FTC issues warning to Uber, Lyft, DoorDash and other “gig-work” companies
The Federal Trade Commission announced Thursday that it plans to crack down on the exploitation of gig workers, who the agency said are entitled to protections regardless of their worker classification.
The commission adopted a policy statement outlining issues facing gig workers — including misleading claims about wages and hours, unfair contract terms and more — and what the FTC plans to do about it. Although the commission did not name any companies, the message is clear: It plans to hold “gig-work” mainstays such as Uber Technologies Inc. UBER,
Lyft Inc. LYFT,
DoorDash Inc. DASH,
and Instacart responsible for the promises they make to potential workers and how they treat the drivers and delivery workers who use their platforms.
Gig companies consider their workers independent contractors and have fought to keep doing so. President Joe Biden campaigned to address worker misclassification; this is the first act under his administration that specifically promises enforcement of gaming companies’ treatment of their workers.
Elaborating: The legal definition of ‘gig work’ is still in limbo
“Regardless of how concert companies choose to classify them, concert workers are consumers entitled to protection under the laws we enforce,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.
Cherri Murphy, a former Lyft driver and an organizer with Gig Workers Rising in California, cheered the FTC announcement Thursday.
“Too many people for far too long have been lured into working gigs, with the promise of entrepreneurship that just isn’t there,” Murphy said.
Citing Federal Reserve statistics, the commission said in its 17-page policy statement that 16% of Americans now earn money through “an online gaming platform” and that the gig economy “touches nearly every aspect of American life, from food delivery to transportation to household services.” The FTC also cited its own report showing that gig workers are disproportionately of color — Latino, black and Asian adults make up 69% of gig workers, according to the report, with only 12% of workers identifying as white.
Also read: Bill to incorporate gigging into federal labor law ‘would effectively get rid of minimum wage and overtime compensation’
According to the policy statement, the FTC will focus on gig economy issues that include deception or misrepresentations about how much workers can earn and how much flexibility they actually have, as well as the responsibilities placed on workers versus the companies. The commission noted that concert companies control gig workers through algorithms, which are hidden in a system that promotes a “power imbalance”, leaving workers “more vulnerable to harm from unfair, deceptive and anti-competitive practices and likely to compound such harm when they occur”. “
The commission said it plans to complement the work other federal agencies are doing by investigating illegal business practices and “harm to market participants.” It mentioned that it has already begun rulemaking related to misleading wage claims, and last fall it issued related notices to companies such as Amazon.com Inc. AMZN,
which uses the gig-work model for some of its drivers, plus Uber, Lyft, DoorDash, Instacart and Grubhub.
For more: Uber, DoorDash, Lyft and Amazon could face billions in fines if they misrepresent wages, FTC official warns
The Flex Association, a trade group representing Uber, Lyft, DoorDash, Instacart, Grubhub, Gopuff, HopSkipDrive and Shipt, which is owned by Target Corp. TGT,
said it was present during Thursday’s open meeting, where the FTC voted 3-2 to adopt the policy statement.
“During today’s meeting, we heard from labor and advocacy groups emphasizing how app-based work provides flexibility and independence that allows millions of people to earn extra income on their terms,” said Kristin Sharp, CEO of Flex, in an emailed statement. “What is missing from the FTC’s policy statement is the perspective of the workers the agency seeks to protect.”
Uber shares fell in afternoon trading on the release of the FTC announcement, but still closed up 0.2% at $33.13 before falling a bit more in after-hours trading. Lyft shares ended the session down 0.7% at $16.99, and DoorDash shares fell 0.2% to $64.41.
