terms.18 These companies

often categorize their workers as independent contractors. Yet 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. This tension has contributed to litigation

across the country over allegations that gig workers are being misclassified as independent

contractors rather than employees.19 When misclassification occurs, workers are often deprived

of critical rights to which they are entitled under law (such as the right to organize, overtime pay,

and health and safety protections), and saddled with inordinate risks (such as unclear and

unstable pay, or responsibility for a vehicle, equipment, or supplies) and business expenses that

employers commonly bear (such as insurance, gas, maintenance, and taxes).20 At the same time,

See, e.g., Cong. Rsch. Serv., What Does the Gig Economy Mean for Workers?, at i (“The apparent availability of

gig jobs and the flexibility they seem to provide workers are frequently touted features of the gig economy.”).

See, e.g., Lawson v. Grubhub, Inc., 13 F.4th 908 (9th Cir. 2021); Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st

Cir. 2020); Razak v. Uber Techs., Inc.¸ 951 F.3d 137 (3d Cir. 2020); Hood v. Uber Techs., Inc., Case

No. 1:16-CV-998, 2019 WL 93546 (M.D.N.C. Jan. 3, 2019).

See, e.g., National Labor Relations Act, 29 U.S.C. §§ 151 et seq. (protecting, among other rights, employees’

rights to act together to address working conditions); U.S. Dep’t of the Treasury, The State of Labor Market

Competition, at 12 (“Classifying workers as independent contractors can especially reduce costs by shifting nonwage costs typically paid by employers (e.g. healthcare benefits) onto the employee. These costs are non-trivial—

approximately 30 percent of per-hour employer costs come from costs other than wages and salaries.”); see also Ken

Jacobs & Michael Reich, Inst. for Rsch. on Labor & Emp., Massachusetts Uber/Lyft Ballot Proposition Would

Create Subminimum Wage, at 2, Univ. Cal. Berkeley. (Sept. 2021) (estimating the financial impact of undisclosed

terms of work for rideshare drivers); James A. Parrott & Michael Reich, An Earnings Standard for New York City’s

App-Based Drivers: Economic Analysis and Policy Assessment, at 49 (July 2018) (noting the large amount of unpaid

“idle” time for rideshare drivers). Moreover, high inflation and other economic shocks may cause certain workerborne costs to rise without any corresponding increase in pay. See Gerrit De Vynck et al., Inflation Is Helping Gig

Companies Like Uber—and Hurting Their Workers, Wash. Post (Aug. 7, 2022, 6:00 AM EDT).

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gig companies may use nontransparent algorithms to capture more revenue from customer

payments for workers’ services than customers or workers understand.21 This dynamic calls for

scrutiny of promises gig platforms make, or information they fail to disclose, about the financial

proposition of gig work.

Diminished Bargaining Power. Gig workers often do not have the information they

need to know when work will be available, where they will have to perform it, or how they will

be evaluated.22 Behind the scenes, ever-changing algorithms may dictate core aspects of

workers’ relationship with a given company’s platform, leaving them with an invisible,

inscrutable boss.23 Workers have little leverage to demand transparency from gig companies: A

decentralized work environment, the potential lack of legal protections to organize, and a high

turnover rate driven by companies’ treatment of workers as replaceable all contribute to workers’

diminished bargaining power.24 Mandatory arbitration and class-action waivers are also

increasingly common among gig workers, meaning that most efforts to vindicate worker rights

occur in nonpublic, isolated proceedings.25 This power imbalance may leave gig workers more

See, e.g., Compl. ¶¶ 30–34, In re Amazon.com, Inc., Dkt. No. C-4746 (alleging that Amazon adopted a “variable

base pay” model for Amazon Flex so it could capture drivers’ tips); Dan Calacci, MIT Media Lab, Bargaining with

the Algorithm: Pooling Worker Data to Estimate Gig Economy Worker Pay (Oct. 15, 2020).

See, e.g., Compl. ¶¶ 35–47, Amazon.com, Dkt. No. C4746 (alleging that Amazon concealed changes to an

algorithm by falsely telling workers that no change had actually occurred).

