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Chain Restaurants Are Locked in a Last-Ditch Legal Battle Over Seattle's $15 Minimum Wage

Seattle's $15 minimum wage is set to take effect April 1, but national chain restaurants are still fighting it.

by Colleen Curry
Mar 19 2015, 4:25pm

A legal fight between national chain restaurants and the city of Seattle over a planned minimum wage increase represents a last-ditch resistance effort by corporations against a swell of support for workers' rights, according to labor leaders.

The International Franchise Association said it plans to fight Seattle's new minimum wage law all the way to the Supreme Court if necessary over the city's decision to treat chain restaurants as large businesses even if they are owned by franchisees.

Seattle's City Council voted in 2014 to raise the minimum wage in the city to $15, phasing in the increases over the next three years. The first phase, in which large employers must pay employees $11 an hour, is set to take effect on April 1.

The IFA asked a federal judge for an injunction against the city, arguing that the owners of franchise restaurants are really small business owners despite their attachment to multinational corporations. US District Judge Richard A. Jones denied that injunction this week, but the IFA says they are prepared to keep fighting.

"[Tuesday's] decision is clearly a disappointment but it is not the end of this fight," IFA president and CEO Steve Caldeira said in a statement. "The ordinance is clearly discriminatory and would harm hard-working small business owners who happen to be franchisees."

The IFA says the lawsuit is not about the minimum wage but about how courts view franchise owners. Labor advocates, however, say the legal fight fits a larger pattern of behavior in which national restaurant lobbying groups fight wage increases with all kinds of legal loopholes.

"They fight, fight, fight up until the bill gets passed, and then they look for loopholes so they don't have to comply with the law," Saru Jayaraman, the director of the Food Labor Research Center at UC Berkeley, told VICE News. "They just believe money and power can change the law."

Related: Walmart Workers Across the Country Rage Against Black Friday for Fairer Wages

Jayaraman said that groups like the IFA and the more powerful National Restaurant Association spend millions fighting against increases in minimum wage, guaranteed sick days, and health benefits for employees. The top four contributors to the association are McDonald's, Yum Brands (which owns Taco Bell, KFC, and others), Darden (which owns Olive Garden, Longhorne Steakhouse, and others), and Disney, she said.

The Center for Responsive Politics, which tracks money spent on lobbying at the federal level, said the IFA spent more than $1 million and the restaurant association spent more than $2.5 million on lobbying and campaign donations in 2014. But CRP and Jayaraman said the groups spend even more money and attention focused on combatting state and local legislation.

"Everybody is involved, from Applebees to Starbucks, but they never allow their names to be mentioned. They spend so much on PR trying to say, We pay our workers well, give them benefits, we're racially conscious. They would never want to be associated publicly with [the NRA]," she said.

The National Restaurant Association released a statement on Wednesday regarding the judge's decision.

"This decision is a disappointing step backward, but the National Restaurant Association will continue to move forward in our fight to stop the city of Seattle's discrimination against hardworking restaurant franchisees," said Angelo Amador, Senior Vice President of Labor and Workforce Policy and Regulatory Counsel for the National Restaurant Association.

Paul Sonn, general counsel and program director for the National Employment Law Project, said the NRA has, for decades, been the single most influential force in keeping the minimum wage low in the US, but the successful increase in Seattle represents a coming sea change.

"Seattle and the new wave of workers demanding a $15 wage has changed the dynamic, and created national momentum for much more meaningful minimum wages," Sonn told VICE News.

The demand for $15 an hour has ricocheted across the country with incredible speed, Sonn and Jayaraman said. Two years ago labor advocates and President Obama were calling for a minimum wage increase to $9, and the highest minimum wage in the nation was $10.55, in San Francisco. Now, following heavily publicized strikes by fast food and retail workers, cities across the country including Los Angeles, Chicago, and Washington, D.C., are proposing their own increases of $13 to $15 an hour.

During the last election cycle, four states with ballot measures proposing wage increases passed overwhelmingly, even as people were voting for pro-business Republican candidates, Jayaraman said.

"I've been working on these issues 20 years and have never seen anything like this," Jayaraman said. "This is a huge moment of rising expectations and total disgust with corporate loopholes and taxpayer subsidies. Paying these [low] wages results in billions of tax dollars being used in public assistance for these workers. People are voting wildly for minimum wage increases."

The demand for higher wages isn't confined to restaurant chains and workers. Earlier this year Walmart announced it would raise its minimum wage to $10 an hour by 2016, TJ Maxx and Marshall's said they would raise theirs to $9 an hour in June, and Target announced this week it would raise its lowest wages to $9 an hour in April.

Related: What Walmart's Pay Hike Proves For Both Sides of the Minimum Wage Debate

Though there has been much progress, there have also been defeats, Jayaraman said. Along with Seattle's minimum wage increase the city council also agreed for the first time to allow a lower wage for tip workers, which disproportionately affects women who make up the majority of the tip-earning workforce, she said. Tip workers will have the same minimum wage once Seattle's 3-year plan is complete. 

Still, advocates and politicians praised Jones' decision against the IFA this week, saying it represented an important step in clearing the way for the wage increase next month.

"This is a great day for Seattle's fast food franchise workers. This ruling ensures that on April 1st, the minimum wage will go up for everyone in our city," Seattle Mayor Ed Murray said in a statement. "Our actions in Seattle have set the bar high for developing a process to raise wages in a way that works for workers and business. Rather than investing in lawyers to prevent workers from earning higher wages, it is time for these large businesses to begin investing in a higher minimum wage for their employees."

The IFA said it will continue to pursue legal avenues to win a permanent injunction against the Seattle law.

Related: Fast Food Workers Fight for a Raise, a Union, and Dignity at First National Convention