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IFA claims Seattle minimum wage hike is discrimination

The International Franchise Association has issued a statement vowing "to keep fighting to block the city of Seattle from discriminating against small franchised businesses as part of the city's 2014 minimum wage law, after the group's request for a preliminary injunction was denied yesterday in federal court."

March 18, 2015

The International Franchise Association has issued a statement vowing "to keep fighting to block the city of Seattle from discriminating against small franchised businesses as part of the city's 2014 minimum wage law, after the group's request for a preliminary injunction was denied yesterday in federal court."

IFA and five Seattle franchisees sued Seattle in June 2014, in an attempt to block portions of the city's new law to increase the city's minimum wage to $15 an hour. The plaintiffs asked the court to refrain from treating franchisees as large, national companies rather than the small, locally-owned businesses, according to the statement.

"Yesterday's decision is clearly a disappointment but it is not the end of this fight," said IFA President & CEO Steve Caldeira, CFE, in the statement. "The ordinance is clearly discriminatory and would harm hard-working small business owners who happen to be franchisees. Those who have set out to destroy the long-accepted, time-tested and proven franchise business model must be stopped. IFA will continue to fight against discrimination of small business owners in Seattle and elsewhere. It was never about Seattle raising the minimum wage to $15 wage, but rather the increase applied in a discriminatory way."

Seattle's new law takes effect April 1 and 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 in April 2015. Smaller businesses have seven years to phase in the wage increase.

The ordinance unfairly requires Seattle franchisees to meet the three-year deadline for large businesses. IFA contends the law is a violation of the Commerce Clause of the U.S. Constitution based on the reasoning that, according to the organization, 96 percent of the franchises operating in Seattle are affiliated with an interstate commerce network.

The IFA lawsuit argues that the Seattle ordinance defied years of legal precedent that defined a franchisee as an independent local business owner who operates separately from its franchisor. IFA also argues that the categorization is a violation of the Equal Protection Clause of the U.S. Constitution, as well as Washington State's Constitution.

IFA will continue to pursue legal avenues to win a permanent injunction against the portions of Seattle's ordinance that apply to small business franchises, the statement said.