See, e.g., Hatim A. Rahman, The Invisible Cage: Workers’ Reactivity to Opaque Algorithmic Evaluations, 66

Admin. Sci. Q. 945, 976 (2021); Spencer Soper, Fired by Bot at Amazon: “It’s You Against the Machine”,

Bloomberg (June 28, 2021, 5:00 AM); see also Noam Scheiber, How Uber Uses Psychological Tricks to Push Its

Drivers’ Buttons, N.Y. Times (Apr. 2, 2017).

See U.S. Dep’t of the Treasury, The State of Labor Market Competition, at 11 (“By removing the immediate nexus

between workers and the firm for which they provide services, workers are prevented from bargaining directly with

the entity that has the economic power.”); Christopher Mims, In a Tight Labor Market, Gig Workers Get Harder to

Please, Wall St. J. (May 4, 2019) (noting “[t]he unusually high rate of turnover [of workers] in the gig economy”);

see also Zipperer et al., National Survey of Gig Workers, at 7.

See, e.g., Elizabeth C. Tippett & Bridget Schaaf, How Concepcion and Italian Colors Affected Terms of Service in

the Gig Economy, 70 Rutgers U. L. Rev. 459, 461 (2018) (analyzing the high prevalence of mandatory arbitration

and class-action waivers in the gig economy even before Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018)).

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exposed to harms from unfair, deceptive, and anticompetitive practices and is likely to amplify

such harms when they occur.

Concentrated Markets. Markets populated by businesses that run online platforms are

often concentrated, resulting in reduced choice for workers, customers, and businesses. As a

platform grows by attracting more users (e.g., riders), it can become more valuable to users on

the other side of the platform (e.g., drivers) by generating so-called “network effects.” Because

network effects can lock in a dominant player’s market position, these businesses can be

incentivized to pursue tactics designed to quickly capture a large share of the market, leading the

market to “tip” and raising significant barriers to entry. Gig companies in concentrated markets

may be more likely to have and exert market power over gig workers or engage in

anticompetitive unilateral or coordinated conduct. Such conduct may eliminate or further weaken

competition among existing gig companies for workers’ services or prevent new gig companies

from getting off the ground or being able to enter the market. The resulting loss in competition

may enable gig companies to suppress wages below competitive rates, reduce job quality, or

impose onerous terms on gig workers.26 In the absence of robust competition among gig

companies, unfair and deceptive practices by one platform can proliferate across the labor

market, creating a race to the bottom that participants in the gig economy, and especially gig

workers, have little ability to avoid.

III.

FTC Enforcement Priorities

The FTC plays a vital role in addressing these and other challenges facing gig workers,

including practices directed toward customers, workers, and honest businesses. As the only

federal agency dedicated to enforcing consumer protection and competition laws in broad sectors

See, e.g., Exec. Order No. 14,036, Promoting Competition in the American Economy, § 1, 86 Fed. Reg. 36,987,

36,987 (July 14, 2021); U.S. Dep’t of the Treasury, The State of Labor Market Competition, at i.

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of the economy, the FTC examines unlawful business practices and harms to market participants

holistically, complementing the efforts of other enforcement agencies with jurisdiction in this

space. This integrated approach to investigating unfair, deceptive, and anticompetitive conduct is

especially appropriate for the gig economy, where law violations often have cross-cutting causes

and effects.

While online gig platforms may seem novel, traditional legal principles of consumer

protection and competition apply.27 And the manifold protections enforced by the Commission

do not turn on how gig companies choose to classify working consumers.28 The Commission will

use the full portfolio of laws it enforces to prevent unfair, deceptive, anticompetitive, and

otherwise unlawful practices affecting gig workers.

Holding Gig Companies Accountable for Their Claims and Conduct

Concerning Gig Work’s Costs & Benefits

Gig companies that classify their workers as independent contractors may seek to retain

control over their workforce while simultaneously shifting costs and risks onto workers. So

classified, workers may be deprived of the protections of an employment relationship to, for

example, insist on minimum pay and recordkeeping standards,29 understand what comprises an

hour of payable work,30 or share information about their income with coworkers to assess unfair

compensation practices or organize for higher compensation.31 A range of FTC authorities can

apply when gig companies seek to exploit this vulnerability by disclosing pay and costs in an

For example, the Commission regulates earnings claims made to gig workers just as it would in any other business

or money-making opportunity. See Advance Notice of Proposed Rulemaking: Deceptive or Unfair Earnings Claims,

87 Fed. Reg. 13,951, 13,953 & n.26 (Mar. 11, 2022) [hereinafter “Earnings Claims ANPRM”].

“The use of the word ‘consumer’” in the FTC Act “is to be read in its broadest sense.” S. Rep. No. 93–151, at 27

(1973); see, e.g., Decision & Order, Amazon.com, Dkt. No. C-4746 (FTC recovering $61.7 million in unpaid tips to

Amazon Flex drivers, regardless of the drivers’ employment classification); Compl. ¶ 5, Uber Techs., Dkt.

