Big Business Defeated as Seattle’s Minimum Wage Hike Upheld

Efforts by big business interests to block implementation of Seattle’s minimum wage increase took a step back Friday as a federal appeals court ruled the city’s wage law is constitutional.

The ruling came from the U.S. Court of Appeals for the Ninth Circuit in a lawsuit filed by a corporate front group known as the International Franchise Association Inc. and a group of Seattle franchisees represented by Paul Clement, a conservative Supreme Court litigator and attorney behind legal challenges to the Voting Rights Act and the Affordable Care Act.

Seattle’s law went into effect in April and requires “large employers,” classified as those with more than 500 employees, to raise their minimum wage to $15 an hour over the next three years. Smaller businesses have until 2021 to phase in the wage increase.

Clement sued the city in 2014 on behalf of conservative business interests to bar parts of the city’s new $15 minimum wage law from taking effect. Clement raised several constitutional challenges to the law, arguing that classifying franchisees like Papa John’s and McDonald’s as “large employers,” which forced them to implement the wage hikes more quickly than smaller businesses, violated the state and federal constitutions and federal statutes.

U.S. Federal District Judge Richard Jones disagreed and denied Clement’s request for a preliminary injunction blocking implementation of the law. Friday’s decision by the Ninth Circuit affirms Jones’ ruling.

Writing for the court, Circuit Judge Michael Daly Hawkins held that the plaintiffs failed to “raise serious questions going to the merits on any of its claims, nor did it show that an injunction is in the public interest.”

Clement had argued on behalf of his clients that classifying franchisees as large employers violated the dormant Commerce Clause’s prohibition on laws designed to burden out-of-state business, an argument similar to ones made in the challenge to the individual mandate and Medicaid expansion provisions of the Affordable Care Act.

Clement argued the ordinance also violated the First Amendment since franchisees operate under prescribed marketing plans and are associated with trademarks or other protected commercial symbols, which the ordinance unconstitutionally restricts.

The Ninth Circuit rejected the constitutional arguments outright, finding that Clement had failed to show how his clients would be “excluded from the market, earn less revenue or profit, lose customers, or close or reduce stores.” Seattle’s wage ordinance, the court wrote, was “plainly an economic regulation that does not target speech or expressive conduct,” despite Clement’s claims.

“The ordinance does not classify employers based on the location of their headquarters, the location of their workers, or the extent to which they participate in interstate commerce,” Hawkins wrote. “Rather, it classifies based on the number of employees (a facially-neutral classification) and the business model (a facially-neutral classification).”

Robert Cresanti, executive vice president of government relations and public policy for the International Franchise Association, called the Ninth Circuit’s decision a “disappointment” and suggested the organization plans to appeal the decision to the U.S. Supreme Court.

If upheld, the decision could clear the way for more cities to raise the minimum wage.

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