When it comes to the FTC’s comprehensive effort to reshape business in America, the agency’s recent public efforts have largely focused on merger regulation, making its proceedings more accessible to the public and policing pandemic predators. Yet, in the background, the FTC has been quietly laying the foundation for an unprecedented attack on long-standing worker-classification norms, which could harm millions of Americans and thousands of small and large businesses that depend on independent contractors. Specifically, the FTC is preparing to unilaterally limit who qualifies as an independent contractor and prosecute violations under Section 5 of the FTC Act.

At present, the Department of Labor, National Labor Relations Board and U.S. Treasury (through the Internal Revenue Code) enforce employee classification. These agencies, pursuant to express statutory grants of authority, remedy misclassification through enforcement action. But according to labor and antitrust activists, including panelists at the FTC’s “Workshop on Promoting Competition in Labor Markets,” the current classification tests used by those other agencies inadequately protect workers. Rather than seeking to remedy this alleged “deficiency” before the labor agencies, activist groups have urged the FTC (an antitrust and consumer protection agency) to adopt its own, more restrictive, classification test and challenge “misclassification” as an unfair method of competition under Section 5 of the FTC Act, a broad statute that may, in principle, be used to stop all manner of anticompetitive business tactics.

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