Higher minimum wage under Seattle’s new ordinance starts April 1.
The minimum wage in Seattle will begin increasing on April 1, 2015 under the complicated $15 minimum wage ordinance approved by the Seattle City Council in June 2014. Seattle hoteliers have been well represented in the process of establishing rules for the implementation of the ordinance and in the legal challenge to the ordinance’s unfair treatment of franchisees as large employers.
The Seattle Hotel Association and the Seattle Restaurant Alliance with support from WLA and the Washington Restaurant Association were successful in their efforts during the rulemaking process to have service charges recognized as commissions. As defined in the rules, service charges paid to the employee may be considered commission and therefore counted as wages. The final Administrative Rules and FAQ were released on the Office of Civil Rights’ website on March 27, 2015, less than one week before the first wage increase requirements take effect.
Complicated Phase-In Schedules
Businesses in Seattle with more than 500 employees and franchisees, regardless of their size, must begin paying employees a minimum wage of $11 an hour on April 1. They will have three years to reach the $15 minimum wage if they do not provide health care coverage and seven years if they do. Businesses with 500 or fewer employees that pay a flat hourly rate and do not offer health insurance benefits must also start paying a minimum of $11 an hour on April 1 and reach $15 by January 1, 2019. There are separate phase-in schedules for small businesses that pay health benefits and/or report employee tips to the IRS.
The Seattle Office of Labor Standards, which was established in November, will enforce Seattle’s minimum wage, paid sick and safe time, and administrative wage theft ordinances. It has released fact sheets for employers and is responsible for the administrative rules.
On the legal front, the International Franchise Association (IFA) and five franchisees are suing the City of Seattle in federal court over the ordinance’s illegal discrimination against franchisees by improperly treating them as large, national companies regardless of their size. Although businesses with fewer than 500 employees have up to seven years to phase in the $15 hour wage, franchisees must follow the three-year, large business phase-in schedule even though they are independent small businesses. The IFA request for a preliminary injunction was recently denied by U.S. District Judge Richard A. Jones, and IFA and the five franchisees are now appealing the judge’s decision to the United States Court of Appeals for the Ninth Circuit. WLA has been a strong supporter of this legal challenge and will continue to keep its members apprised of its progress.
Learn more here about the IFA lawsuit challenging the discriminatory treatment of franchisees in the Seattle minimium wage ordinance.