labor lawAdivision of labor law center

The overwhelming majority of Alabama employers were affected by the federal minimum wage increase in July, 2009.

Although there is no Alabama minimum wage, most employers in the state are covered by the federal minimum wage.

On July 24, 2009 the federal minimum wage increased by 70 cents from $6.55 per hour to $7.25 per hour.

This is not the first increase for Alabama employers. The federal minimum wage increased from $5.15 to $5.85 per hour in 2007 and from $5.85 to $6.55 in 2008.

At present, the federal minimum wage in not scheduled to increase again in 2010. This could be good new for employers which are facing hard times in the current struggling economy.

Alabama is one of five states that have no minimum wage at the state level. Others include Mississippi, Louisiana, South Carolina and Tennessee.

In addition, effective July 24, 2009 there are 8 states that have a minimum wage lower than the federal rate. They are Arkansas, Georgia, Kansas, Minnesota, Wisconsin, Wyoming, Alaska and Delaware.

In just two years, Alaska has gone from having one of the highest state minimum wages to having one of the lowest rates.

Seventeen other states increased the state minimum wage to match the federal minimum wage increase on July 24, 2009. They are: Florida, Missouri, Montana, (more…)

Wal-Mart computed overtime pay for workers in Alabama and throughout the U.S. in a way that underpaid them, and did not comply with federal and Alabama overtime laws. That’s according to the U.S. Department of Labor, in its announcement that Wal-Mart has agreed to pay more than $33 million in back wages to 86,680 workers nationwide.

“This settlement provides $33 million in back wages, plus interest, to Wal-Mart Workers,” said Victoria A. Lipnic, Assistant Secretary of Labor for Employment Standards. She said the company has taken action “to prevent this from happening again.” The agreement covers the period between February 1, 2002, and January 19, 2007.

The Labor Department also obtained a consent judgment from U.S. District Court. In the complaint with that court against Wal-Mart Stores, Inc., the Labor Department alleged that the retailer violated the overtime provisions of the Fair Labor Standards Act, or FLSA as well as state minimum wage laws. The court issued a consent judgment ordering Wal-Mart to make the back payments and ordered it to abstain from any future violations. The agreement has Wal-Mart paying all back wages for the violations, plus interest on the amount as a deterrent.

Under the FLSA, employees must be paid at what is popularly called “time-and-a-half,” or 1.5 time their usual rate, for any time over 40 hours a week. At issue was not whether Wal-Mart paid overtime. It did. The question revolved around what the retailer used to calculate that overtime. Employees’ pay, before incentives and premiums, is called the “base rate.” With premiums and incentives it is called the “average hourly compensation.”

For example, an employee’s “base rate” may be $6 an hour, while his or her “average hourly compensation,” with those incentives and premiums, may be $7 an hour. The law says overtime must be calculated by using the “average hourly compensation,” or, in this example, $7 an hour. Wal-Mart was using the “base rate,” which in this example would have been $6 an hour. 

Todd’s bill in Alabama would not have just set up a state minimum wage in Alabama for the first time in recent memory. It would also allow the Labor Department in the state of Alabama to investigate on and check up on employers to make sure they are paying the right minimum wage to employees.

This part of the bill supposedly caused some opponents in the House Commerce Committee some concern, according to my sources. These opponents of the bill were publicly quoted as saying that such overseeing by the Department of Labor would just make too much red tape and regulations for small employers in the state.

Other opponents wondered why the new state minimum wage was needed, when many employees in the state, they said, already enjoy a wage higher than the minimum wage. They also said that the federal minimum wage would probably soon be increased as well, so that would be the minimum wage increase for Alabama’s workers.

But supporters of the bill pointed to the fact that Alabama lawmakers had recently given themselves a 62 percent pay raise. That bill was recently passed, and supporters claimed that the state’s lowest paid workers should also then get a raise.

From the sources I have contacted for this story, however, such arguments did not seem to sway the debate. As I said the bill was sent down to a subcommittee, and it is not clear if the bill will make its way back up to the Commerce Committee. Even if it does, it would need to overcome this opposition there, to then have to be voted on again in the full House. The verdict—employers, I will still monitor the situation for you here, but don’t buy yourself a new Alabama minimum wage poster just yet.

The answer to the above question seems like it will be a “no.” There is another question we have been talking about for the last couple days, up there with the one about the New Hampshire minimum wage, and as with the New Hampshire minimum wage question, it appears as if we have an answer.

A quick backgrounder for those who don’t read my blog every day (for shame on you, by the way!)—the state of Alabama does not have its own state minimum wage. But a freshmen representative from the city of Birmingham, a Democrat by the name of Patricia Todd, just introduced a bill into the state House to give the state its own minimum wage. The bill would have started the state minimum wage at a level of $5.85 per hour, two months after the bill would be passed. Then the bill would raise the Alabama minimum wage to $6.55 per hour a year later. One year after that—we’re talking 2009 at this point—the Alabama minimum wage would have gone up one more time, to $7.25 per hour.

There were rallies for the new bill the past few days at the statehouse in the capital, and Todd had the support of labor and unions. But the bill, as was expected and predicted by yours truly, does not seem to have the support of the House Commerce Committee, where it has been debated for the last couple days.

The House Commerce Committee first added an amendment to her bill that would make an Alabama minimum wage, but would link it to whatever the federal minimum wage was. The current federal minimum wage is $5.15 per hour. Then the committee did not even vote on that. They sent the bill down to a subcommittee for further discussion.

We talked about this before, but that was just the appetizer to the main course. For as we talked about yesterday, that was only a rally for a state minimum wage in Alabama, whereas what happened today was democracy at work in the Alabama state legislature, as workers and union groups had their voices heard on the state minimum wage in the state legislature.

As you recall, a bill to give Alabama its very own state minimum wage—which it does not have at this moment—was introduced into the Alabama state legislature by a Rep. Patricia Todd, a Democrat from the city of Birmingham. Her argument in favor of a state minimum wage is that the national Congress has not given a minimum wage increase in more than 10 years, and that the state of Alabama should no longer tie itself to that rule.

In consideration of Rep. Todd’s bill, the state House Commerce Committee was supposed to discuss and debate the minimum wage, according to my local sources there. Rumor has it, however—or a simple count of the votes perhaps—that the bill has an uphill battle to win support in the legislature in the state of Alabama.

In order to have a chance at becoming law, however, the bill from Rep. Todd would need to get voted on in the House Commerce Committee. Then if it made its way out of the committee, it would then need to win support from the entirety of the House. Meanwhile, a similar bill would need to get passed in committee and then in the full session of the Senate. After all that, the bill would then need to be signed by the state governor.

It’s too soon to call it one way or the other, but Alabama employers do not just yet have to buy an Alabama minimum wage poster. More courses to come!