FTC issues warning to Uber, Lyft, DoorDash and other 'working in concert' companies

FTC issues warning to Uber, Lyft, DoorDash and other ‘working in concert’ companies

The Federal Trade Commission announced Thursday that it plans to crack down on the exploitation of gig workers, who the agency says are entitled to protection regardless of classification.

The commission adopted a policy statement that details issues construction workers face — including misleading claims about their wages and hours, unfair contract terms and more — and what the FTC plans to do about it. topic. While the commission didn’t mention any company by name, the message is clear: it plans to hold “work-on-demand” stalwarts like Uber Technologies Inc. UBER,
+0.24%,
Lyft Inc. LYFT,
-0.70%,
DoorDash Inc. DASH,
-0.19%
and Instacart accountable for the promises they make to potential workers and how they treat drivers and delivery people who use their platforms.

Gig companies view their workers as independent contractors and have fought to continue to do so. President Joe Biden has campaigned to fight misclassifications of workers; it is the first action under his administration that specifically promises the enforcement of gig business treatment of their workers.

In Depth: The Legal Definition of “Gig Work” Is Still in Limbo

“No matter how gig businesses choose to classify them, gig workers are consumers entitled to protections under the laws we enforce,” said Samuel Levine, director of the FTC’s Consumer Protection Bureau. , in a press release.

Cherri Murphy, a former Lyft driver and organizer of Gig Workers Rising in California, applauded the FTC’s announcement on Thursday.

“Too many people for too long have been lured into gig work, with the promise of an entrepreneurial spirit 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 make money from “an online gig platform” and that the gig economy is “affecting almost every aspect of American life, from food delivery to transportation.” to domestic services. The FTC also cited its own report which shows gig workers are disproportionately people of color — Latino, Black and Asian adults make up 69% of gig workers, the report said, with just 12% of workers s id as white.

Also read: Bill to enshrine gig work in federal labor law ‘would effectively eliminate minimum wage and overtime pay’

According to the policy statement, the FTC will focus on gig economy issues that include deception or misrepresentation about how much workers could earn and how much flexibility they actually have, as well as what liabilities are incumbent on the workers in relation to the companies. The commission noted that gig companies control gig workers through algorithms, which are hidden in a system that promotes an “imbalance of power”, leaving workers “more exposed to harm resulting from unfair, deceptive practices and anti-competitive and likely to amplify those harms when they occur”. .”

The commission said it plans to complement work done by other federal agencies by looking at illegal business practices and “harms to market participants.” He mentioned that he had already initiated rule-making proceedings related to misleading wage claims, and last fall he issued related notices to companies like Amazon.com Inc. AMZN,
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which uses the work-on-demand model for some of its drivers, as well as Uber, Lyft, DoorDash, Instacart and Grubhub.

Read more: Uber, DoorDash, Lyft and Amazon could face billions in fines if they mislead on wages, FTC official warns

Flex Association, a trade group representing Uber, Lyft, DoorDash, Instacart, Grubhub, Gopuff, HopSkipDrive and Shipt, which is owned by Target Corp. TGT,
-0.22%,
said he was present at Thursday’s town hall meeting, where the FTC voted 3-2 to adopt the policy statement.

“During today’s meeting, we heard from workers and advocacy groups highlighting how app-based work provides the flexibility and independence that allows millions of people to earn extra income. on their terms,” ​​Kristin Sharp, chief executive of Flex, said in an emailed statement. “What’s missing from the FTC’s policy statement is the perspective of those very workers the agency seeks to protect.”

Uber shares fell in late afternoon trading when the FTC announcement was released, but still closed 0.2% higher at $33.13 before plunging a little more in the exchanges after office hours. Shares of Lyft ended the session down 0.7% at $16.99, and shares of DoorDash slid 0.2% to $64.41.

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