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Wednesday, May 29, 2024 | Back issues
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Judge Keeps Seattle Wage Increase on Track for All

SEATTLE (CN) - The city of Seattle does not have to delay a $15-per-hour minimum wage law for franchisees, a federal judge ruled - denying a franchise association's motion for an injunction.

The International Franchise Association sued Seattle and its director of the Department of Finance and Administrative Service over an ordinance that raises the minimum wage to $15 an hour.

While the ordinance takes effect at the beginning of April, there are two schedules to phase in the new wage - one for large businesses and one for small ones.

Small businesses will have seven years to implement the new minimum wage, while larger businesses will have three.

The franchise association objected to the three-year phase-in schedule, and demanded that Seattle treat franchisees as small businesses - and give them seven years to raise their workers' wages.

In its lawsuit, the association focused on email statements made by a member of the Seattle mayor's advisory committee.

"Franchises like Subway and McDonalds really are not very good for our local economy," Nick Hanauer wrote in an email. "A city dominated by independent, locally owned, unique sandwich and hamburger restaurants will be more economically, civically and culturally rich than one dominated by extractive national chains."

In a press release, Mayor Ed Murray also noted the differences between franchises and small businesses, such as menus and supplies that come from a corporate national entity.

The association argued that statements like these show that the minimum-wage law discriminated against franchises by categorizing them as large businesses.

On Tuesday, U.S. District Judge Richard Jones disagreed.

"The statements made by these lawmakers are consistent with the ordinance's stated purpose of differentiating between large and small businesses - businesses with more resources can more easily (and more quickly) adjust to the increasing minimum wage, while small businesses, with fewer resources, may have difficulty in accommodating the costs," Jones wrote. [Parentheses in opinion.]

Jones noted that the ordinance was "hotly debated" by labor groups and franchise groups.

"The alleged statements by some union leaders, for example, indicating a desire to 'break the franchise model' do not surprise the court," Jones wrote.

"Even if true, such fervent remarks and lobbying efforts by interest groups cannot be imputed to the City Council."

The franchise association also failed to convince the court that the ordinance would have a discriminatory effect on interstate commerce.

"There is simply no credible evidence in the record that indicates franchisees will close up shop or reduce operations, or that new franchisees will not open up in Seattle," Jones wrote.

"Although one plaintiff's declaration indicates that the faster phase-in may cause her to go out of business, she is only speculating."

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