Franchise association files lawsuit against Seattle for $15 min. wage vote

June 12, 2014

The International Franchise Association and five franchisees filed a lawsuit in U.S. District Court in Seattle on Wednesday, seeking to block Seattle’s recently enacted law to increase to the city’s minimum wage to $15 an hour.

The complaint alleges the new law “illegally discriminates against franchisees and improperly treats them not as the small, locally-owned businesses they are, but as large, national companies.”

Seattle Mayor Ed Murray last week signed the law, which requires large businesses (with more than 500 employees) to raise the minimum wage they pay their employees to $15/hour throughout three years beginning on April 1, 2015. Smaller businesses have an extra four years, or a total of seven years, to phase in the wage increase.  

IFA’s lawsuit asserts that the Seattle statute unfairly requires Seattle’s 600 franchisees, who own 1,700 franchise locations and employ 19,000 workers, to meet the three-year deadline for large businesses simply because they operate as part of a franchise network. The lawsuit argues that the Seattle ordinance “defies years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from the corporation that provides brand and marketing materials.”

IFA CEO Steve Caldeira said in a news release that hundreds of businesses and thousands of their employees are unfairly threatened by the new law.

“The city’s minimum wage statute arbitrarily and illegally discriminates against franchisees and significantly increases their labor costs in ways that will harm their businesses, employees, consumers and Seattle’s economy,” he said. “We hope the court will block the ordinance to save jobs and prevent Seattle from unfairly singling out one type of business — a franchise — for punitive treatment.”

Defendants named include the City of Seattle and the Director of the Department of Finance and Administrative Services. The suit seeks an injunction to stop the law from going into effect as scheduled on April 1, 2015.

Topics: Franchising & Growth, Staffing & Training

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