Senior Vice President, Employment Policy Division, U.S. Chamber of Commerce
February 08, 2024
On February 2, Federal Trade Commission (FTC) Commissioner Alvaro Bedoya gave a speech in which he argued the agency should wade into the complex field of employee classification. The fact that multiple other agencies, such as the Department of Labor (DOL), the National Labor Relations Board (NLRB), and the Internal Revenue Service (IRS), have explicit authority over classification seems no deterrent to Commissioner Bedoya. In fact, he stated that “our agencies’ authorities are complementary and not duplicative.” But there’s a big problem here — the FTC has no history of, or expertise in, determining whether misclassification has occurred.
Employee classification is an important and, at times, tricky issue. Workers who are classified as independent contractors generally have the flexibility to work when, how, and where they want. However, they do not receive benefits provided to individuals classified as “employees,” such as overtime or minimum wage. Likewise, they pay their own employment taxes and are not covered by the National Labor Relations Act. Companies make good faith efforts to distinguish employees from contractors following a series of complicated tests prescribed by DOL, the NLRB, and the IRS.
Workers and businesses don’t need the FTC injecting itself into this already heavily regulated space. But Commissioner Bedoya seems to believe that the FTC can “stop unfair practices in their incipiency, before harms to workers and other market actors are cemented.” In other words, before any of the agencies with responsibility for determining worker status have even investigated. Such a role envisions the FTC as either supplanting, or at a minimum duplicating, the role of the DOL, NLRB, and IRS.
In his remarks, Commissioner Bedoya cites several examples of what he considers workers who were misclassified. And judging by the facts he cites, those workers likely were. In this case, one of the three aforementioned agencies has rules in place to make that determination and issue a complaint against the offenders. Furthermore, those agencies have far more powerful remedies at their disposal than the FTC to address misclassification, especially willful misclassification.
Congress has passed numerous laws to deal with classification questions and assigned specific agencies to hold businesses accountable where needed. The FTC was not among them. The FTC’s agenda is already overreaching in lanes that are actually within its jurisdiction. It doesn’t need to go looking for other work, especially in areas where it has no experience and no expertise.
About the authors
Spencer oversees the Chamber’s work on immigration, retirement security, traditional labor relations, human trafficking, wage hour and worker safety issues, EEOC matters, and state labor and employment law.