11th Circuit Revives Lawsuit Challenging Legality of Alabama’s Ban on Local Minimum Wage Ordinances

On July 25, 2018, the Eleventh Circuit Court of Appeals reversed a Birmingham federal judge’s dismissal of a lawsuit challenging the February 2016 Alabama Uniform Minimum Wage and Right to Work Act (commonly known as “the Minimum Wage Act”). The Minimum Wage Act provided the Alabama state legislature with the authority to control the regulation of wages within the state of Alabama, including the establishment of a state minimum wage. The passage of the Minimum Wage Act occurred shortly after the City of Birmingham passed an ordinance providing for an increase in the minimum wage for workers in Birmingham (including employees of private employers who perform work within the Birmingham city limits).

The Eleventh Circuit’s decision results in the revival of the lawsuit that was previously dismissed at the lower court level, but it does not have an immediate impact on the hourly minimum wage for employees in the city of Birmingham.

Background

The current federal minimum wage is $7.25 per hour. While some states and cities across the country have increased the minimum wage beyond this threshold, Alabama is not one of those states.

In April 2015, the Birmingham City Council passed a resolution asking the Alabama state legislature to raise the minimum wage to $10 per hour across Alabama. After this request was denied, in August 2015, the Birmingham City Council adopted its own minimum wage ordinance, Ordinance No. 16-28, that increased the minimum wage for employees in the city of Birmingham to $8.50 per hour beginning in July 2016, and to $10.10 per hour in 2017.

Shortly after the approval of Ordinance 16-28, a state representative introduced a bill in the Alabama House of Representatives prohibiting municipalities—including the City of Birmingham—from implementing a local minimum wage. Eventually, a version of the bill was approved by the Alabama House of Representatives, and later it was approved by the Alabama Senate Committee on Governmental Affairs.

While these efforts were ongoing in the Alabama legislature, the Birmingham City Council accelerated the implementation of Ordinance 16-28. On February 23, 2016, former Birmingham mayor William Bell signed Ordinance 16-28 into law, which had been modified to provide an increase in the minimum wage for employees in the city of Birmingham to $10.10 per hour, effective immediately. The ordinance also called for adjustments to the minimum wage on an annual basis.

On February 25, 2016, the Minimum Wage Act was approved by the Alabama Senate. Former Alabama governor Robert Bentley signed the Minimum Wage Act into law that same day. The Minimum Wage Act provided the Alabama state legislature with the authority to control the regulation of wages and to establish a uniform minimum wage across the state of Alabama. Of course, the implementation of the Minimum Wage Act nullified the passage of Ordinance 16-28. The heightened minimum wage for the city of Birmingham was in place for only one day.

On April 28, 2016, African-American hourly workers from the city of Birmingham, along with the National Association for the Advancement of Colored People (NAACP) and other local interest groups, filed a federal lawsuit challenging the Minimum Wage Act and claiming racial discrimination under the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution, among other claims. The lawsuit named the governor of Alabama, the attorney general for the State of Alabama, the State of Alabama, the City of Birmingham, and the mayor of Birmingham as defendants. On February 1, 2017, a Birmingham federal judge dismissed the lawsuit, holding that the Minimum Wage Act did not violate the Fourteenth Amendment and contained no racially discriminatory intent.” The plaintiffs appealed the lower court’s decision to the Eleventh Circuit Court of Appeals.

The Eleventh Circuit’s Opinion

While the Eleventh Circuit upheld the lower court’s opinion with respect to several defendants and some legal theories, it reversed the lower court’s dismissal of the Fourteenth Amendment claims against the attorney general for the State of Alabama, stating that the plaintiffs’ lawsuit “plausibly alleged a discriminatory motivation behind the Minimum Wage Act.”

In issuing its opinion, the Eleventh Circuit stated that the city of Birmingham has Alabama’s largest African-American population and has more total residents living in poverty than anywhere else in the state, and that the Birmingham City Council’s makeup was primarily African-American. The Eleventh Circuit also noted that the Minimum Wage Act was introduced by a Caucasian state representative, primarily supported by Caucasian lawmakers, and uniformly opposed by African-American lawmakers. These factors, the Eleventh Circuit concluded, led to its decision that the plaintiffs plausibly stated a claim that the Minimum Wage Act was discriminatory towards African-Americans in violation of the Equal Protection Clause of the Fourteenth Amendment. The Eleventh Circuit went on to say, however, that it had no opinion as to whether the plaintiffs could ultimately prove that the law was enacted with a discriminatory motive, but that dismissal at the outset of litigation was inappropriate.

Key Takeaways for Employers

It is unknown at this point whether this matter will be appealed to the Supreme Court of the United States. For the time being, the hourly minimum wage for employees within the city of Birmingham remains at $7.25. However, employers that have workers within the city of Birmingham may want to continue to monitor this case and any legislative activity occurring as a result of this litigation. Eventually, the hourly minimum wage for employees within the city of Birmingham could rise pursuant to Ordinance 16-28, or the state legislature could take other efforts that increase the state minimum wage.

Ogletree Deakins will continue to monitor this issue and provide updates on future developments.