In remarks last week at the University of Utah School of Law, FTC Commissioner Alvaro Bedoya argued that independent contractors should be allowed to bargain collectively. He acknowledged that courts have always treated collective bargaining by contractors as illegal under federal antitrust law. But he claimed that these courts have made a mistake: in fact, Congress never meant to stop small contractors, like truckers or plumbers, from forming a union and bargaining together.
Bedoya’s interpretation would upset a century of careful balancing between antitrust and labor policy. It would also expose the contractors themselves to serious risks of abuse. And it would undermine well-established rules against collusion, price fixing, and other restraints on trade.
To see why Bedoya is so wrong, you have to understand labor law and antitrust law’s tangled history. Let’s start with section 1 of the Sherman Antitrust Act. Adopted in 1890, section 1 banned all contracts and conspiracies in restraint of trade. It did not, however, define trade restraints. Instead, it incorporated common-law standards. Under the common law, unions were treated no differently from any other combination of buyers or sellers. If they conspired to fix labor prices, they violated the law. And collective bargaining could be seen as one form of price fixing. As a result, the law sometimes treated unions as, essentially, labor cartels.
Courts quickly folded the common-law view into antitrust law. They applied antitrust law to certain union tactics, such as blacklisting and secondary boycotts. They also allowed employers to collect full antitrust remedies for violations¾including as much as three times the employer’s actual damages. The result was crushing liability for unions and an existential threat to the labor movement.
That result sat poorly with Congress. So in a series of laws, it carved out an exception for labor. For example, in section 6 of the Clayton Act, it declared that the labor of a human being was not an article of commerce. And in section 20, it exempted certain union activities from antitrust liability.
These exemptions, however, were limited. Congress tied them strictly to employment disputes. In fact, it made that limitation explicit in section 20’s language: the exemptions applied only to “a dispute concerning terms or conditions of employment.”
Ever since, courts have looked to that language to define the labor exemption’s outer limits. They have recognized that Congress wanted to exempt certain labor disputes from antitrust—but only when the disputes involved employment. So they have refused to stretch the exemption to cover other disputes, including disputes over independent contracting. And as a result, independent contractors have continued to be subject to traditional antitrust rules—including section 1’s rule against restraints on trade.
None of that history, however, has slowed down the Biden FTC. From the start, Biden’s appointees have looked for ways to push the labor exemption’s limits. For example, in a September 2021 letter, FTC Chair Lina Khan recognized that “federal courts have held that these protections apply only to workers formally classified as employees.” But she also suggested that the FTC would make enforcing the law against those contractors a low priority. Months later, the FTC staged a multi-day symposium on labor-market competition. One panel focused exclusively on how competition officials could facilitate collective bargaining by independent contractors. And more recently, in a policy statement focused on “gig work,” the FTC cited gig workers’ lack of bargaining rights as a reason to scrutinize the app-based industry more closely.
Bedoya’s statement, therefore, didn’t come out of the blue. It added to a growing drumbeat for expanding the labor exemption. The Biden FTC has not hidden its view on how the exemption should apply. Precedent and history notwithstanding, the FTC thinks the exemption should license contractors to bargain collectively.
That view relies on at least two implicit assumptions. First, it assumes that bargaining by contractors would essentially mirror bargaining by employees. Second, it assumes that normal antitrust rules would continue to apply in other contexts. Both assumptions, however, are wrong.
Keep in mind, the labor exemption does not operate in a vacuum. When Congress exempted labor from antitrust, it did not simply deregulate collective bargaining. Instead, it replaced antitrust with a complex web of labor-specific laws. In the Wagner Act, it imposed a duty to bargain on employers. It also created an administrative edifice for enforcing that duty, overseen by a specialized administrative agency, the National Labor Relations Board. Later, in the Taft-Hartley Act, Congress protected employees from discrimination by unions. It also banned certain union tactics, such as secondary boycotts. And still later, in the Landrum-Griffin Act, it required unions to file annual financial statements with the Department of Labor. It also guaranteed certain union-democracy rights, such as equal voting, access to meetings, and freedom of speech.
None of these laws apply to independent contractors. So even if the labor exemption expanded to cover contractors, the contractors would still lack basic protections. They would be unable to access other safeguards designed to keep union activity within bounds.
For example, consider the duty to bargain. Because the Wagner Act applies only to employees, an employer would have no duty to bargain with a union of independent contractors. The contractors’ union would therefore have no peaceful way to bring the employer to the table. Instead, the union’s only option would be to do what unions did before the Wagner Act—strike. The result would be industrial disruption and a corresponding loss of productivity. In other words, it would cause exactly what Congress was trying to avoid when it established bargaining rights in the first place.
Similarly, because Taft-Hartley and Landrum-Griffin apply only to employees, contractors would have no protection from union abuse. Unions could refuse them even the most basic rights enjoyed by employees, such as access to union meetings. The union could take their dues, spend their money however it wanted, and never look back. We might expect most unions to behave more responsibly. But history tells us that not all of them would. After all, widespread reports of union abuse were what prompted Congress to adopt safeguards in the first place.
Even more troubling, once contractors had the right to bargain, there would be no clear stopping point. When Khan and Bedoya talk about extending the labor exemption, they’re usually referring to individual contractors¾truckers, gig workers, and the like. But there’s no clear way to distinguish between those workers and other kinds of contractors. For example, if truckers can bargain collectively, why couldn’t lawyers? Could a consortium of law firms collectively set billing rates? For that matter, could a consortium of doctors agree on how much to charge patients? Beyond professionals, could any group of independent businesses combine and “collectively bargain” the price of their services? And if they could, what difference is there between collective bargaining and collusive pricing? What is left of section 1?
The FTC may have some principled way to distinguish between these activities. But if it does, it hasn’t shared that distinction with the public. Instead, it has taken a position that is misguided, dangerous, and ahistorical. It would heighten industrial strife, expose workers to abuse, and hollow out federal antitrust law. The idea should stay where it is: rejected and discarded in history’s dustbin.
Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We welcome responses to the views presented here. To join the debate, please email us at [email protected].