Will Alabama Governor Sign Pay Equity Legislation?

Federal law already prohibits employers from paying an employee less than employees of another sex for equal work, unless the employer bases the wage difference on statutorily defined factors. Alabama and Mississippi were the only two states without corresponding state-specific laws until Representative Adline Clarke, D-Mobile, introduced Alabama House Bill 225 on March 19, 2019. The Alabama Senate voted unanimously to approve the bill, with amendments, and the Alabama House of Representatives unanimously passed the Clarke-Figures Equal Pay Act on May 30, 2019. Alabama Governor Kay Ivey has yet to sign the act into law. Some political groups speculate that she may not sign the bipartisan bill. If she does sign the bill, Alabama will become the 49th state to adopt equal pay legislation.

Alabama’s Equal Pay Act

The act would prohibit an employer from paying an employee a lower wage rate than an employee of another race or sex for equal work in the same establishment, where job performance requires “equal skill, effort, education, experience, and responsibility” and occurs “under similar working conditions.” The act creates an exception where the employer bases the wage differential on any of the following factors:

1. A seniority system
2. A merit system
3. A system that measures earnings by quantity or quality of production
4. A differential based on any factor other than sex or race

The Alabama Act Compared to Federal Pay Equity Law

The Alabama act substantially adopts the federal Equal Pay Act (EPA), 29 U.S.C. § 206(d), with some notable differences. First, the act goes a step further than the EPA by prohibiting an employer from refusing to “interview, hire, promote, or employ an applicant,” or retaliate against an applicant, because the applicant does not provide wage history.

The act also raises the pleading standard for employees bringing an equal pay claim. Rather than merely stating a “plausible” claim, employees must “plead with particularity” that (1) the employer violated the act, and (2) that the alleged wage differential is not due to a permissible exception under the act.

Further, the penalties provided in the act are not as stout as those the EPA provides, which impose criminal fines for willful violations. An employer violating the Alabama act may be liable to the employee for the wage difference caused by the violation, with interest. However, under the act, if an employee files equal pay claims under both state and federal law and recovers damages under both, then the employee must return to the employer the lesser amount recovered under either state or federal law.

Finally, while the EPA imposes EPA-specific recordkeeping requirements on employers, the Alabama act adopts, for state employers, the federal recordkeeping requirements already established by the United States Department of Labor for the Fair Labor Standards Act (FLSA).

The Act’s Impact on Alabama Employers

Ultimately, the Alabama act does not substantially increase the existing burden on Alabama employers. The EPA applies only to sex, while the Alabama act prohibits wage discrimination based on both race and sex. But Title VII of the Civil Rights Act prohibits wage discrimination based on race, so the Alabama act provides no greater protection than existing federal pay-equity law. Many employers already comply with the federal FLSA recordkeeping requirements the Alabama act adopts. Likewise, the act is arguably more employer friendly than federal pay equity law, given its heightened pleading standard for employees. This heightened standard may facilitate dismissals for failure to state a claim, allowing employers to eliminate claims at the pleading stage rather than after the costly discovery process and summary judgment stage. Additionally, the act prohibits double recovery, so employers need not fear an employee recovering damages under both federal and state law.

However, the act raises at least two considerations for Alabama employers. First, employers may want to base any pay differentials on the specific exceptions the act provides: (1) a seniority system, (2) a merit system, (3) a system that measures earnings by quantity or quality of production, or (4) a differential based on any factor other than sex or race. The EPA already provides for these exceptions, and the Alabama act reinforces the best practice of basing pay differentials on statutorily defined exceptions.

Second, absent a compelling reason to request wage history, employers may want to avoid seeking that information during the selection process. Though federal pay-equity law already provides an avenue for recovery where part of a selection process creates a disparate impact on a protected class, the act provides a new avenue of liability for employers to consider during the process. Adding to the concern, several other states and municipalities have enacted tougher legislation that altogether prohibits requesting wage history from applicants. Because Alabama-based employers often attract applicants from other jurisdictions, many Alabama employers are moving away from wage-history inquiries during the selection process.

Stay tuned to find out whether Governor Ivey will sign the Clarke-Figures Equal Pay Act, making Alabama the 49th state to prohibit wage discrimination.

Morgan Pike Epperson is an associate in the Birmingham office of Ogletree Deakins.

Scott Kelly is a shareholder in the Birmingham office of Ogletree Deakins.

Gabrielle Carusello is a law student and is currently participating in the summer associate program in the Birmingham office of Ogletree Deakins.