How Antitrust Law Supports Workers’ Rights

Background: In April 2024, the Federal Trade Commission issued a final rule banning noncompete provisions in nearly all work arrangements.¹ The FTC found that noncompetes²—contract terms that prevent workers from working for a competitor company during or after their current employment—are unfair trade practices under the Federal Trade Commission Act. This post explores other ways that antitrust law can support workers’ rights.

On May 13, I participated in a panel hosted by the NYU Wagner Labor Initiative—“Building Worker Power as Anti-Monopoly: The Next Phase of the Modern Antitrust Agenda”—that explored various ways that robust antitrust enforcement can bolster workers’ rights.

As I explained during the panel, employers often structure work in ways that degrade working conditions by passing the risks and costs of their business onto their workers, while increasing profits for investors and CEOs. Some of these work structures—such as misclassifying workers as independent contractors even though the workers are not running their own businesses, and hiring workers through labor intermediaries like temp agencies—allow businesses to avoid responsibility to the workers powering their businesses. They also exacerbate occupational segregation and the racial wealth gap, because people of color and immigrants are more likely to be hired into sham independent contractor or underpaid temp jobs.

Worker Misclassification as an Unfair Trade Practice

So, what does this have to do with antitrust law? These dubious work structures make it more difficult for honest employers to compete. Among other things, law-abiding employers:

• pay payroll taxes for their employees that fund critical social insurance programs, such as unemployment insurance and Social Security;
• provide workers’ compensation; and
• adhere to basic labor standards, like minimum wage and overtime pay laws.

By contrast, employers who misclassify their workers shirk these obligations, creating a race to the bottom on labor standards. FTC Commissioner Alvaro Bedoya has spoken about the anticompetitive effects of misclassification and believes it may be considered an unfair trade practice under the FTC Act.

Independent contractor misclassification makes it more difficult for honest employers to compete and should be considered an unfair trade practice.

Anticompetitive Practices on ‘Gig Work’ Platforms

Antitrust law also highlights the contradictions in digital labor platform work—otherwise known as “app-based” or “gig” work. Digital labor platforms like Uber, Lyft, and DoorDash say their workers are independent contractors all running their own independent businesses, yet the digital labor platforms control key conditions of the work, including:

• which assignments workers are offered,
• the prices consumers pay for the workers’ services, and
• the wages workers get paid.

If these workers were truly independent businesses, shouldn’t this wage- and price-fixing and other coordination implicate antitrust law?

Digital labor platforms want to have it both ways. As Sandeep Vaheesan and Brian Callaci at Open Markets Institute have said, they want control without responsibility. They want control over the workers doing the central work of their businesses, without being responsible to these workers for complying with wage and hour laws, health and safety laws, and paying into social insurance funds. If the digital labor platforms want to call their workers independent contractors, then antitrust law should require them to truly treat them as independent and protect these independent contractors from violations of their autonomy.

FTC Investigates Possible Data Abuse

Digital labor platforms also collect enormous amounts of data from workers and consumers, and they use this data to refine their operations, including potentially setting individualized wage rates and prices based on that data—what Professor Veena Dubal has called algorithmic wage discrimination. The FTC, which recently announced an investigation into how companies are using consumers’ personal data to set individualized prices, has recognized the unchecked power of corporations in this area and the significant risk of abuse. The FTC should expand this investigation to digital labor platforms that are collecting the data of both consumers and workers.

Remedying a Power Imbalance

Unchecked corporate power creates a profound imbalance of power between corporations and workers that can be used to subvert worker power and workers’ rights. Antitrust laws can and should play a role in leveling the playing field for working people.

Footnotes

1. Business and industry groups filed a legal challenge to the rule in federal court. As per the FTC website, “On August 20, a district court issued an order stopping the FTC from enforcing the rule on September 4. The FTC is considering an appeal. The decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.”

2. These exploitative contract terms depress wages, reduce job mobility, and exacerbate racial and gender wealth gaps for women and people of color.