Alabama has joined a growing number of states that have recently enacted pay equity laws. Last month, Gov. Kay Ivey (R) signed the Clarke-Figures Equal Pay Act, which generally prohibits pay discrimination based on sex or race. The CFEPA also prohibits retaliation against an applicant for refusing to provide salary history information.

Pay discrimination based on sex or race is prohibited

The CFEPA will take effect September 1, and applies to both public and private employers. There is no exception for small employers. The law says that an employer

may not pay any of its employees at wage rates less than the rates paid 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 . . ..

However, similar to the federal Equal Pay Act (which prohibits pay discrimination based on sex only), wage disparities are permissible under the Alabama law if due to (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.

Inquiries about salary history

The second major prohibition in the CFEPA relates to salary history. The Act says,

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 as wages paid to the applicant by a current or former employer.

The federal EPA does not address questions about salary history or use of salary history in determining compensation. The U.S. Court of Appeals for the Ninth Circuit recently said that the federal EPA prohibits employers from basing compensation decisions solely on salary history, but the U.S. Supreme Court vacated that decision for other reasons.

If a plaintiff prevails under this provision of the CFEPA as well as under federal law, the plaintiff must repay the employer one of the two “recoveries,” whichever is less.

Other provisions of the CFEPA

Pleading. An applicant or employee who brings an action under the CFEPA against an employer “must plead with particularity in demonstrating . . . [that he or she] was paid less than someone for equal work despite possessing equal skill, effort, education, experience, and responsibility,” and that the differential was not covered by one of the exceptions (for example, a seniority system).

Damages. An applicant or employee who prevails on a claim under the Alabama CFEPA can recover lost wages plus interest.

Recordkeeping. The CFEPA also requires Alabama employers to maintain records in accordance with regulations issued by the U.S. Department of Labor in connection with the federal Fair Labor Standards Act.

Statute of limitations. The statute of limitations to bring an action under the retaliation provision is two years “after the act of discrimination giving rise to a cause of action.” Although the CFEPA does not have a statute of limitations for pay discrimination claims, Alabama Code Section 6-2-38(m) provides that “[a]ll actions for the recovery of wages, overtime, damages, fees, or penalties accruing under laws respecting the payment of wages, overtime, daamges, fees, and penalties must be brought within two years.”

Under the federal Lilly Ledbetter Fair Pay Act, which applies to pay discrimination claims brought under the Equal Pay Act and Title VII, each paycheck that contains discriminatory compensation is a separate violation regardless of when the discrimination began. It remains to be seen whether the same principle will apply to discriminatory pay claims under the CFEPA.

Recommendations for employers

Employers with operations in Alabama should review their payroll records to ensure that they are ready for the September 1 effective date. Although the CFEPA does not prohibit employers from continuing to ask for salary history, employers may want to go the extra step and remove those questions from application forms to avoid retaliation claims.

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