On May 2, 2016, The U.S. Supreme Court declined to hear the legal challenge to the Seattle Minimum Wage Ordinance’s impact on Seattle franchisees (IFA v. Seattle–denial of cert). We have blogged about Seattle’s Minimum Wage Ordinance (“Ordinance”) before. The 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 four years starting in April 2015. Smaller businesses have five years to phase in the wage increase.
The Ordinance groups franchisees with their franchisor in determining whether they are a large employer or not. Many Seattle franchisees are categorized as “large” employers under the Ordinance, even if they would otherwise be “small” employers who would have more time to comply with the law. These franchisees will be required to pay a $15 minimum wage as of January 1, 2017, unless they contribute to medical benefits, in which case the phased in minimum wage goes to $15 for such franchisees as of January 1, 2018. The IFA lawsuit had argued that a franchisee should be considered an independent local business owner who operates separately from its franchisor.
Seattle was the first major city to institute a phased in $15 minimum wage, setting off a wave of similar laws in other U.S. cities and states.