No. C-4662 (“Uber Drivers are consumers who use the [Uber] App to locate Riders in need of transportation.”).

See 29 U.S.C. §§ 206–07 (minimum pay and overtime), 211(c) (recordkeeping).

See id. § 203(o) (defining “[h]ours worked” for purposes of calculating minimum pay and overtime pay).

See id. § 157.

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unfair or deceptive manner. The Commission also recognizes that misleading claims about the

costs and benefits of gig work can impair fair competition among companies in the gig economy

and elsewhere.

Deceptive or Unfair Pay Practices. False, misleading, or unsubstantiated claims about

earnings may violate Section 5 of the FTC Act,32 the Franchise Rule, or the Business

Opportunity Rule,33 and can trigger civil penalties.34 Likewise, withholding money owed to

workers without consent can violate Section 5’s prohibition against unfairness.35 Gig companies

often advertise hourly pay to prospective workers or promise a specific amount or range of pay

to existing workers for completing a gig.36 Yet fewer than half of gig workers understand how

their pay is determined, and misleading or unsupported claims about their earnings can leave

workers in a financial bind.37 Deceptive earnings claims and opaque compensation criteria can

also impede competition by preventing workers from accurately comparing opportunities

presented by gig companies.

15 U.S.C. § 45. Unfortunately, the Commission’s ability to refund consumers for violations of Section 5 is

hampered following the U.S. Supreme Court’s decision in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341

(2021), which stripped the Commission of its most potent tool to recover money for consumers. Indeed, AMG would

have prevented recovery of more than $81 million in consumer redress obtained in two of the Commission’s recent

victories for gig workers. See Decision & Order, Amazon.com, Dkt. No. C-4746 (recovering $61.7 million for

Section 5 violations); Stipulated Order, FTC v. Uber Techs., Inc., Case No. 3:17-cv-261-JST (N.D. Cal. Jan. 19,

2017) (recovering $20 million for Section 5 violations).

16 C.F.R. pts. 436 (Franchise Rule), 437 (Business Opportunity Rule). Whether the Franchise Rule or the

Business Opportunity Rule applies to a particular gig arrangement requires a case-by-case factual analysis. See id.

§ 436.1(h) (defining a franchise); id. § 437.1(c) (defining a business opportunity). The Commission may seek civil

penalties and consumer redress from companies that violate FTC rules. See 15 U.S.C. §§ 45(m)(1)(A), 57b(a)–(b).

See Fed. Trade Comm’n, Press Release, FTC Puts Businesses on Notice That False Money-Making Claims Could

Lead to Big Penalties (Oct. 26, 2021); see also 15 U.S.C. § 45(m)(1)(B).

Cf. Decision & Order, Amazon.com, Dkt. No. C-4746 (requiring a gig company to obtain workers’ “express

informed consent” before changing how workers’ tips are distributed).

See, e.g., Compl. ¶¶ 21–22, Uber Techs., Case No. 3:17-cv-261-JST (FTC alleging that Uber made various hourly

earnings claims targeted to multiple U.S. cities that did not align with what drivers in those cities actually earned);

see also Compl. ¶¶ 30–34, Amazon.com, Dkt. No. C-4746 (alleging that Amazon promised that workers would keep

100% of their tips, but instead used tips to reduce workers’ base pay).

See Anderson et al., The State of Gig Work in 2021, at 35 (“Overall, 44% of people who have ever earned money

through online or delivery platforms say they at least somewhat understand how the companies that run these apps

or sites determine how much they get paid . . . .”); see also Zipperer et al., National Survey of Gig Workers, at 6–7

(describing high rates of financial hardship among gig workers).

