A federal judge in Seattle heard arguments Tuesday in a lawsuit challenging the city’s $15 minimum wage on constitutional grounds. The International Franchise Association (IFA) — an industry group representing both small franchisees and powerful franchisers such as the McDonald’s Corp. — filed the lawsuit against the city last summer, arguing that the minimum wage law unfairly discriminates against franchise owners.
At Tuesday's court hearing, the IFA presented its case for a preliminary injunction on a portion of the law. A full trial regarding will not begin until October.
The Seattle City Council voted to approve the $15 minimum wage in June 2014, and the first phase of the increase is scheduled to begin on April 1. Although the law will require all employers in Seattle to pay their employees a minimum of $15 per hour by Jan. 1, 2021, the wage increase will hit different businesses at different times. Employers with 500 or fewer workers will be required to pay at least $10 per hour starting in April; for businesses that employ more than 500 people nationwide, the minimum wage as of April will be $11.
The IFA’s lawsuit disputes the law’s definition of a large business. The law treats McDonald’s franchisees and similar employers like large businesses because of their franchising agreements with multinational corporations — even though those corporations do not own the businesses. The IFA, represented by the high-profile Washington, D.C., law firm Bancroft, argues that classifying smaller franchises as big businesses violates the commerce clause of the Constitution.
"This discriminatory treatment of a business model typified by involvement in interstate commerce, the use of federally protected trademarks and particular forms of protected speech and association is not just novel but unconstitutional,” according to the plaintiff’s motion for a preliminary injunction against the law.
If the motion is granted, then franchises will no longer be automatically grouped with large businesses, at least until the lawsuit is resolved. A ruling on the motion is expected by next Tuesday.
Seattle University School of Law professor Charlotte Garden attended the hearing and later told Al Jazeera she found it "unlikely" that presiding federal judge Richard A. Jones would grant the injunction.
"[The plaintiffs] are relying heavily on statements by Nick Hanauer, who was part of an advisory committee on the minimum wage, to the effect that local businesses are better for the local economy than franchises," she said in an email to Al Jazeera. "However, at argument, Judge Jones seemed reluctant to impute Hanauer's statements to the city council or the mayor. Especially without that statement, my sense is that it will be difficult for the plaintiffs to prove intentional discrimination against interstate commerce."
The fight over whether franchises can be considered part of large businesses parallels another legal matter currently being litigated by the National Labor Relations Board (NLRB): whether franchisers are joint employers with their franchisees and therefore jointly responsible for labor law violations that occur at franchised locations. The general counsel for the NLRB contends that companies such as McDonald’s exert enough control over their franchisees to be considered joint employers, whereas groups such as the IFA have argued that franchisees are solely responsible for working conditions at their businesses.