9th Circuit OKs Seattle’s Minimum Wage Hike

(CN) - The Ninth Circuit gave Seattle a green light on Friday to phase in a $15-per-hour minimum wage law that requires franchises to raise wages sooner than small businesses.

The appellate panel today denied the International Franchise Association's request for a preliminary injunction to stop the city from classifying franchises as large employers and subjecting them to steeper incremental wage increases.

Seattle requires all business to pay the new wages by 2021, but businesses with 500 or more employees must pay $15 an hour by 2017.

The International Franchise Association (IFA) filed suit in federal court in 2014, seeking a preliminary injunction requiring Seattle to classify certain franchises as small business.

The group argued the franchise classification violated the Commerce Clause, Equal Protection Clause and First Amendment of the U.S. Constitution, the Washington State Constitution and was preempted by the Lanham Act and ERISA.

But the judge ruled the group did not show a likelihood of succeeding on the merits of its various claims and denied the preliminary injunction this past March.

The group immediately appealed to the Ninth Circuit.

On Friday, a three-judge panel agreed with the lower court, finding the group "did not raise serious questions going to the merits on any of its claims, nor did it show that an injunction is in the public interest."

Circuit Judge Michael Hawkins, writing for the majority, said the group failed to show the wage law would "burden interstate commerce" under the Commerce Clause.

"It does not show that interstate firms will be excluded from the market, earn less revenue or profit, lose customers, or close or reduce stores. Nor does it show that new franchisees will not enter the market or that franchisors will suffer adverse effects. The district court did not clearly err," Hawkins wrote.

The ruling also calls the group's First Amendment claims "unpersuasive."

"Seattle's minimum wage ordinance is plainly an economic regulation that does not target speech or expressive conduct," Hawkins wrote.

The group's argument that the ordinance defines franchises based in part on their shared use of a trademark does not necessarily conflict with the Lanham Act - the federal law governing trademarks, Hawkin found.

Nor was the panel swayed by the group's state constitutional claims.

"IFA's claim that the ordinance violates the state constitution is unpersuasive at both steps. The district court correctly concluded that the provision is not violated 'anytime the legislature treats similarly situated businesses differently,'" Hawkins wrote.

While the group did show franchises might face "competitive injury" from having to pay a higher wage than non-franchises, it did not show irreparable harm or that an injunction would be in the public interest, the panel found.

Working Washington, a coalition advocating the $15 minimum wage, tweeted "Workers win again," after the ruling.

The IFA called the decision "a disappointment" in a statement.

"Today's decision is clearly a disappointment as the ordinance is blatantly discriminatory and affirmatively harms Seattle hard-working franchise small business owners every day since it has gone into effect," said Robert Cresanti, the group's executive vice president of government relations and public policy.

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