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The Commission has initiated rulemaking proceedings to strengthen its ability to detect

and deter deceptive earnings claims and has sought comment on the prevalence of deceptive

earning claims relating to gig work.38 In the meantime, misleading earnings claims remain

prohibited by Section 5 of the FTC Act.39 Likewise, pursuant to the Franchise Rule or the

Business Opportunity Rule, gig companies that require new participants to make required

payments may need to disclose any claims they make about potential earnings and have a

reasonable basis for, and written materials on hand to support, those claims.40 The Commission

has also issued Notices of Penalty Offenses related to earnings claims and testimonials41 to place

gig companies, among others, on notice that the Commission is working to deter misleading

representations throughout the gig economy, including by seeking civil penalties where

appropriate.42

Undisclosed Costs or Terms of Work. By the same token, deceptive claims or

nondisclosures about startup costs, training fees, other expenses, or other material terms can

violate Section 5,43 and the failure to make required disclosures can violate the Franchise Rule or

Business Opportunity Rule.44 When a firm requires consumers to make one or more required

payments to sign up for a work opportunity, that arrangement may fall under the Franchise Rule

See Earnings Claims ANPRM, 87 Fed. Reg. at 13,955–56.

See id. at 13,951–52 (describing the FTC’s extensive history of prior enforcement actions against a wide variety

of companies offering employment and other work opportunities with misleading earnings claims).

See 16 C.F.R. § 436.5(s) (describing the disclosures that franchisors must make to franchisees about financial

performance); id. § 437.4 (explaining how sellers of business opportunities must substantiate any earnings claims

regarding the opportunity, including when claims are presented in the general media).

See Fed. Trade Comm’n, Notice of Penalty Offenses Concerning Money-Making Opportunities (Oct. 26, 2021);

Fed. Trade Comm’n, Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct Around Endorsements

and Testimonials (Oct. 26, 2021).

See FTC Press Release, FTC Puts Businesses on Notice That False Money-Making Claims Could Lead to Big

Penalties (announcing that Notices of Penalty Offenses were sent to more than 1,100 businesses and advising that

violating the Notices could result in civil penalties that now amount to $46,517 per violation, see 16 C.F.R.

§ 1.98(e)).

See, e.g., Compl. ¶¶ 31–33, 38, Uber Techs., Case No. 3:17-cv-261-JST (alleging that Uber violated Section 5 by

understating the price and overstating the advantages of its auto financing program for drivers).

See 16 C.F.R. §§ 436.2, 437.2.

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or the Business Opportunity Rule.45 The Rules require accurate, upfront disclosures—including

information about the franchise or business opportunity, other workers, and prior lawsuits—

before consumers make any commitment.46

Combating Unlawful Practices and Unlawful Constraints Imposed on Gig

Workers

Gig workers may lack key information about their working conditions, and can be subject

to onerous contract terms and arbitrary evaluation requirements. Increasingly, gig workers are

managed by algorithms, which use extensive data collected from workers and other consumers to

make important management decisions using undisclosed criteria. Multiple laws enforced by the

Commission may apply when these practices are deceptive, unfair, anticompetitive, or otherwise

unlawful.

Unfair or Deceptive Practices by an Automated Boss. Section 5 of the FTC Act

prohibits unfair or deceptive practices in any form, including practices involving artificial

intelligence (“AI”) tools or algorithm-based decision-making.47 In the gig economy, companies

may employ algorithms to govern how gigs are made available to workers, how workers are

paid, how worker performance is rated, and when workers are suspended or terminated from the

platform. Firms may deploy surveillance technology to monitor workers’ every move without

See id. § 436.1(h) (defining a franchise); id. § 437.1(c) (defining a business opportunity).

See id. §§ 436.2(a), 436.4, 436.5 (requiring franchisors to provide a disclosure document in business relationships

that qualify as franchises covered by the Franchise Rule); id. §§ 437.3, 437.4, apps. A–B (requiring a disclosure

document for business opportunities and providing templates).

Running these algorithms requires collecting troves of sensitive data from workers, which heightens the

importance of FTC rules governing data security, see, e.g., 16 C.F.R. pt. 314 (Safeguards Rule), and gig companies’

obligation under Section 5 to safeguard collected information in line with their promises, see Compl. ¶¶ 28–32, Uber

Techs., Dkt. No. C-4662 (alleging that, despite public representations, Uber failed to monitor internal access to

drivers’ personal information and failed to provide reasonable security against potential data breaches). Workers are

also entitled under the Fair Credit Reporting Act to know when a gig platform uses a background screening or other

consumer report to take an adverse action against them, whether through an algorithm or otherwise. See 15 U.S.C.

