Seattle’s New $15 Minimum Wage Starts Phasing in on April 1, 2015
(June 2, 2014) Seattle’s City Council unanimously passed an ordinance that will raise Seattle’s minimum wage to $15 an hour for all Seattle employers.
The ordinance establishes phased-in wage increases starting April 1, 2015. It requires large businesses with 500 or more employees in the US to start paying a minimum of $11 an hour by that date and to reach $15 by January 1, 2017. Large businesses that provide health care benefits have an additional year to reach $15.
Businesses with fewer than 500 employees in Seattle or nationally must reach a $15 an hour minimum wage by 2021, and they have until 2019 to meet a minimum compensation requirement of $15 if they combine employer-paid health care contributions, consumer-paid tips, and employer-paid wages.
Seattle’s minimum wage is tied to inflation, and the city projects that by 2025 the minimum wage will be $18.13 an hour, nearly double the state’s current $9.32 an hour.
Franchisees are recognized in the ordinance as large businesses if their brand has more than 500 employees nationwide. WLA has been partnering with the American Hotel & Lodging Association, the International Franchise Association (IFA) and other organizations to address this discriminatory treatment which will not only greatly increase labor costs for franchisees, but will permanently damage the franchise business model by singling out franchise business owners for punitive regulatory treatment.
Immediately following the City Council vote, IFA issued a press release announcing that it would file suit to challenge the unfair and discriminatory minimum wage plan, noting that decades of legal precedent have held that franchise businesses are independently-owned businesses and are not operated by the brand’s corporate headquarters. IFA CEO and President Steve Caldeira calls the treatment of franchisees in the ordinance “unfair, discriminatory and a deliberate attempt to achieve a political agenda at the expense of small franchise business owners.”
The ordinance will give Seattle the highest minimum wage in the country and includes the following provisions:
- Businesses with 500 or more employees in Seattle or nationally must start paying a minimum wage of $11 on April 1, 2015 and must increase the wage to $15 an hour by January 1, 2017.
- Large businesses that provide health care coverage have an extra year to reach $15 an hour.
- Businesses with fewer than 500 employees must start paying a minimum wage of $10 on April 1, 2015, and then follow the city’s schedule to reach $15 an hour by 2021.
- Businesses with fewer than 500 employees can count tips and health care costs as part of total compensation for the first five years of a seven-year phase-in. These businesses must start at $11 an hour on April 1, 2015.
- Franchisees are considered large employers if the franchise has 500 or more employees nationwide.
- Once the $15 an hour wage is reached, it will be increased annually on January 1 on a percentage basis to reflect the rate of inflation.
- A training wage is included, but businesses must apply for certificates similar to the state’s program.
- A city director will have the authority to establish a sub-minimum youth wage for 14- and 15-year-olds.
With the passage of this complex ordinance, the city will now begin drafting rules for its implementation. The Washington Lodging Association and the Seattle Hotel Association, with support from the American Hotel & Lodging Association, will be actively engaged in the rule-making process to protect the interests of lodging owners, operators and employees in Seattle.
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