Supreme Court Rejects Challenge to Minimum-Wage Law

Date: May 05, 2016

Court Refuses To Hear Franchisees’ Case Against Seattle’s $15 Minimum Wage

This week the debate over higher minimum wages took the national stage as the Supreme Court refused to hear a challenge to one of the numerous minimum wage hikes that has cropped up across the US. Reuters reported that the Supreme Court rejected a challenge by the International Franchise Association Seattle-area businesses against the city’s new $15 per hour minimum wage. Seattle’s wage hike, enacted in April 2015, mandates that businesses with more than 500 employees across the US boost their minimum wage to $15 by 2018, while smaller companies must do so by 2021. The IFA wasn’t targeting the wage hike itself, but instead arguing that locally-owned franchises of US companies like Burger King and McDonald’s should be given the same extra time to boost wages as small companies. IFA President Robert Cresanti said, “Seattle’s ordinance is blatantly discriminatory and affirmatively harms hard-working franchise small business owners every day since it has gone into effect.” However, Seattle officials and those supporting the wage increase argued that franchises aren’t typical of small businesses in that they offer advantages like bulk purchasing, access to lending, and easily-recognized brand names. The case was previously heard by a Federal judge in Seattle in March 2015, who sided with the city in mandating the 2018 wage hike. Last year the 9th US Circuit Court of Appeals in San Francisco upheld that decision.

What This Means For Small Businesses

Businesses large and small, franchised or only at one location, have been suffering as a result of Seattle’s minimum wage increase, and similar wage increases across the US. News that the Supreme Court has declined to hear a case involving a minimum wage increase is disappointing, but the case was more a test of the differences between franchises and small businesses, rather than about the wage hike itself. Future action through judicial and legislative channels is necessary to help stem the trend of mounting labor costs that come from rising minimum wages.

Additional Reading

The Huffington Post also reports on the Supreme Court’s decision not to hear this case.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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