Q&A: managing the employment relationship in the USA (Alabama)

Employment relationship

What state-specific laws govern the employment relationship?

Age discrimination in employment is prohibited (under Ala. Code 25-1-20, and following). The statute follows the federal Age Discrimination in Employment Act coverage (an employer must have 20 or more employees, and it protects persons aged 40 and older).

The Workers' Compensation Act (Ala. Code 25-5-1 and following) applies to anyone who employs a person to perform a service for hire and pays wages directly to that person. Employers must maintain insurance but can be self-insured. Claims can only be settled with court approval.

Full-time employees serving on juries have job protection (under Ala. Code 12-16-8, 8.1). Employers must pay those full-time employees their regular wages during jury service.

The Alabama Restrictive Covenants Act (Ala. Code 8-1-190 and following) regulates non-competes and non-solicitation agreements.

Alabama has a statute which provides that all commissions due at the time of termination of a contract between a sales representative and a principal must be paid within 30 days from the termination. Any commissions that become due after the termination date must be paid within 30 days from becoming due. Failure to pay as required makes the principal liable for three times the damages, plus reasonable attorneys' fees and court costs (Ala. Code 8-24-1, 2, and 3).

The City of Birmingham passed a non-discrimination ordinance prohibiting discrimination based on “real or perceived race, color, religion, national origin, sex, sexual orientation, gender identity, disability, or family status.” This ordinance applies to any person employing one or more employees in the City of Birmingham. This is a criminal ordinance and the municipal court can levy fines for violations which cannot exceed $500. The mayor  signed the ordinance but has yet to appoint the Human Rights Commission that is to receive complaints.

The Clarke-Figures Equal Pay Act (CFEPA) prohibits employers from paying any worker at a wage rate less than that paid to employees of another race or sex for equal work where the jobs require equal skill, effort, education, experience, and responsibility under similar working conditions. There is an exception for payments made pursuant to a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or a differential based on any factor other than race or sex. The CFEPA also provides that employers may not refuse to interview, hire, promote, or employ an applicant and may not otherwise retaliate against an applicant for refusing to provide wage history information during the application or interview process. A successful plaintiff can recover an amount equal to the wages that were lost because of the violation—plus interest—and must file a lawsuit within two years of the alleged discrimination.

Who do these cover, including categories of workers?

Age discrimination in employment is prohibited (under Ala. Code 25-1-20, and following). The statute follows the federal Age Discrimination in Employment Act coverage (an employer must have 20 or more employees, and it protects persons aged 40 and older).

The Workers' Compensation Act (Ala. Code 25-5-1 and following) applies to anyone who employs a person to perform a service for hire and pays wages directly to that person. Employers must maintain insurance but can be self-insured. Claims can only be settled with court approval.

Full-time employees serving on juries have job protection (under Ala. Code 12-16-8, 8.1). Employers must pay those full-time employees their regular wages during jury service.

The Alabama Restrictive Covenants Act (Ala. Code 8-1-190 and following) regulates non-competes and non-solicitation agreements.

Alabama has a statute which provides that all commissions due at the time of termination of a contract between a sales representative and a principal must be paid within 30 days from the termination. Any commissions that become due after the termination date must be paid within 30 days from becoming due. Failure to pay as required makes the principal liable for three times the damages, plus reasonable attorneys' fees and court costs (Ala. Code 8-24-1, 2, and 3).

The City of Birmingham passed a non-discrimination ordinance prohibiting discrimination based on “real or perceived race, color, religion, national origin, sex, sexual orientation, gender identity, disability, or family status.” This ordinance applies to any person employing one or more employees in the City of Birmingham. This is a criminal ordinance and the municipal court can levy fines for violations which cannot exceed $500. The mayor  signed the ordinance but has yet to appoint the Human Rights Commission that is to receive complaints.

The Clarke-Figures Equal Pay Act (CFEPA) prohibits employers from paying any worker at a wage rate less than that paid to employees of another race or sex for equal work where the jobs require equal skill, effort, education, experience, and responsibility under similar working conditions. There is an exception for payments made pursuant to a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or a differential based on any factor other than race or sex. The CFEPA also provides that employers may not refuse to interview, hire, promote, or employ an applicant and may not otherwise retaliate against an applicant for refusing to provide wage history information during the application or interview process. A successful plaintiff can recover an amount equal to the wages that were lost because of the violation—plus interest—and must file a lawsuit within two years of the alleged discrimination.

Are there state-specific rules regarding employee/contractor misclassification?

No.

Must an employment contract be in writing?

No, oral contracts are enforceable (subject to the statute of frauds).

Are any terms implied into employment contracts?

No, but in the absence of a specific term, employment is assumed to be at will. 

Are mandatory arbitration agreements enforceable?

Yes.

How can employers make changes to existing employment agreements?

Courts can enforce the terms of a written agreement and amendment provisions. As a general matter, continued employment is sufficient consideration for an alteration to a term of employment. In the absence of a written agreement, employees are employed at will. Employers should consider new or additional considerations to bolster the enforcement of significant changes to employment terms.