Reported / Citable
Background
The City of Seattle enacted Ordinance 126878 in 2023, creating the App-Based Worker Deactivation Rights Ordinance (Seattle Municipal Code Chapter 8.40).
The Ordinance applies to ‘network companies’ like Uber and Instacart that provide platforms for customers to hire temporary workers, such as delivery drivers.
It prohibits ‘unwarranted deactivations’ of worker accounts and imposes specific requirements under Section 8.40.050: (1) network companies must inform app-based workers in writing of their deactivation policies, and (2) those policies must be ‘reasonably related’ to the company’s ‘safe and efficient operations.’ The Ordinance lists eight examples of policies deemed not reasonably related to safety and efficiency, including deactivations based solely on aggregate customer ratings or background checks (except for egregious misconduct).
Seattle enacted the law to address instability in the gig economy, algorithmic reliance leading to arbitrary deactivations, and bias in customer ratings.
Uber and Instacart sued, alleging the Ordinance compels speech in violation of the First Amendment and is unconstitutionally vague.
The district court denied a preliminary injunction, finding the Ordinance regulates conduct with only incidental effects on speech, that ‘reasonable’ is not vague, and that Plaintiffs failed to show irreparable harm or a favorable balance of equities.
A stay of enforcement is currently in place pending appeal.
The reviewing court therefore addressed the dispute in the posture described above, applying the governing standard to the existing record rather than deciding questions the opinion expressly reserved.
The Court’s Holding
The Ninth Circuit affirmed the district court’s denial of the preliminary injunction.
Assuming without deciding that the Ordinance regulates speech, the panel held that the regulated speech is commercial speech—communications about the terms of engagement for temporary workers—and thus subject to lower First Amendment scrutiny.
Applying the Zauderer standard for compelled commercial disclosures, the court held that the notice requirement (Section 8.40.050.A.1) is reasonably related to Seattle’s substantial interest in worker safety and employment stability, involves purely factual and uncontroversial information, and is not unduly burdensome.
The ‘reasonably related’ standard (Section 8.40.050.A.2) regulates speech related to what Seattle has designated as unlawful activity (unwarranted deactivations) and thus does not violate the First Amendment even under the stricter Central Hudson test.
The court also rejected the vagueness challenge, holding that ‘reasonable’ is a well-established legal standard and the Ordinance’s examples and textual limitations (e.g., ‘solely’ for customer ratings, carveouts for egregious misconduct) provide fair notice to a person of ordinary intelligence.
Because Plaintiffs are unlikely to succeed on the merits, the district court did not abuse its discretion in denying the injunction.
The court reviewed only the denial of preliminary relief.
It assumed without deciding that the ordinance regulates speech, classified the communications as commercial, and applied Zauderer to the disclosure requirement.
The majority also rejected the claim that “reasonably related” is impermissibly vague.
Judge Bennett dissented only from the vagueness portion, concluding that Uber and Instacart had shown likely success on that claim.
Key Takeaways
- The Ninth Circuit classified communications about deactivation policies for gig workers as commercial speech, subject to intermediate or lower scrutiny, distinguishing them from compelled speech on matters of public concern (e.g., NetChoice, X Corp.).
- Under Zauderer, the government may compel disclosure of purely factual, uncontroversial commercial information reasonably related to a substantial governmental interest, provided it is not unduly burdensome.
- The Ordinance’s requirement that deactivation policies be ‘reasonably related to safe and efficient operations’ survives First Amendment scrutiny because it targets speech related to conduct the City has prohibited (unwarranted deactivations).
- A vagueness challenge fails where the term ‘reasonable’ is supplemented by specific examples and textual qualifiers (e.g., ‘solely,’ ‘egregious misconduct’) that provide fair notice of prohibited conduct.
- The panel affirmed the denial of a preliminary injunction based solely on the unlikelihood of success on the merits, without reaching the other Winter factors.
Why It Matters
This decision upholds a municipal labor standard for app-based workers against First Amendment and vagueness challenges, reinforcing the authority of local governments to regulate algorithmic management practices in the gig economy.
By classifying platform-to-worker communications about deactivation policies as commercial speech, the court permits greater regulatory leeway for mandated disclosures and substantive policy standards.
The ruling clarifies that Zauderer, not strict scrutiny, applies to compelled commercial disclosures tied to employment terms, and that ‘reasonableness’ standards in labor regulations are not void for vagueness when contextualized by specific prohibitions and carveouts.
The decision may encourage other jurisdictions to enact similar deactivation protections for gig workers.
For practitioners, the limits of the disposition are as important as its result: the decision controls the identified issue and posture, while leaving reserved questions and further proceedings to the tribunal handling the case.