Seattle Could Face Supreme Court Challenge Over Minimum Wage Law

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A coalition of franchised businesses appealed to the U.S. Supreme Court Monday against a Seattle minimum wage law that treats individually owned franchises the same as their corporate partners.

The International Franchise Association (IFA) appealed the decision after losing in the Ninth Circuit Court of Appeals in September. It argues the $15 minimum wage enacted by Seattle lawmakers in June 2014 is discriminatory because it treats individually owned franchisees like the large corporations with which they contract.

“Our appeal has never sought to prevent the City of Seattle’s wage law from going into effect,” IFA President Robert Cresanti said Monday in a statement. “Our appeal to the Supreme Court will be focused solely on the discriminatory treatment of franchisees under Seattle’s wage law and the motivation to discriminate against interstate commerce.”

The contracts often allow smaller companies to use the corporate brand name and sell its products. IFA filed the lawsuit with five locally owned franchisees when the measure was passed. Seattle lawmakers wrote the measure to phase in over a few years to mitigate economic stress — small businesses were given more time to adjust, but the provision excluded franchisees.

Some lawmakers have claimed small franchisees can handle a rise in the minimum wage just as well as the corporations with which they contract. State Attorney General Robert Ferguson has noted that franchisees enjoy a unique economic advantage being connected to a larger corporation, as corporations often offer advertising, supply chain management and menus.

The Employment Policies Institute (EPI) claim in its recent report,”What’s in a (Brand) Name?” small independently owned franchisees are just as vulnerable to minimum wage increases as non-franchised small businesses. Businesses are often forced to increase costs or scale back their workforce to adjust to the higher cost of labor that comes with a higher minimum wage.

Additionally low-skilled workers and those new to the workforce are likely to be the worst hit because they often don’t contribute as much to the company. Franchises are known for hiring low-skilled workers because of the types of businesses that most often utilize the business model.

The Supreme Court has the authority to except or reject any case that gets appealed to it.

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