We recently discussed the various ways in which the Federal Trade Commission is focusing on worker protections in the gig economy. Though we didn't have a crystal ball to foresee it, the FTC announced that it is furthering those efforts through a new partnership with the National Labor Relations Board. On July 19, 2022, FTC Chair Lina Khan and NLRB General Counsel Jennifer Abruzzo signed a Memorandum of Understanding on behalf of their respective agencies to "promote interagency collaboration," to enhance enforcement efforts, and to "better root out practices that harm workers."
The NLRB is an independent federal agency that enforces federal labor regulations-namely, regulations prohibiting unfair labor practices-through investigations, administrative proceedings, and lawsuits. The NLRB also engages in rulemaking and conducts elections concerning the formation or decertification of unions. FTC Chair Khan stated that the agencies' agreement will advance their "shared mission to ensure that unlawful business practices aren't depriving workers of the pay, benefits, conditions, and dignity that they deserve."
Under the MOU, the FTC and NLRB can share information for law enforcement purposes and conduct cross-agency training and coordinated outreach and education. The agreement identifies areas of mutual interest for the two agencies, the primary interest being "labor market developments relating to the 'gig economy' and other alternative work arrangements." Other common interests include:
- Claims and disclosures about earnings and costs associated with gig work;
- Algorithmic decision-making on workers;
- One-sided and restrictive contract provisions;
- Labor market concentration;
- Collective bargaining; and
- Classification and treatment of workers.
The FTC sees this partnership as part of a broader initiative to use its full authority to protect workers from businesses that lower wages, reduce benefits, and maintain exploitative working conditions. One way it has done this is by scrutinizing mergers that it believes are harmful to competition in the labor market. Indeed, President Biden's July 2021 executive order encouraged the FTC, and several other federal agencies, to ramp up efforts to protect fair competition, calling for a "whole-of-government approach" to address overconcentration, monopolization, and unfair competition in the U.S. economy. The FTC has eagerly obliged.
Last year, the FTC ordered 7-Eleven to divest itself of hundreds of convenience stores that sell gasoline, to remedy competition concerns stemming from its acquisition of Marathon Petroleum Corporation's subsidiary, Speedway. Pertinent to the order was a provision that prohibited 7-Eleven from enforcing anticompetitive noncompete agreements against any employee who sought employment with the gasoline companies acquiring the divested convenience stores pursuant to the order. Similarly, the FTC also issued an order against DaVita, Inc., a dialysis services provider, forcing it to divest itself of certain dialysis clinics it had acquired and give them to a competing provider company. Pursuant to the order, DaVita was required to remove any impediments-including noncompete and confidentiality provisions-that might deter employees of the divested clinics from accepting employment with the competing provider.
The FTC claims it is prioritizing anticompetitive contract provisions that leave workers unable to negotiate freely over the terms and conditions of their employment, particularly in "take-it-or-leave-it" contexts. It recently held open Commission meetings to hear concerns about noncompete clauses and has solicited public comment on contracts that may harm fair competition.
The FTC's new partnership with NLRB furthers the policy trail it is blazing, with an increased focus on deceptive and unfair practices in labor markets, competition, and worker protections. This announcement serves as another reminder to gig companies that they are being closely monitored by the FTC and other regulators.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.