Will FTC Consider Misclassification Of Workers An Unfair Method Of Competition?

The Federal Trade Commission (FTC) is signaling its intent to get further involved in employment practices after its activity of the last year and a half in proposing a ban on noncompete clauses in employment contracts and signing a memorandum of understanding with the U.S. Department of Labor (DOL) to bolster the FTC's efforts to promote competitive U.S. labor markets.

Early this month, Commissioner Alvaro Bedoya focused his keynote speech at Global Competition Review: Law Leaders Global Summit 2024 on the competitive effects of misclassification of employees as independent contractors. Commissioner Bedoya indicated his belief that the FTC should be investigating these practices as an "unfair method of competition" under the FTC Act. In his speech, Bedoya highlighted two competitive concerns with employee misclassification. First, that businesses that violate labor and employment laws get an unfair competitive advantage and are able to undercut their competitors.