Tag Archives: Alabama

DOL Partnership regarding worker misclassification — 34 States and Counting

Thirty-five states have agreed to “team up” with the US Department of Labor to investigate worker misclassification. Is your state one of them?

In 2015, Department of Labor launched an initiative to combat the misclassification of employees as independent contractors. As a part of this initiative, the Department of Labor sought to partner with the state agencies and agree to share information and conduct joint investigations regarding independent contractor misclassification. To date, 35 states have entered into a memorandum of understanding regarding worker misclassification issues.

These states are:

  • Alabama
  • Alaska
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Florida
  • Hawaii
  • Idaho
  • Illinois
  • Iowa
  • Kentucky
  • Louisiana
  • Maryland
  • Massachusetts
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Hampshire
  • New Mexico
  • New York
  • North Carolina
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • Wisconsin
  • Wyoming

What does this mean for employers in these states?

Employers in the above-listed states should expect collaborative efforts between their state agencies and the Department of Labor during a investigation into potential employee misclassification as the state and the Department of Labor will share information. This could lead to simultaneous, multi-agency investigations into worker classification. It is recommended that companies have qualified legal counsel review any existing independent contractor arrangements. In addition, before entering into an independent contractor relationship, speak with an HR Professional or qualified legal counsel to verify that the worker truly is an independent contractor.

Alabama Non-Compete Law

Earlier this year, Alabama passed a new non-compete and non-solicitation statute, which sets forth the types of non-compete agreements that are permissible in Alabama. The allowable agreements include the following:

  1. Agreements preventing the seller of the good will of a business from opening a competing business or soliciting the buyer’s customers within a specified geographic area;
  2. Agreements preventing an employee from engaging in a similar business (i.e., a non-compete agreement), and
  3. Agreements preventing an employee from soliciting current customers (i.e., a non-solicitation agreement).  NOTE: this prohibition does not extend to prospective or past customers with whom an employer hopes to establish or re-establish a relationship.

The new law also defines those “protectable interests” that can support a business’s need for a non-compete agreement, these “protectable interests” include

  • Access to trade secrets and certain confidential information (including pricing and customer lists);
  • Relationships with specific prospective or current customers, clients, patients or vendors;
  • The good will associated with a business’s customers, clients, patients or vendors; and
  • Specialized training that involves significant expense as long as that training is set forth in the agreement as the reason for the restraint.

Finally, the new law sets reasonable time limits on non-compete agreements, which are:

  1. Two years is presumed to be reasonable for a non-compete agreement.
  2. Eighteen months is presumed to be reasonable for a non-solicitation agreement.
  3. One year or less is presumed to be reasonable for a non-compete or non-solicitation agreement arising out of the sale of the good will of a business.

Recommended Action

It is recommended if an employer wishes to enter into a restrictive covenant with its employees, that the employer first consult with competent legal counsel to ensure that the agreement meets the requirements set forth in the new law.

City-Specific Minimum Wage? Not In Alabama!

A growing trend in minimum wage law is that of individual cities passing minimum wage laws that establish a minimum wage for city workers that is higher than the applicable state minimum wage.

Recently, Birmingham, Alabama sought to join the ranks of cities who have established a city-specific minimum wage by establishing a minimum wage of $10.10 per hour. However, on February 25, 2016, Birmingham’s efforts were thwarted by Alabama Governor Robert Bentley with the passage of Alabama’s Uniform Minimum Wage and Right-to-Work Act.

This newly enacted law clarifies once and for all that only the Alabama state legislature has the power to set minimum wage in Alabama and voids Birmingham’s newly enacted city-specific minimum wage. Minimum wage in Alabama remains at $7.25.