While a lot of people believe the Ninth Circuit Court of Appeals is the most liberal federal court out there, the newest decision by the courts should reinforce that belief and some. The Ninth Circuit Court of Appeals just ruled that the Seattle minimum wage hike did not violate any existing laws or violate the Constitution, even though there is a discrepancy in the wage hike. In part, franchise businesses have to begin paying the higher minimum wages sooner that the non-franchise small businesses. This comes not really as a shock to the International Franchise Association, but more of a let down as the International Franchise Association was hoping this would end before the next raise hike will take effect, which is going to be within the next few months.
The Ninth Circuit Court of Appeals ended up agreeing with the District Judge from a decision in March in which an injunction was denied to the International Franchise Association, which wanted the law blocked before the trial. The mayor of Seattle, Washington, Mayor Edward B. Murray in 2014 formed an “Income Inequality Advisory Committee” which was right after he took office. Murray said that he wanted to focus on an opportunity agenda which was going to focus on implementing the minimum wage increase into the city of Seattle. Just in April, the Seattle City Council had passed the $15 an hour minimum wage hike, and then the Mayor signed in the phased wage increase on April 1. The law specifically says and discriminates against the large employers and the small employers. Large employers are defined as a business that has over 500 employees or more. The small employers do not need to phase in the $15 an hour minimum wage hike for seven years, but the large employers have to start the $15 an hour minimum wage increase within three years from the April 2015 initial date.
In June 2014, The International Franchise Association and five different franchisees sued the United States District Court in Washington because they argued that the minimum wage hike in Seattle discriminated against the franchised businesses, because in 2015 they would have to pay $11 an hour whereas the small businesses would only have to pay $10 an hour. While it might have seemed like a good argument, which was based off the Equal Protection Clause of the Constitution and the Washington State Constitution, the IFA lost the argument. The argument was mostly based off of the fact that there were two identical types of businesses that were being treated differently. There was also an argument made that since a lot of the franchises were out of the state, there was discrimination involved, and this then violated the Constitution;s Commerce Clause, but it was not enough to win the IFA the ruling, and then they appealed. A three-judge panel at the Ninth Circuit Court of Appeals of the United States ruled unanimously that the injunction was correctly denied. Specifically, the ruling had stated that there was not enough serious questions being raised by the International Franchise Association and the merits were not serious enough, and the injunction was not shown to be in the best interest of the public. The Presiding Judge Hawkins did say that there was some evidence in the records that did bring questions about the franchise business model, there was not enough to say that the City Council had been motivated by discrimination against the out-of-state firms, and that there was a non-discriminatory purpose in which the city clearly showed.
With this ruling, the International Franchise Association said they were extremely disappointed, and the Executive Vice President of Government Relations and Public Policy, Robert Cresanti also commented after the decision. He said that there was conflict among the decisions being made in the circuit courts, and that a further review of this case and decision by the United States Supreme Court would be beneficial in this case. The Seattle City Attorney and Mayor both spoke out saying that this was a victory for all of the workers in Seattle, and that higher wages not only benefit workers, but the local economy and their families too. The next wake hike will go into effect on January 1, 2016, and from there it will be another couple of years before the wage hikes hit $15 an hour across the board, of course, small businesses will have some more time to comply than the big businesses.
It is not known right now if the IFA can appeal this decision at all at the lower courts or if as they pointed out, the next step would be taking the issue to the Supreme Court where the challenge could wind up taking months to process and render a decision. This in part would be because interstate commerce is involved so the Supreme Court would have to see if the Seattle laws and Washington laws could dictate the out-of-state franchised locations. It is not known exactly how long it will take for the IFA to file the appeal as it seems right now that is what will happen or what the process will be once that appeal gets filed, since it will likely become a Supreme Court issue. There probably will not be an injunction or stay of the minimum wage hike that is already in place, so that means that until the issue is sorted out in federal court, both the small businesses and large businesses will have to pay the higher minimum wages, although it likely will be before everyone has to pay the $15 an hour minimum wage. For now at least, it seems like the workers in Seattle across the board will be getting their wage hike, although those working in the small businesses will have to wait a few more years for it to become mandatory than those who are already working in a large business since that is how the law had mandated it to be.