Three-judge U.S. appeals court panel hears arguments over the Seattle $15 minimum wage law, which puts local franchisees on the same fast track of compliance as large employers.
The International Franchise Association, in oral arguments before a federal appeals court panel Tuesday, again contended that Seattle’s minimum wage law unfairly discriminates against local franchisees.
The law, which puts local franchisees on the same fast track as large employers in having to pay employees at least $15 an hour, “clearly discriminates in both effect and purpose,” Paul Clement, the franchise association’s attorney, said to a three-judge panel of the U.S. Ninth Circuit Court of Appeals convening in Seattle.
The case stems from a lawsuit the association, along with five Seattle-area franchisees, filed in June 2014, contending that the minimum wage law unfairly lumps in franchisees with employers with more than 500 employees, even though franchisees are independently owned and operated as small businesses.
Large employers and franchisees have to pay employees $15 minimum by 2017 or 2018, rather than having until 2019 or 2021 to do so, as small businesses do.
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In March, U.S. District Court Judge Richard A. Jones denied the franchise’s request for a preliminary injunction to prevent franchisees from having to abide by that faster timeline.
Judge Jones had said the franchise association and franchisees hadn’t shown that the city intended to discriminate against them and that there was no credible evidence showing that the law would cause franchisees to close or reduce operations.
In seeking to overturn Jones’ decision, the franchise association pressed its point that the city’s minimum wage law violated the Commerce Clause of the U.S. Constitution by discriminating against franchisees solely based on the franchisees’ affiliation with interstate commerce — i.e., the franchise network.
Greg Narver, assistant Seattle city attorney, said the intent of the law was not o target franchisees but to “put more money into the pockets of workers.”
The purpose of putting franchisees on the same fast track as large employers, Narver said, was to identify businesses that had the resources to pay more sooner.
The law is structured as “if you can pay more sooner, you must,” he said. “This is about financial wherewithal.”
The oral arguments were peppered by questions from the judges ranging from whether franchisees indeed follow a different business model than small businesses to whether there was evidence that franchisers would be willing to give more resources to franchisees because of the law.
No date has been set for the panel to issue its decision.
If Jones’ decision is overturned and a preliminary injunction granted, it’s unclear what that would mean in terms of higher wages the franchisees have already paid to employees since the law went into effect in April.
“I feel like we were able to get our arguments in well,” Narver said after the hearing.
Steve Caldeira, president and CEO of the franchise association, said he felt confident about the case it made Tuesday. “But if we have to take this case all the way to the Supreme Court, we’ll do it,” he said.