FTC sends warning to Uber, Lyft, DoorDash and other ‘gig-work’ companies

The Federal Trade Commission announced Thursday that it plans to eliminate the exploitation of temporary job workers, which the agency said deserve protection regardless of their workers’ classification.

The commission adopted a policy statement detailing the issues that workers in temporary jobs face — including deceptive claims about their wages and hours, unfair contract terms and more — and what the FTC plans to do about it. Although the commission didn’t name any companies, the message is clear: It plans to build a mainstay for a “gig-work” like Uber Technologies Inc. UBER,
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Lyft Inc. LYFT,
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DoorDash Inc. DASH,
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And Instacart is responsible for the promises they make to potential workers and how they treat the taxi drivers and delivery workers who use their platforms.

Gig Companies consider their workers independent contractors and have struggled to continue to do so. President Joe Biden campaigned to address worker misclassification; This is the first measure under his administration that promises specifically to enforce the operating companies’ treatment of their workers.

In depth: the legal definition of “temporary work” is still forgotten

“No matter how gig companies choose to classify, temporary job workers are consumers entitled to protection under the laws we enforce,” Samuel Levine, director of the Federal Trade Commission’s Office of Consumer Protection, said in a statement.

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

“A lot of people have been tempted for far too long to be busy, with the promise of entrepreneurship that didn’t exist,” Murphy said.

Citing Federal Reserve statistics, the commission said in its 17-page policy statement that 16% of Americans now make money through an “online gig platform,” and that the temporary work economy “touches nearly every aspect of American life, from food delivery to Transfer to home services. The Federal Trade Commission (FTC) also cited its own report showing temporary job workers are disproportionately people of color — Hispanic, black, and Asian adults make up 69% of temporary job workers, according to the report, with only 12% of workers identified on They are white.

Read also: Bill to enshrine urgent work in federal labor law “would virtually do away with minimum wage and overtime compensation”

According to the policy statement, the FTC will focus on temporary economy issues that include deception or misrepresentation about how much workers can earn and how much flexibility they actually have, as well as the responsibilities of workers versus companies. The commission noted that temporary service firms control workers in temporary jobs through algorithms hidden in a system that promotes an “imbalance of power,” leaving workers “more vulnerable to harm from unfair, deceptive and anti-competitive practices and likely to amplify such damages when they occur.” .”

The commission said it plans to complement the work other federal agencies are doing by examining illegal business practices and “harm to market participants.” It stated that it had already begun rule-making procedures regarding deceptive wage claims, and last fall it issued related notices to companies such as Amazon.com Inc. AMZN,
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which uses the gig-work business 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 of dollars in fines if they misrepresent wages, FTC official warns

Flex Association, a trade group representing Uber, Lyft, DoorDash, Instacart, Grubhub, Gopuff, HopSkipDrive, and Shipt, owned by Target Corp. TGT,
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She said she was present during Thursday’s open meeting, where the Federal Trade Commission voted 3-2 to adopt the policy statement.

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

Uber shares fell in late afternoon trading, when the Federal Trade Commission announcement was made, but closed 0.2% higher at $33.13 before dropping slightly more in after-hours trading. Lyft shares ended the session 0.7% lower at $16.99, and DoorDash stock fell 0.2% to $64.41.

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