The Seattle City Council unanimously approved the highest minimum wage among major U.S. cities on Monday, endorsing a $15-an-hour wage floor that is more than double the federal level.
The proposal, which Seattle Mayor Ed Murray is expected to sign into law this week, is likely to become a test case for local rules that offer more leeway to certain small businesses over global chains and larger employers. The Seattle measure carves up city employers into four groups and gives them between 2017 and 2021 to meet the $15 mark. The proposal would phase in the wages over three to seven years, based on the size of the employer and the benefits offered. Federal and state wage rules typically apply the same minimum to all businesses.
Wages in the country’s 21st-largest city would jump 60% from Washington’s $9.32 hourly level, already the highest state pay floor in the country. San Francisco has the highest current minimum wage among large cities at $10.74 an hour. The suburb of SeaTac, Wash., home to Seattle-Tacoma International Airport, mandates a $15 wage for hospitality and transportation workers.
“Voters clearly said income inequality is a city issue,” Seattle council member Sally Clark said on Monday before voting for the increase. “We will redefine the minimum wage in Seattle and the country.”
Mr. Murray established a task force of business and labor leaders this year to craft a proposal to eventually reach the $15 mark.
The blueprint that the mayor endorsed requires businesses with more than 500 employees—in Seattle or nationwide—to lift wages in three steps to $15 an hour by 2017. Large employers that offer health-insurance benefits would have an additional year to comply. Small businesses will have as late as 2021 to reach $15 an hour, with different rules for tipped and nontipped workers.
Wages for all four categories of employers would be adjusted annually after reaching the $15 mark, with all employers complying with the same wage floor—a projected $18.13 an hour—in 2025.
The Seattle City Council’s approval drew an immediate backlash from the International Franchise Association, a trade group that represents businesses ranging from fast-food eateries to hotels to carpet cleaners. The association said it will challenge the law on the grounds that it discriminates against hundreds of small franchisees by subjecting them to the faster adoption of the wage increase, treating them like they are big businesses.
“Just because you’re a franchisee using a common brand doesn’t mean that you’re part of one giant business,” said the trade group’s General Counsel Dennis Wieczorek. “You’re an independent owner.”
Federal law doesn’t account for the size of employers in setting the $7.25-an-hour pay floor. Most states follow similar rules.
A few states have exemptions for small businesses. For example, earlier this year, Minnesota lawmakers approved a $7.75-an-hour wage by 2016 for businesses with less than $500,000 in annual revenue, but a $9.50-an-hour floor for larger companies.
Meanwhile, a prominent union leader called the Seattle measure a “breakthrough.”
“It is a huge step forward as workers across the country build a movement to make sure that fast-growing service jobs pay people enough to become the foundation of the next American middle class,” said Mary Kay Henry, president of the Service Employees International Union.
Write to Eric Morath at eric.morath@wsj.com and Melanie Trottman at melanie.trottman@wsj.com
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