FTC and NLRB Announce Interagency Cooperation in the “Gig Economy”

            On July 19, 2022, the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) signed a four-page Memorandum of Understanding (MOU) regarding information sharing, cross-agency training, and outreach in areas of common regulatory interest, focusing on the “gig economy.” The agencies identified the following areas of interest:

Issues of common regulatory interest include labor market developments relating to the “gig economy” and other alternative work arrangements; claims and disclosures about earnings and costs associated with gig and other work; the imposition of one-sided and restrictive contract provisions, such as noncompete and nondisclosure provisions; the extent and impact of labor market concentration; the impact of algorithmic decision-making on workers; the ability of workers to act collectively; and the classification and treatment of workers.1

Although the MOU identifies information-sharing, training, and outreach as its three goals, the document deals primarily with the sharing of “Nonpublic Information” between the FTC and NLRB in furtherance of their stated shared goals.

            The MOU defines “Nonpublic Information” as “all information in any format (including written, oral, or electronic) shared pursuant to this MOU unless the Providing Party [the agency providing the information] expressly consents or designates the information as publicly available.”2 The MOU does not expressly state whether the Nonpublic Information is information gathered by either agency as part of its target investigations. Existing FTC rules, however, permit the sharing of information gathered from submitters in investigations with federal and state agencies for both law enforcement and non-law enforcement purposes, without the notice to or consent from the submitter.3 This MOU appears to streamline the interagency process for sharing this information.

            Companies that or individuals who may have submitted information to one agency are limited, under this MOU, from obtaining information about whether their Nonpublic Information has been shared with the other. The MOU “does not confer upon any third party any right and specifically does not confer on any third party the ability directly or indirectly to obtain, suppress, or exclude any information shared pursuant to this MOU, or to challenge a request under this MOU.”4 And the agency receiving information under the MOU (the “Receiving Party”) may not disclose that fact to any third-party without the consent of the Providing Party.5 The Receiving Party must refer any Freedom of Information Act request regarding the Nonpublic Information in question to the Providing Party for response.6 If any request for disclosure of Nonpublic Information is made in the course of a judicial proceeding (e.g., subpoenas or court orders), the Receiving Party will consent to the Providing Party’s application to intervene in the judicial proceeding in question.7

            This MOU is the latest effort in the federal government’s expansion of antitrust enforcement into the labor market, from its traditional concern with consumer pricing. On April 13, 2020, the FTC and the United States Department of Justice (DOJ) released joint guidance on the investigation and prosecution of wage-fixing and other anticompetitive agreements between employers, staffing agencies, and recruiters in the wake of the COVID-19 pandemic. A July 9, 2021 Executive Order on Promoting Competition in the American Economy took an even broader sweep in addressing market consolidation that is “making it harder for workers to bargain for higher wages and better work conditions.”8 That executive order explicitly mentioned cooperation between the FTC and DOJ.9 It also created a White House Competition Council consisting of nine agency heads; the NLRB was not among them.10 The executive order takes what it calls a “whole-of-government-approach . . . to address overconcentration, monopolization, and unfair competition in the American economy.” Those efforts have included the FTC’s prohibition on the enforcement of non-competes, as a condition to approving mergers and acquisitions, and criminal prosecutions by the DOJ for alleged wage-fixing conspiracies. The new MOU and its express mission statement bring the NLRB into the fold of the Biden administration’s concerted emphasis on antitrust enforcement in the labor markets.

            The MOU also comes at a time when the current membership of the NLRB has invited amicus briefs on the continued viability of SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019), which had reinstated the focus on “entrepreneurial opportunity” in the common-law agency test for determining whether a worker is properly classified as an employee or independent contractor. SuperShuttle reversed the NLRB’s decision in FedEx Home Delivery, 361 NLRB No. 610 (2014), enf. denied, 849 F.3d 1123 (D.C. Cir. 2017), which purported to look at actual, rather than theoretical, entrepreneurial opportunities available to workers classified as independent contractors. The practical effect of reverting to the FedEx Home Delivery standard would be to constrain companies’ abilities to structure their labor relationships with independent service providers. For a more in-depth review of these NLRB decisions, see Littler’s prior coverage on this subject.

            Taken in the context of these developments, the MOU suggests that gig-economy companies investigated by either agency should expect that information submitted to one agency may be scrutinized by both. Special attention should be paid to service agreements that could be read to restrict independent contractors’ freedom to contract with rival platforms. Businesses should bear in mind that non-compete provisions in such agreements may be construed as evidence that an individual is an employee rather than an independent contractor, particularly if the service provided does not involve access to the company’s confidential information. Companies should work with knowledgeable counsel to ensure that any customer non-solicitation provisions are tailored to address customer privacy and safety, legitimate proprietary rights, and the improper use of company platforms.

            Other areas of interests identified by the MOU raise novel enforcement issues as applied to independent contractors, including: “claims and disclosures about earnings and costs associated with gig and other work;” “the impact of algorithmic decision-making on workers;” and the “ability of workers to act collectively.” Close future cooperation between the FTC and the NLRB raises the potential that an agency finding of an employment relationship may be made in conjunction with an agency finding that gig-economy companies are infringing on worker rights in these areas. Companies are advised to consult with experienced counsel in determining options to protect legitimate business needs while preserving the independent nature of individual service providers with respect to each one of these areas of interests.

See Footnotes

1 MOU ¶ 3.

2 MOU ¶ 8.

3 16 C.F.R. §§ 4.10(d), 4.11(c)-(d).

4 MOU ¶ 5.

5 MOU ¶ 10.

6 MOU ¶ 11(a).

7 MOU ¶ 11(b)(ii).

8 Executive Order § 1.

9 Id. § 3.

10 Id. § 4.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.