US judge decides not to block part of Seattle minimum wage law from going into effect April 1

Economic IndicatorsAssociated Press

A federal judge on Tuesday declined to block part of Seattle's new minimum wage law from going into effect after some businesses said it discriminates against franchises that are part of large national chains.

The law, which raises the city's minimum wage to $15 an hour, is phased in more quickly for big companies than small ones. Among those determined to be big companies under the law are franchises — from fast-food joints to hotel chains — that are connected to networks that have a total of more than 500 workers.

Continue Reading Below

Lawyers for the International Franchise Association and five franchises in Seattle told U.S. District Judge Richard A. Jones that is unfair. The franchises are essentially small businesses, they argued, but by 2017 they'll have to pay their workers a minimum wage $4 an hour higher than their purely local competitors.

Jones ruled, however, that the possible harm to the franchises "does not outweigh the concrete harm" that would be suffered by employees who are entitled to an increase in their wages under the law.

On April 1, the large businesses and national chains must raise their pay to at least $11 an hour. Smaller ones must pay at least $10 an hour.

The franchises sought a preliminary injunction that would block the relevant part of the law from taking effect, pending a ruling from Jones expected later this year on the full merits of the case.

The franchises contended they were being punished for their involvement in interstate commerce — a violation of the Constitution's Commerce Clause, which reserves the regulation of interstate commerce to the federal government.

Attorneys for the city argued that that the law's intent was simply to raise the pay of Seattle's low-wage workers, and that the City Council wanted to draw the line somewhere as far as which businesses could afford to pay the higher wage when. Because franchises receive benefits from their association with their chains — national marketing, training, product development — the city said it was perfectly reasonable for them to be treated differently.

Seattle's law gives businesses with more than 500 employees nationally three years to phase in the increase — four if they provide health insurance. Smaller employers get seven years.