§ 1681m(a). If information in a consumer report results in a worker being denied the requested opportunity, the

consumer must receive notice that the denial was based on a consumer report and a chance to view the report and

request any needed corrections. See id.

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transparency about how it impacts worker pay or performance evaluation.48 Workers report

unexpected drops in their performance ratings,49 unexplained changes in their pay,50 assignment

of impossible or dangerous delivery routes,51 or other arbitrary evaluations that could lead to

wrongful terminations.52 Companies are responsible for fulfilling their promises to their workers,

even if they use automated management technologies.53 Gig companies that employ algorithmic

tools to govern their workforce should ensure that they do so legally.54

Unfair Contractual Terms & Restrictions on Mobility. Restrictive contract terms may

constitute unfair or deceptive acts and practices in violation of Section 5 of the FTC Act if they

unfairly harm workers, render a gig company’s representations misleading, or prevent fair

competition for workers. Gig companies often present workers with nonnegotiable contracts that

may include lopsided provisions.55 Such take-it-or-leave-it provisions may, for example, hinder

workers from seeking other jobs during or after their time with a company, bar negative reviews,

See Advance Notice of Proposed Rulemaking: Trade Regulation Rule on Commercial Surveillance and Data

Security, 87 Fed. Reg. 51,273, 51,274 (Aug. 22, 2022) (noting the lack of transparency and informed consent around

increasingly extensive data collected from workers).

See, e.g., Soper, Fired by Bot at Amazon: “It’s You Against the Machine”; see also Rahman, The Invisible Cage,

66 Admin. Sci. Q. at 964; Pierre Bérastégui, Eur. Trade Union Inst., Exposure to Psychosocial Risk Factors in the

Gig Economy: A Systemic Review, at 47 (Jan. 2021) (noting that workers “are unsure about what data is gathered

from them and how it is used to compute wages and ratings,” leading to “frustration about not being rated on the

basis of ‘true’ performance”).

See, e.g., Alina Selyukh, At the Mercy of an App: Workers Feel the Instacart Squeeze, NPR (Nov. 25, 2019, 9:15

AM) (reporting that multiple gig platforms use “ever-changing pay structures” governed by algorithms); see also

Calacci, Bargaining with the Algorithm (describing a gig platform’s pay structure as a “black-box algorithm”).

See Eve Livingston, Food Delivery Drivers Fired After “Cut Price” GPS App Sent Them on “Impossible” Routes,

Guardian (July 2, 2022, 2:39 PM EDT).

See, e.g., Madhumita Murgia, Workers Demand Gig Economy Companies Explain Their Algorithms, Fin. Times

(Dec. 12, 2021).

See Compl. ¶ 32, Amazon.com, Dkt. No. C-4746 (alleging that Amazon Flex changed the algorithm governing

delivery drivers’ base pay, allowing Amazon to capture a greater portion of customer tips than it had disclosed).

Elisa Jillson, Fed. Trade Comm’n, Aiming for Truth, Fairness, and Equity in Your Company’s Use of AI (Apr. 19,

2021).

See U.S. Dep’t of the Treasury, The State of Labor Market Competition, at 14, 18 (noting that “restrictive

employment agreements can both result from and reinforce employer market power,” while other clauses can reduce

workers’ options “within the legal system”); Fed. Trade Comm’n, Strategic Plan for Fiscal Years 2022-2026, at 19

(Aug. 26, 2022) (announcing FTC interest in “non-compete and other potentially unfair contractual terms resulting

from power asymmetries between workers and employers”).

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or waive fundamental protections.56 If those provisions cause substantial injury that is not

reasonably avoidable and not outweighed by countervailing benefits, they may constitute an

unfair act or practice under Section 5(n) of the FTC Act.57 The Commission has used its

unfairness authority to prohibit certain one-sided clauses in credit contracts,58 to stop abusive use

of a one-sided clause allowing a financing entity to obtain uncontested judgments against small

businesses,59 to prevent contractual clauses suppressing negative consumer reviews,60 and to

invalidate illusory choice-of-law and venue-selection clauses that, in very fine print, left the

forum state undetermined.61 The Commission will continue to scrutinize potentially unfair terms

companies impose on gig workers or other consumers.

