Ninth Circuit Upholds Seattle Discriminatory $15 Minimum Wage Law

The Ninth Circuit Court of Appeals ruled today that Seattle’s minimum wage does not violate the Constitution or existing laws, despite requiring that franchise businesses start paying a higher minimum wage more quickly than non-franchise small businesses.

In another example of why the Ninth Circuit is considered the most liberal federal court in the land, the Court of Appeals agreed with a District Judge’s decision in March that denied issuing an injunction to the International Franchise Association’s (IFA) to block imposition of the law before trial.

Seattle Mayor Edward B. Murray formed an ‘Income Inequality Advisory Committee’ shortly after taking office in 2014 to address what he called his “opportunity agenda” to focus on implementing a meaningful increase in the city’s minimum wage. In April, the Seattle City Council passed and the Mayor signed a phased in $15 an hour minimum wage for all Seattle workers on April 1, 2015.

In a clear shot at franchisers, the law’s mandates specifically discriminated between large employers defined as 500 employees or more and small employers. Small employers do not have to reach a $15 an hour minimum wage for seven years, but large employers must meet the wage in three years, beginning April 2015.

The IFA and five local franchisees sued in June 2014 in the United States District Court for the Western District of Washington, arguing that Seattle’s minimum wage specifically discriminates against franchise businesses, because they must start paying a higher minimum wage of $11 an hour in 2015 as large businesses, versus only $10 an hour for small businesses.

The IFA unsuccessfully argued that the city violated the Equal Protection Clause of the U.S. Constitution and the Washington State’s Constitution by taking two identical business models and treating them differently. Furthermore, since many franchises are based out of state, IFA also claimed that the city’s discrimination violated the Constitution’s Commerce Clause. After losing, the IFA appealed.

In a unanimous decision issued by a three-judge panel of the Ninth U.S. Circuit Court of Appeals, it was reasoned that U.S. District Judge Richard A. Jones was correct in denying the injunction. The ruling states that the IFA “did not raise serious questions going to the merits on any of its claims, nor did it show that an injunction is in the public interest.”

Presiding Judge Hawkins added: “While the record contains some evidence that City officials and advocates questioned the merits of the franchise business model, the district court did not clearly err in determining that the City Council was not motivated by an intent to discriminate against out-of-state firms or interstate commerce. The text shows the City had a legitimate, non-discriminatory purpose.”

The IFA “expressed disappointment” in a press release. Executive Vice President of Government Relations and Public Policy Robert Cresanti commented: “The absence of controlling Supreme Court precedent, and the conflict among the decisions of the federal circuit courts, suggests that Supreme Court review of the Ninth Circuit’s decision may be appropriate.”

Seattle Mayor Murray and the City Attorney issued a victory statement, “Today’s unanimous decision is a victory for Seattle’s workers.” Mayor Ed Murray added. “This year, we’ve shown that higher wages benefit workers, their families and the local economy. This decision clears the way for Seattle’s next raise to go into effect on Jan. 1.”