Executive Summary: Earlier this week, in Lewis v. Governor of Alabama, 2018 U.S. App. LEXIS 20635, the Eleventh Circuit Court of Appeals resurrected a lawsuit alleging Alabama’s predominantly-white state legislature discriminated against the workers in Birmingham, a predominantly black city, by overriding the city’s ordinance to increase the city’s minimum wage. While changes to the minimum wage often elicit strong opinions from employers, workers, and other interested parties, few laws have engendered the passions and inspired the racially-charged allegations presented in Lewis. As discussed below, in light of the Eleventh Circuit’s recent opinion, employers and workers in Birmingham must continue to wait to see if the city’s increased minimum wage will ever take effect.
Background: In 2015, the Birmingham City Council adopted an ordinance to raise the minimum wage in the city from $7.25 to $10.10/hour. The Council subsequently adopted a second ordinance that accelerated the effective date to March 1, 2016. In many respects, Birmingham’s actions reflected a growing trend around the country. For example, due to the federal minimum wage’s stagnation at $7.25/hour since 2009, an increasing number of states and cities have raised the minimum wage for their workers. According to the U.S. Department of Labor, 28 states and Washington D.C. currently have a higher minimum wage than the federal standard. Moreover, at least 18 states have increased the applicable minimum wage in 2018. Nonetheless, just one day after Birmingham raised its minimum wage, the Alabama Senate approved the “Minimum Wage Act” which rendered the city’s ordinance null and void.
In response to the Minimum Wage Act, in Lewis v. Bentley, Case No. 2:16-cv-00690, 2017 U.S. Dist. LEXIS 13565 (N.D. Ala., Jan. 31, 2017), two Birmingham workers and several public interest groups filed a lawsuit against the State of Alabama and its Attorney General (among other parties) alleging racial discrimination under multiple theories. The plaintiffs alleged that the Minimum Wage Act purposely discriminates against Birmingham’s black citizens by denying them economic opportunities on account of their race. According to the Complaint, African Americans constituted 73% of Birmingham’s population in 2016, while only constituting 26% of Alabama’s total population. The defendants moved to dismiss plaintiffs’ claim.
On February 1, 2017, U.S. District Judge R. David Proctor granted the State’s motion to dismiss in its entirety. The court noted the strong difference in opinion between the parties, stating: “Plaintiffs have painted this dispute as yet another chapter in Alabama’s civil rights journey. . . . [while] Defendants disagree and frame it as a simple matter of ensuring consistency in how employers operating within the state are treated.” In dismissing the case, the court held that the Complaint only contained conclusory allegations, “unsupported by any specific factual allegations,” that the defendants’ actions constitute intentional discrimination on the basis of race. The plaintiffs appealed.
On July 25, 2018, the Eleventh Circuit Court of Appeals reversed, in part, the lower court’s dismissal—reviving both the plaintiffs’ discrimination lawsuit and the ordinance’s proponents’ hope that the minimum wage increase may eventually go into effect. The Eleventh Circuit first noted that, in order to prevail on an equal protection challenge to a facially neutral law, the plaintiffs must prove discriminatory impact and discriminatory intent. Finding discriminatory impact, the court noted that the Minimum Wage Act denied 37% of Birmingham’s black wage workers a higher hourly wage, compared to only 27% of white wage workers. The court also noted that black workers earned, on average, $1.41 less per hour than white workers in Birmingham, and less than $2.12/hour compared to white workers statewide.
While acknowledging that discriminatory intent was “a more challenging question,” the Eleventh Circuit also determined that the plaintiffs alleged facts plausibly supporting a conclusion that the Minimum Wage Act was enacted with discriminatory purpose. In stark contrast to the lower court’s opinion, the Eleventh Circuit found persuasive the “detailed factual allegations” regarding the disproportionate effect on Birmingham’s black residents; the “rushed, reactionary, and racially polarized” nature of the legislative process; and “Alabama’s historical use of state power to deny local black majorities authority over economic decision making.” Moreover, the Eleventh Circuit noted that the “Minimum Wage Act responded directly to the legislative efforts of the majority-black Birmingham City Council, which represents more black citizens (and more black citizens living in poverty) than any other city in Alabama.” Indeed, the Minimum Wage Act “swiftly nullified” Birmingham’s ordinance even though “the Alabama legislature had previously ‘failed to take any action to establish a statewide minimum wage law and had been indifferent to efforts to establish such a law.’” (quoting the docket). As a result of this holding, the plaintiffs may continue their litigation against the State.
Bottom Line: Employers in Alabama are still only required to pay employees the federal minimum wage of $7.25. As noted in the Eleventh Circuit’s opinion, due to the passage of Minimum Wage Act and the ongoing litigation, the Birmingham ordinance only provided employees within Birmingham a “single day” of higher wages. Nonetheless, if the courts ultimately invalidate the Minimum Wage Act, then the Birmingham ordinance may take effect in the future. It will still be an uphill battle for the plaintiffs to prove intentional discrimination but, in the words of the Eleventh Circuit, “they have the right to try.” In the meantime, employers in Alabama will have to continue to wait to see if a higher minimum wage in Birmingham is coming down the pike.