Certain unfair terms may also implicate the antitrust laws and raise concerns about unfair

methods of competition with respect to gig labor markets. The Commission will continue to

investigate the effects on workers and competition of any non-compete clauses in the gig

economy. Non-compete provisions may undermine free and fair labor markets by restricting

workers’ ability to obtain competitive offers for their services from existing companies, resulting

in lower wages and degraded working conditions.62 These provisions may also raise barriers to

See, e.g., Exec. Order No. 14,036, 86 Fed. Reg. at 36,987–88; FTC v. Roca Labs, Inc., 345 F. Supp. 3d 1375,

1393–97 (M.D. Fla. 2018); U.S. Dep’t of the Treasury, The State of Labor Market Competition, at 18.

15 U.S.C. § 45(n); FTC Unfairness Policy Statement, Letter from the FTC to Hon. Wendell Ford & Hon. John

Danforth, S. Comm. on Commerce, Sci. & Transp. (Dec. 17, 1980), appended to In re Int’l Harvester Co., 104

F.T.C. 949, 1070 (1984).

See FTC Trade Regulation Rule; Credit Practices, 49 Fed. Reg. 7,740, 7,744 (Mar. 1, 1984) (codified at 16 C.F.R.

pt. 444).

See 1st Am. Compl. ¶¶ 24–28, 39–41, FTC v. RCG Advances, LLC, Case No. 20-CV-4432 (S.D.N.Y. June 10,

2021).

See Roca Labs, 345 F. Supp. 3d at 1393; see also 15 U.S.C. § 45b; FTC v. World Patent Mktg., Inc., Case

No. 17-cv-20848-GAYLES, 2017 WL 3508639, at *15–16 (S.D. Fla. Aug. 16, 2017) (preliminarily enjoining a

defendant’s “consumer complaint suppression practices” as unfair).

See Compl. ¶¶ 18, 32–33, FTC v. NorVergence, Inc., Civil Action No. 04-5414 (D.N.J. Nov. 4, 2004).

See Exec. Order No. 14,036, 86 Fed. Reg. at 36,987 (noting that non-compete agreements can “mak[e] it harder

for workers to bargain for higher wages and better work conditions”); Matthew S. Johnson et al., The Labor Market

Effects of Legal Restrictions on Worker Mobility, at 2 (Oct. 12, 2021) (“We find that increases in [non-compete

clauses] decrease workers’ earnings and mobility.”); Evan P. Starr et al., Noncompetes in the U.S. Labor Force, 64

J.L. & Econ. 53, 81 (2021) (finding that non-compete provisions imposed in employment contracts “appear to be

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entry for new companies.63 Such provisions may violate Section 1 of the Sherman Act64 and the

FTC Act’s prohibition on unfair methods of competition.65 The Commission will also investigate

contractual limitations, such as liquidated damages clauses66 or nondisclosure agreements,67 that

may be excessive or overbroad and effectively operate as non-compete provisions. Moreover, the

Commission recognizes that companies may be able to effectuate the same harmful results

through imposing a variety of other restraints that restrict worker mobility.

Policing Unfair Methods of Competition That Harm Gig Workers

Anticompetitive mergers or practices may prevent gig workers from obtaining

competitive compensation or more favorable terms or working conditions. Such conduct may

also lead to higher prices or fees, diminished service, or less favorable contractual terms for

customers or businesses. Firms that undertake such conduct may run afoul of the antitrust laws,

and the Commission will focus its resources on investigating potential unlawful conduct by or

linked to lower job satisfaction” and do not correlate with greater pay or training); see also FTC Comm’r Noah J.

Phillips, Prepared Remarks at FTC Workshop on Non-compete Clauses in the Workplace, at 2–3 (Jan. 9, 2020)

(“When you can exit a job, you have greater leverage to improve the terms of your employment.”); FTC Comm’r

Rebecca Kelly Slaughter, Prepared Remarks at FTC Workshop on Non-Compete Clauses in the Workplace, at 5

(Jan. 9, 2020) (prioritizing investigation into “potential restraints that may be inhibiting competition for labor” and

noting that non-compete clauses can “affect people’s livelihoods and ability to earn a living”).

