The Ninth Circuit Court of Appeals has upheld a Seattle ordinance designed to protect app-based workers from unjust account deactivations. This ruling affects major gig economy companies such as Uber Technologies, Inc. and Instacart, which had challenged the ordinance on constitutional grounds. The decision is significant as it reinforces local governments' ability to regulate labor practices in the gig economy, a sector that has seen rapid growth and increasing scrutiny.

The case, Uber Technologies, Inc. v. City of Seattle (Docket No. 25-228), centers around Seattle's App-Based Worker Deactivation Rights Ordinance, enacted in 2023. The ordinance mandates that companies using app-based workers must provide clear written policies regarding account deactivations and ensure these policies are related to safe and efficient operations. The court's ruling emphasizes the balance between protecting workers' rights and the operational needs of gig economy companies.

Background

Uber Technologies, Inc. and its subsidiary Portier, LLC, along with Maplebear Inc. (doing business as Instacart), are the plaintiffs in this case. Both companies rely heavily on app-based workers for services like food delivery and grocery shopping. The plaintiffs argue that the ordinance infringes on their First Amendment rights by compelling them to communicate specific policies to their workers and that it is unconstitutionally vague.

The ordinance requires network companies to inform app-based workers in writing about their deactivation policies and ensures that these policies are reasonably related to the companies' operational safety and efficiency. The plaintiffs contend that these requirements violate their rights by forcing them to disclose information that could be seen as a form of compelled speech.

The case reached the Ninth Circuit after the U.S. District Court for the Western District of Washington denied the plaintiffs' motion for a preliminary injunction, which sought to prevent the enforcement of the ordinance. The district court found that the ordinance does not violate the First Amendment and is not vague.

The Ruling

The Ninth Circuit, in its ruling, affirmed the district court's decision, stating that the ordinance's requirements do not violate the First Amendment. The court noted, "Assuming, without deciding, that the Ordinance regulates speech, that speech is commercial speech, and the Ordinance’s regulation of it overcomes the applicable lower level of First Amendment scrutiny." The ruling was delivered by Judge Richard R. Clifton, with a partial dissent from Judge Mark J. Bennett.

The court found that the requirement for companies to inform workers about deactivation policies is reasonably related to the city's interest in protecting app-based workers. The court stated, "The provision requires network companies to inform workers of what situations may lead to account deactivation and resulting lost income, which is reasonably related to Seattle’s goals." The court also determined that the ordinance is not unconstitutionally vague, providing fair notice to a person of ordinary intelligence regarding what constitutes reasonable grounds for deactivation.

Impact

This ruling has significant implications for the gig economy and how companies interact with their workers. By upholding the ordinance, the Ninth Circuit reinforces the ability of local governments to implement regulations aimed at protecting workers' rights in the gig economy. This decision may encourage other cities to adopt similar ordinances, potentially leading to broader changes in how gig economy companies operate.

The ruling also clarifies the legal standards regarding commercial speech and compelled speech under the First Amendment, particularly in the context of employment and labor regulations. Companies like Uber and Instacart may need to adjust their policies and practices to comply with similar regulations in other jurisdictions.

What's Next

The plaintiffs have the option to appeal the decision to the U.S. Supreme Court, although it remains unclear if they will pursue this route. The Ninth Circuit's ruling sets a precedent that could influence similar cases in the future, and it may lead to further legal challenges as gig economy companies navigate the evolving regulatory landscape.