Seattle Increases Minimum Wage to $15.00 Per Hour

Joining Hawaii, Maryland and Connecticut, all of which have voted to gradually raise their state minimum wages to $10.10 per hour, and Massachusetts, which has voted to gradually increase its minimum wage to $11.00 per hour, Seattle has become the first city to pass a $15.00 per hour minimum wage. The initial impact of the city ordinance will be felt by Seattle employers beginning on April 1, 2015, with additional increases in the minimum wage phased in over several years.

Seattle Mayor Ed Murray signed the legislation that will increase the minimum wage on June 3, 2014. The new law applies to employees performing work in Seattle and raises the minimum wage to $15.00 per hour over the next few years. While the battle rages on in Congress over a potential increase to the $7.25 per hour federal minimum wage, Seattle’s increase is at the forefront of a political trend. A $15.00 minimum wage is also on the November ballot in San Francisco, which currently has the country’s highest minimum wage at $10.74 per hour. Washington State’s minimum wage is the highest state minimum wage at $9.32 per hour and will increase in 2015. Washington is one of 10 states that adjust the minimum wage based on inflation and the Consumer Price Index. The others are Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, and Vermont.

The new Seattle ordinance, Seattle Municipal Code §14.19 et seq., applies to all employees in Seattle for each hour worked within the geographic boundaries of the city. The rate at which an employer must implement increases in the minimum wage depends on the number of employees it employs within the United States, regardless of where the employees work. An employer with more than 500 employees in the United States is a “Schedule 1” employer and must reach the $15.00 per hour minimum wage by January 1, 2017, while a “Schedule 2” employer with 500 or fewer employees has until January 1, 2021 to reach the $15.00 minimum wage. Schedule 1 employers that pay toward an employee’s qualifying medical benefits plan have another year to reach the $15.00 per hour wage. Schedule 2 employers that pay wages plus tips and contributions toward employees’ qualifying medical benefits plans are also on a longer timeline and may pay a lower initial effective minimum wage of $10.00 per hour.

The ordinance also contains notice requirements, enforcement procedures and penalties. The Seattle Office for Civil Rights will prepare and provide an annual notice, which employers must post for employees in English, Spanish, and any other language commonly spoken in the workplace. An employer that willfully fails to comply with this requirement can be subject to a civil penalty of $125 for the first violation and up to $250 for subsequent violations. Civil penalties for violations of the minimum wage law include up to $500 for the first violation, and a maximum civil penalty for subsequent violations of up to $20,000 per employee, depending upon the number of violations.

The Seattle ordinance is already facing one legal challenge. The International Franchise Association and four of its members have filed a lawsuit seeking an injunction to stop the law from going into effect. The lawsuit alleges that the Seattle ordinance violates the Commerce Clause and the Equal Protection Clause of the U.S. Constitution as well as the Washington Constitution and numerous other statutes and legal doctrines. According to the lawsuit, the ordinance “unfairly and irrationally discriminates against interstate commerce generally, and small businesses that operate under the franchise business model specifically” with “absurd results.” In addition, several groups are collecting signatures in an attempt to put the law to a referendum vote on the November 2014 ballot.