See, e.g., Matt Marx & Lee Fleming, Non-Compete Agreements: Barriers to Entry … and Exit?, 12 Innovation

Pol’y & Econ. 39, 51 (2012) (“Non-competes assist in preserving the firm’s competitive position by discouraging

entry.”); see also U.S. Dep’t of the Treasury, The State of Labor Market Competition, at 16 (“Lower worker

mobility increases recruitment costs for all firms as fewer workers are seeking to switch jobs than otherwise would,

absent the post-employment restrictive employment agreement.”).

15 U.S.C. § 1.

See, e.g., Statement of Interest of the United States at 6, Beck v. Pickert Med. Grp., P.C., Case No. CV21-02092

(Nev. Dist. Ct. Feb. 25, 2022) (“Non-compete agreements between employers and employees constitute concerted

action properly subject to scrutiny under Section 1 of the Sherman Act.”); see also U.S. Dep’t of the Treasury, The

State of Labor Market Competition, at 16 (“[R]estrictive employment agreements can both result from and reinforce

employer market power.”).

See, e.g., Wegmann v. London, 648 F.2d 1072, 1073 (5th Cir. Unit A 1981) (“The contract clauses to which

plaintiff object are, given the prohibitive magnitudes of liquidated damages they specify, de facto covenants not to

compete . . . .”).

See, e.g., Brown v. TGS Mgmt. Co., 271 Cal. Rptr. 3d 303, 319 (Cal. Ct. App. 2020) (“Collectively, these overly

restrictive [confidentiality] provisions operate as a de facto noncompete provision . . . .”).

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among gig companies, from wage-fixing to the unlawful consolidation or exercise of market

power.68

Wage-Fixing & Coordination. The Commission will investigate evidence of agreements

between gig companies to fix wages, benefits, fees, or other terms relating to gig work that

should be subject to competition.69 The Commission will also investigate evidence of nopoaching agreements, where companies agree not to solicit or hire each other’s workers, and

agreements to share competitively sensitive information that might suppress compensation for

workers.70 The Commission may further examine any use by gig companies of technologyenabled methods of collusion or exclusion. Agreements among gig companies that

anticompetitively harm workers violate Section 1 of the Sherman Act and may be challenged by

the Commission directly, and, in the case of wage-fixing or no-poaching agreements, may be

referred to the U.S. Department of Justice (“DOJ”) for potential criminal prosecution.71

Market Consolidation & Monopolization. The Commission will review and, as

appropriate, challenge mergers and other combinations of gig companies that may substantially

At least one court has ruled that the labor-dispute exemption under Section 1 of the Sherman Act applies to

workers regardless of whether they are classified as employees or independent contractors. See Confederación

Hípica de P.R., Inc. v. Confederación de Jinetes Puertorriqueños, 30 F.4th 306, 314–15 (1st Cir.

2022). Commission enforcement therefore will not focus on organizing efforts undertaken by gig workers. Despite

past efforts, the Commission will also refrain from other enforcement or policy efforts that might undermine the

ability of gig workers to organize. See, e.g., Brief for the United States & FTC as Amici Curiae Supporting

Appellant at 2, 8, Chamber of Commerce v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-35640), 2017 WL

5166667, at *2, *8 (arguing that the state action doctrine did not apply to shield a municipal ordinance allowing

drivers to organize from antitrust scrutiny).

See, e.g., Compl. ¶¶ 11–27, In re Your Therapy Source, LLC, Dkt. No. C-4689 (FTC July 31, 2018) (alleging an

agreement and invitation to collude among staffing agencies to lower payments to their independent contractors).

See U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidance for Human Resource Professionals, at 4–5

(“[P]eriodic exchange of current wage information in an industry with few employers could establish an antitrust

violation because, for example, the data exchange has decreased or is likely to decrease compensation.”); U.S. Dep’t

of Justice & Fed. Trade Comm’n, Antitrust Guidelines for Collaborations Among Competitors, at 15 (Apr. 2000)

(“[T]he sharing of information related to a market in which the collaboration operates or in which the participants

are actual or potential competitors may increase the likelihood of collusion on matters such as price, output, or other

competitively sensitive variables.”).

