Franchisees Will Go To Court To Stop Seattle’s $15/Hr Minimum Wage

Yesterday, the Seattle City Council unanimously approved a plan that will raise the minimum wage for workers to $15/hour over the next three-to-seven years. But business-owners who run franchise operations in the city say they are being unfairly targeted, and it looks like this issue may end up in a courtroom.

See, the new Seattle ordinance provides different wage-hike schedules depending on the size of the business. “Schedule 1” employers are those with more than 500 employees (not just in Seattle, but anywhere in the U.S.). These businesses have until 2017 to raise their base pay to $15/hour (or until 2018 if they also contribute to employee’s health benefits).

“Schedule 2″ employers are those with 500 or fewer workers. These smaller operations have a seven-year ramp up to the $15/hour wages.

But the catch for franchisees is that even if they have fewer than 500 employees, they will be considered Schedule 1 employers if they are part of a franchise network with more than 500 workers.

“The Seattle City Council and Mayor Murray’s plan would force the 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in 3 years, while most other small business owners would have seven years to adopt the $15 wage,” said Steve Caldeira, President of the International Franchise Association. “These hundreds of franchise small business owners are being punished simply because they chose to operate as franchisees. Decades of legal precedent have held that franchise businesses are independently owned businesses and are not operated by the brand’s corporate headquarters.”

Caldeira says his organization will be filing a legal challenge against Seattle to “overturn the unfair and discriminatory minimum wage plan.”

Last year, city lawmaker in Washington, D.C., attempted to raise the minimum wage in the nation’s capital to $12.50/hour, but only at larger retailers; a move that many saw as an effort to keep Walmart from expanding into the city (or at least make it pay a toll for doing so). D.C. Mayor Vincent Gray vetoed the wage hike, saying that the bill, “while well-intentioned, is flawed and will fail to achieve its intended goals.”

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