Seattle City Council unanimously approved the adoption of a $15 per hour minimum wage yesterday, making it the highest minimum wage in the nation.

Beginning April 1, 2015, the legislation will phase in a $15 per hour minimum wage annually over three to seven years, depending on employer size, according to the City of Seattle.

Businesses with more than 500 employees will have to pay $15 an hour by 2017 — or 2018 if they offer health care benefits. Smaller businesses would need to increase minimum wage within the next five to seven years, depending on the company’s benefits. Within the first five years, there will be a tip credit for small businesses, according to the City of Seattle. After five years, tips won’t be included in the minimum wage payment.

Currently, Washington state’s minimum wage is $9.32 per hour, according to the Washington State Department of Labor & Industries.

"With inaction at the state and national levels, it's time for cities to demonstrate bold and necessary leadership to address income inequality," said Tim Burgess, president of the Seattle City Council. "Seattle has found a workable and careful compromise that recognizes both the harm caused by stagnant wages and the harm to local businesses should we move forward too quickly."

Some Seattle businesses, including car rental companies, could be affected by the increase in minimum wage.

"It depends on the final wording of the ordinance," said Doris Cassan, owner of a Dollar Rent A Car licensee with locations in Seattle. "We base our compensation on a wage but also have productivity and incentive programs in place for every job category. If tips and other compensations are included in the ordinance for the calculation of the $15, it will not affect us at all. But if it is just the actual wage, it will."

The International Franchise Association (IFA) is filing a lawsuit against the minimum wage plan, calling it unfair and discriminatory.

“The Seattle City Council and Mayor Murray’s plan would force the 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in three years, while most other small business owners would have seven years to adopt the $15 wage,” said Steve Caldeira, IFA’s president and CEO. “These hundreds of franchise small business owners are being punished simply because they chose to operate as franchisees.”

Although the Seattle Metropolitan Chamber of Commerce took part in the discussions about the minimum wage plan and participated on Seattle Mayor Ed Murray’s Income Inequality Advisory Committee, the Chamber of Commerce posted this response on its website: “Unfortunately, we believe that the legislation passed today by the City Council does not fully reflect the final compromise proposal. Moving forward, we will continue to advocate on behalf of our members to ensure that these new wage polices are implemented fairly and accurately, and that the impacts of this new law are captured fully.”

This legislation will take effect 30 days after Mayor Murray signs it into law, says the City of Seattle.

By Amy Winter