National Restaurant Association joins fight against Seattle wage increase

Aug. 13, 2014

The National Restaurant Association announced in a press release that it is joining the U.S. Chamber of Commerce, as well as the American Hotel & Lodging Association and Asian American Hotel Owners Association, in an effort to stop the city of Seattle from raising the minimum wage.

In an August 12 amicus brief supporting the International Franchise Association's motion for a preliminary injunction—a request for the court to stop part of the law from taking effect—the NRA, U.S. Chamber of Commerce, AHLA and AAHOA allege that the $15 minimum wage passed by the Seattle City Council earlier this year will hit franchises especially hard because of a rule that treats them as large employers, regardless of their size. The IFA's motion, filed in U.S. District Court, Western District of Washington, asks that the same schedule for implementation be applied to both franchises and non-franchised businesses. 

"Not only does it impose the largest minimum wage increase in the history of the United States, but it does so by targeting plaintiffs for disfavored treatment because of their affiliation with out-of-state franchisors," the organizations wrote in the amicus brief.

Seattle's minimum wage law, which was passed in June, raises the city's minimum wage to $15. But instead of a flat increase, the law calls for businesses to increase their minimum wage to $15 over a period of years, from five to seven years for small businesses and three to four for large businesses, with the length determined by the businesses' size and whether they offer health care benefits.

Under the law, a "small" business has fewer than 500 employees, while a "large" business has more than 500. But the law assumes all franchised restaurants are large employers because it considers every employee of the brand's franchise—regardless of ownership or location—in its assessment of a business's size. That treatment discriminates against franchises, the IFA and NRA allege.

"By saddling them with a massive increase in labor costs that non-franchised small businesses are not required to bear, the ordinance will make it quite difficult—if not impossible—for franchises to compete," the amicus brief stated.

The court could hear arguments in the IFA's motion by early September. The Seattle wage hikes are due to begin phasing in on July 1, 2015.

Topics: Franchising & Growth, Operations Management

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