See U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidance for Human Resource Professionals, at 3–4

(explaining that naked wage-fixing agreements are per se illegal and DOJ intends to proceed criminally against

naked wage-fixing).

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lessen competition between or among gig companies.72 The Commission will also investigate

any exclusionary or predatory conduct by dominant firms that may unlawfully create or maintain

a monopoly (a dominant seller) or a monopsony (a dominant buyer or employer), resulting in

harm to customers or reduced compensation or poorer working conditions for gig workers. Such

conduct may include the use of exclusive contracting, predatory pricing, or other forms of

monopolization, and may be subject to legal action by the Commission as a violation of

Section 2 of the Sherman Act.73

IV.

Policy, Partnerships, & Outreach

In addition to robust enforcement, the Commission addresses issues in the gig economy

through policy work, outreach, and partnerships with other law enforcement agencies.

Governmental Collaboration. The FTC’s Regional Offices have spearheaded the

agency’s efforts to identify law violations, develop policy, and collaborate with government

partners in this space. The Commission is also partnering with other agencies on broad labor

initiatives and individual enforcement actions. In December 2021, the FTC and DOJ hosted a

workshop to promote competitive labor markets and worker mobility.74 And in July 2022, the

FTC and National Labor Relations Board signed a Memorandum of Understanding that deepens

the agencies’ collaboration around issues facing gig workers through sharing information,

conducting cross-training for staff at each agency, and partnering on investigative efforts within

each agency’s authority.75

See Exec. Order No. 14,036, § 1, 86 Fed. Reg. at 36,988 (directing federal attention “to enforce the antitrust laws

to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly

and monopsony—especially as these issues arise in labor markets”).

15 U.S.C. § 2.

Fed. Trade Comm’n, Making Competition Work: Promotion Competition in Labor Markets (Dec. 6–7, 2021).

Memorandum of Understanding Between the Federal Trade Commission (FTC) and the National Labor Relations

Board (NLRB) Regarding Information Sharing, Cross-Agency Training, and Outreach in Areas of Common

Regulatory Interest (July 19, 2022).

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Ensuring Equity. The FTC’s Equity Action Plan reaffirms the Commission’s

commitment to protecting the public, including meaningfully addressing barriers that historically

underserved communities face in participating in and benefiting from a fair and thriving

marketplace.76 As outlined in the Equity Action Plan, the FTC’s Bureau of Consumer Protection

is focusing resources to aid staff in assessing whether certain communities are disproportionately

affected or targeted by unfair or deceptive practices, including in the gig economy.77 Similarly,

the Equity Action Plan outlines the FTC’s Bureau of Competition’s commitment to consider

more explicitly the impact of mergers and anticompetitive conduct on workers, particularly lowwage workers.78 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.

Public Participation. The Commission continues to seek input from consumer and labor

groups, industry, and experts on challenges facing gig workers through monthly Open

Commission Meetings79 as well as targeted workshops like those on dark patterns80 and labormarket competition.81 Gig workers harmed by unlawful practices should continue to file reports

at ReportFraud.ftc.gov so the Commission and other governmental agencies can promptly

identify and take action against deceptive, unfair, and otherwise unlawful acts and practices.

See Fed. Trade Comm’n, Federal Trade Commission (FTC) Equity Action Plan, at 1 (Apr. 14, 2022)

(promulgated pursuant to Executive Order No. 13985, Advancing Racial Equity and Support for Underserved

Communities Through the Federal Government, 86 Fed. Reg. 7,009 (Jan. 25, 2021)).

See id. at 4–5.

See id. at 6–7.

See Fed. Trade Comm’n, Open Meetings.

Fed. Trade Comm’n, Bringing Dark Patterns to Light: An FTC Workshop (Apr. 29, 2021) (exploring how user

interfaces can, intentionally or not, obscure, subvert, or impair consumer autonomy, decision-making, or choice).

FTC Workshop, Making Competition Work (exploring recent developments at the intersection of antitrust and

labor, as well as implications for efforts to protect and empower workers through enforcement and rulemaking).

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Conclusion

Successfully addressing the range of consumer protection and competition challenges

associated with the gig economy requires innovative and collaborative approaches by

governmental enforcers that are responsive to the public’s concerns and input. The Commission

will continue to capitalize on its broad jurisdiction and interdisciplinary expertise to combat

unlawful practices that harm gig workers.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.