This week, the Federal Trade Commission (FTC) and the New York attorney general announced a settlement with Handy Technologies, Inc. to resolve allegations that the company engaged in an array of unfair and deceptive practices that violated Section 5 of the FTC Act and New York advertising laws. This settlement is yet another indication of the FTC’s continued emphasis on protecting workers’ rights, an emphasis that may continue under a new administration.

The complaint alleged that Handy, a gig-economy platform that connects workers with home cleaning and handyman services, misled workers by advertising inflated earnings claims and failing to clearly disclose fees and fines that withheld millions of dollars from workers’ pay.

According to the complaint, Handy advertised that workers would be paid “as soon as the job is done,” yet the company generally did not pay new workers until seven days after they’d finished a job, unless the workers paid a fee to receive their compensation immediately paid a fee. Additionally, the complaint alleged that Handy imposed fines on workers when customers failed to show up or provide access to a job site. Workers could avoid these fines only by navigating a complicated and undisclosed multi-step “Customer No Show” process.

In addition to a $2.95 million monetary settlement, Handy has also agreed to variety of injunctive relief provisions that include making substantial changes to its “Customer No Show” process.

The complaint also alleged that Handy misled workers by advertising earnings “up to” an amount that was not realistically achievable by most workers. According to the complaint, Handy advertised earnings “as high as $45 an hour,” when in fact only 10% of workers were able to make that amount.

However, FTC commissioner Andrew Ferguson, who is set to become chair this month under the new administration, stated in an opinion that his concurrence should not be taken as an endorsement of any specific “up to” claims percentage. While the complaint in this case repeatedly alleged that “approximately 10%” of workers ever achieved the “up to” earnings, Ferguson stated that this settlement did not necessarily mean that 10% was sufficient to establish a misleading “up to” claim in all circumstances. Commissioner Melissa Holyoak also concurred with the settlement but dissented as to the “up to” earnings claims in the stipulated order.

Ferguson dissented on Count V of the complaint and settlement. Count V alleged that Handy violated Section 5(m)(1)(B) of the FTC Act, which authorizes the FTC to pursue civil penalties against defendants who engage in the same “such acts or practices” that the agency previously determined to be unfair or deceptive in a final, litigated cease-and-desist order. Ferguson reiterated an argument he made in the FTC’s recent case against Lyft: the complaint fails to identify a predicate cease-and-desist order specific to Handy, and the Notice of Penalty Offenses Concerning Money-Making Opportunities served on Handy in 2021 cannot satisfy the requirements of Section 5(m)(1)(B) because that notice did not address the same conduct the FTC deemed unfair or deceptive in the complaint. As a result, Ferguson contended, Count V is inadequate as a matter of law. Based on his dissent and other statements, it seems that the FTC going forward will make less of its “penalty offense authority” under Ferguson. 

This settlement comes as just the latest effort by the FTC to protect workers’ rights. In April 2024, the FTC proposed a rule that amounted to a near-total nationwide ban on employers’ use of non-compete agreements. While this rule has been put on hold by a federal judge, the FTC has continued to expand its regulatory efforts to protect workers’ rights.

In August 2024, the FTC obtained a $7 million settlement against Arise Virtual Solutions, another gig economy company accused of making inflated earnings claims. As the gig economy evolves at a rapid pace, employers should keep an eye on any changes and further actions from the FTC in this space, as a change in administration can result in significant and rapid shifts in policy priorities and positions, which could have substantial implications for companies.

The authors thank law clerk Eden Caliendo for her assistance in writing this post.

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