News & Insights

Alabama Enacts New Equal Pay Act To Prevent Wage Disparity

On June 11, 2019, Alabama Governor Kay Ivey signed a new law that prohibits employers from paying less for the same work on the basis of gender or race. The new law, titled the Clarke-Figures Equal Pay Act (the “Act”), makes Alabama the 49th state to enact a state law against wage inequality, with only Mississippi remaining. The Act will go into effect on September 1, 2019.

Until now, Alabama employers have only been subject to federal wage equality law. Similar bills have been introduced in Alabama over the last decade, but they have failed to gain any traction. Alabama was previously subject to the Equal Pay Act of 1963 (“EPA”) which prohibits employers from paying women less than men for doing the same or substantially the same work at the same facility. Employers can assert affirmative defenses to the EPA claims if they can demonstrate that the pay disparity is justified by a seniority system, a merit system, or other facts related to job performance and business operations.

In addition to federal law, nearly all states have passed their own wage equality laws. The newly enacted Alabama law prohibits an employer from paying any of its employees a wage rate less than the wage rates paid to employees of another sex or race for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. However, the law does allow for differences in pay for the same work when based on reasons such as seniority or a merit system. Further, such differences may be supported by any system that measures earning by the quantity or quality of production or a differential that is “based on any factor other than sex or race.”

The Act provides that an employer may not discharge, discriminate or retaliate against any employee who exercises his or her rights under the Act. Aggrieved employees can file a civil cause of action up to one year after a violation occurs, and can seek reinstatement, reimbursement for lost wages and benefits, and equitable relief. Employers under the Act are also required to maintain records of the wages and wage rates, along with other terms and conditions of their employees’ employment for a period of three years.

Employers doing business in Alabama should review their handbooks, policies, practices and recordkeeping requirements to ensure future compliance of their payment policies and that records concerning employee wages, wage rates, job classifications and other terms and conditions of the employer are maintained for at least three years.