July 19, 2022
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Employers in the gig economy or who otherwise have a primarily contractor-based workforce need to prepare for additional scrutiny from both the National Labor Relations Board (NLRB) and the Federal Trade Commission (FTC). The NLRB’s major area of focus is to protect workers’ rights to organize and bargain collectively. The FTC promotes fair competition by targeting anti-competitive conduct and deceptive practices. In a July 19, 2022 Memorandum of Understanding (MOU), both agencies claimed a shared interest in protecting workers against unfair methods of competition, unfair or deceptive acts or practices, and unfair labor practices. Specifically mentioned, among other points, were one-sided and restrictive contract provisions like noncompete and nondisclosure provisions as well as the classification and treatment of workers.
Employers with a large contractor workforce should prepare for additional risk surrounding misclassification. Having independent contractors enter into one-sided or restrictive noncompete and nondisclosure agreements may now not only result in a misclassification violation but possibly an anti-competitive trade practice. One-sided independent contractor agreements could also be considered an unfair labor practice. While there is not much additional information included in the MOU, it allows the agencies to share information and consult for official law enforcement purposes, provide training, and coordinate outreach and education. Employers will need to stay tuned on what will come about as a result of this partnership.
- Read the Memorandum of Understanding here.
- Review and revise contractual requirements for independent contractors.
- Audit independent contractors for misclassification issues.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2022 ManagEase