Power

Federal Court: Seattle Wage Hike Will Stand

The 43-page ruling rejects every constitutional challenge brought against Seattle's $15 an hour minimum wage law.

The 43-page ruling rejects every constitutional challenge brought against Seattle's $15 an hour minimum wage law. Shutterstock

Corporate franchise owners opposed to Seattle’s new $15 an hour minimum wage law have failed at their first attempt to convince a federal court the measure was unconstitutional.

U.S. District Judge Richard Jones on Tuesday issued a 43-page opinion rejecting every argument put forth by attorneys for the International Franchise Association (IFA) and five Seattle-area franchisees to preliminarily block the law.

Attorneys for the IFA argued that the law discriminates against franchise businesses by classifying them as “large” employers under the ordinance regardless of the number of people employed by the particular franchise because of their connections to corporate franchise parents.

Seattle’s ordinance requires large businesses, defined as those with more than 500 employees, to raise the minimum wage to $15 an hour over three years, starting April 1. Businesses that employ fewer people have seven years to phase in the wage increase. Employers with 500 or fewer employees will be required to pay workers at least $10 an hour starting in April.

The plaintiffs argued that local franchises like McDonald’s and Holiday Inn should be covered only if they meet the ordinance’s employee threshold requirement.

Former Solicitor General Paul Clement represents the plaintiffs in this case. Clement represented Hobby Lobby in its challenge to the birth control benefit in the Affordable Care Act and frequently represents other conservative interests in high-profile cases before the U.S. Supreme Court.

During last week’s hearing requesting the blocking of the ordinance, Clement claimed that the record was littered with evidence of unlawful discriminatory bias against franchises.

“Discrimination is so overwhelming on businesses with interstate commerce—we prefer to have local business, they are better for neighborhoods,” Clement said at the hearing, referencing testimony from city council meetings where the issue of whether or not franchises would be subjected to the ordinance’s phase-in was debated. “That is a view someone can have, but it isn’t a view that the commerce clause allows a local government to have.”

Jones disagreed, finding there was no evidence the ordinance unlawfully discriminated against franchises.

“As an initial matter, comparing franchisees and independent small businesses is somewhat difficult; they are not ‘similarly situated’ in all relevant respects,” Jones wrote. “It is true they compete in the same markets and it is also true that a franchisee who owns only one outlet may share some similarities with an independent small business. That said, franchisees and independent small business have different business structures.”

The plaintiffs also charged that the ordinance violated the Equal Protection Clause of the 14th Amendment by arbitrarily and irrationally discriminating against small franchisees in classifying them as large employers.

Jones rejected this argument outright, holding that the “plaintiffs have neither shown a likelihood of success nor raised serious questions going to the merits of their equal protection claim.”

With the request for an injunction denied, Seattle’s wage hike is set to take effect April 1. A trial on the merits of IFA’s claims is expected to begin in late October.