Oral Arguments in Seattle Minimum Wage Lawsuit Set for Tuesday, March 10

(March 4, 2015) The International Franchise Association (IFA) and the City of Seattle will make oral arguments on Tuesday, March 10, as part of the lawsuit filed by IFA and Seattle franchisees seeking to overturn part of the city’s new $15 hour minimum wage ordinance.

The IFA and Seattle franchisees filed a lawsuit in June in U.S. District Court to challenge the provisions of the new law that discriminated against small franchise businesses. Then in August, the IFA requested a preliminary injunction to stop the discriminatory provisions of the minimum wage law from taking effect.

U.S. District Court Judge Richard A. Jones will hear oral arguments on that request for a preliminary injunction at 9 a.m. on Tuesday. This will be the first time that arguments will be made on the legal challenge to the new law in person. The hearing will be before Judge Jones at the U.S. District Courthouse at 700 Stewart St. in downtown Seattle.

As the hearing approaches, the franchisees’ legal challenge against part of Seattle’s minimum wage law continues to draw attention. The Seattle Channel recently aired a half-hour show about businesses’ reaction to the new law, which takes effect April 1. During the show, which can be viewed online here WLA’s President and CEO Jan Simon speaks about the impact to franchisees and small business owners as part of an in-studio discussion.

IFA and five Seattle franchisees sued the city of Seattle in June seeking to stop the city from treating franchisees as large, national companies rather than the small, locally-owned businesses that they are.

Seattle’s ordinance requires large businesses, defined as those with more than 500 employees, to raise the minimum wage they pay their employees to $15 an hour over three years starting April 1, 2015. Smaller businesses get seven years to phase in the wage increase. But at the request of SEIU, the law treats a single hotel, print center, restaurant or in-home health care provider as if it employs more than 500 people due to its affiliation with a national chain, even if it only employs five people, thereby creating an uneven playing field.

The city’s ordinance willfully categorizes small, independently-owned franchise owners as big, out-of-state businesses, a violation of the Commerce Clause of the U.S. Constitution. The lawsuit argues that the Seattle ordinance defies years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from its franchisors that provide brand and marketing materials, based on the payment of an initial franchise fee and ongoing royalty payments to use the brand’s trademark.

U.S. District Court Judge Richard A. Jones is likely to decide on the preliminary injunction before the law takes effect on April 1. Regardless of the ruling on the injunction, the lawsuit against the franchisee provisions of the new law will continue.

The injunction – and the lawsuit – seek to stop only the provisions of the new law that discriminate against franchise businesses. If the injunction is granted, the new minimum wage law still takes effect. Small franchise businesses, however, would adopt the $15 minimum wage on the same 7-year timetable as other small businesses, instead of the 3-year schedule currently required in the ordinance.

The Associated Press has written about the upcoming Seattle federal court hearing as well as a National Labor Relations Board issue over whether franchisors are “joint employers” of franchisees. Both the discriminatory provisions in Seattle’s new law and the NLRB proceeding are part of an orchestrated campaign by the Service Employees International Union (SEIU) to try to undermine the franchise business model and increase union membership.

To learn more about the preliminary injunction, you can read IFA’s motion for the injunction here and the IFA’s further briefs on the injunction here and here.

Go to SeattleFranchiseFairness.com to learn more about the lawsuit and the coalition of Seattle small business owners working together to oppose the local franchise business owner provisions in the city’s minimum wage law.