United States: Alabama Enacts Pay Equity Law

On June 10, 2019, Alabama enacted the state's first wage equity law. The Clarke-Figures Equal Pay Act (CFEPA) mimics, in large portion, the federal Equal Pay Act (EPA), but includes race as a protected classification in addition to sex. The CFEPA also prohibits retaliation based on an applicants' failure or refusal to provide their wage history and sets forth employer recordkeeping requirements. Employers of any size are subject to the act. There is no small employer exception. The CFEPA takes effect September 1, 2019.

Pay Equity Provisions Target Sex and Race

Taking cues from the EPA, Alabama's CFEPA prohibits employers from paying employees at wages less than they pay to employees of another sex or race "for equal work within the same establishment on jobs the performance of which requires equal skill, effort, education, experience, and responsibility, and performance under similar working conditions." This language tracks that of the EPA, but adds education and experience as factors. As with the federal EPA, the CFEPA contains four exceptions. An employer may base wage differences on: 1) a seniority system; 2) a merit system; 3) a system that measures earnings by quantity or quality of production; and 4) a differential based upon any factor other than race or sex. Alabama courts may look to federal precedent in interpreting the equal pay portion of the CFEPA.

Damages available under the CFEPA are limited to the illegal wage differential plus interest. The statute does not provide for recovery of other compensatory damages, punitive damages, or attorneys' fees. No statutory or liquidated damages are provided. Pursuant to Alabama Code 6-2-38(m), the statute of limitations on CFEPA wage equity claims is two years.

The CFEPA does not contain certain elements of the federal Lilly Ledbetter Fair Pay Act of 2009, which established that an equal pay violation occurs each time an employee is affected by a discriminatory compensation decision or practice, thereby resetting the statute of limitations for filing claims. The CFEPA, by contrast, does not define when a discriminatory pay act occurs.

Wage History Provisions

The CFEPA breaks new ground in Alabama with respect to wage history. While no current federal law prohibits or limits an employer's ability to inquire or consider an applicant's wage history in a hiring decision, a recent wave of states have either proscribed entirely or placed limitations on an employer's inquiry or use of wage history information in a hiring decision.

The CFEPA states: "An employer shall not refuse to interview, hire, promote, or employ an applicant for employment, or retaliate against an applicant for employment because the applicant does not provide wage history." Wage history is defined in the act as "the wages paid to an applicant for employment by the applicant's current or former employer." The statute of limitations for wage history claims is two years.

Unlike California's wage history law and Colorado's Equal Pay Act, for example, the CFEPA does not prohibit an employer from seeking wage history information altogether. The CFEPA does, however, prohibit retaliation in response to an applicant's failure or refusal to provide wage history. The damages available under the wage history provision of the CFEPA are the same as those available under the pay equity provision.

Employers may decide that the value of wage history information is not outweighed by the risks of requesting this information from applicants and employers may stop routinely asking for wage history. Other employers may decide to affirmatively instruct applicants not to provide wage history information.

Recordkeeping Requirements

The third significant change to Alabama law created by the CFEPA is the recordkeeping requirement. Under the CFEPA, employers "shall adopt" the recordkeeping requirements set out in the federal Fair Labor Standards Act regulations at 29 C.F.R. Part 516. These recordkeeping requirements include, among other things, certain payroll documents, wage rate tables, and earnings records. The CFEPA does not define "employer" or contain a small employer exception.

The Future of Litigation Under the CFEPA

Plaintiffs who assert pay equity violations under the CFEPA face special pleading requirements. The plaintiff must plead with "particularity" that he or she was "paid less than someone for equal work despite possessing equal skill, effort, education, experience, and responsibility." This provision may be interpreted to require a plaintiff identify a comparator of a different gender or race in the complaint. A plaintiff must also plead with particularity that "the applicable wage schedule at issue was or is not correlated to any conditions permissible" under the pay equity provision. The contours of this heightened pleading standard will have to be developed through litigation.

Finally, the CFEPA contains a unique section regarding its interplay with federal law. If an employee recovers for a wage history retaliation violation under the CFEPA "and also files a complaint or brings an action pursuant to federal law which results in additional recovery under federal law for the same violation," the employee "shall return" to the employer the lesser of the two recovered amounts. The CFEPA is silent regarding the interplay between its wage equity provisions and federal law.

State courts in Alabama typically do not hear many employment discrimination claims. Alabama's only other non-discrimination statute, the Alabama Age Discrimination in Employment Act, essentially duplicates federal law. It is infrequently used. With the passage of the CFEPA, Alabama state courts may experience an uptick in employment-related claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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