Opinion ID: 4521976
Heading Depth: 2
Heading Rank: 1

Heading: The Alabama Merit System

Text: (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee. 2 The relevant provision here, 42 U.S.C. § 2000e-2(a), provides: It shall be an unlawful employment practice for an employer--(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or (2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin. 3 Case: 18-14433 Date Filed: 04/02/2020 Page: 4 of 23 DDS processes applications for social security disability benefits in Alabama. Some positions at DDS, including DDPs, are classified positions within the State of Alabama Merit System (“Merit System”), codified in Ala. Code § 3626-1 et. seq. (1975). State regulations govern Merit System employees’ salaries. As in effect when DDS hired Reddy, Sellman, and Sims (the comparator), Rule 670-X-8.02 of the Alabama Administrative Code provided: The salary rate of a new employee upon entrance into the service shall normally be the minimum rate of the range for the class of positions to which appointed. In the event it should prove impossible to obtain qualified personnel at such rate, the Appointing Authority may recommend and the Director may approve a hiring rate above the minimum rate but not to exceed the Base Maximum Rate of the range. Ala. Admin. Code r. 670-X-8-.02 (1983). 3 The annual salary range for DDPs as set by the State of Alabama Personnel Department (“SPD”) is $116,277.60 to $177,266.40. Within that assigned range are eighteen “steps,” which represent the salary level of an employee. For DDPs, “Step 1” is the base level salary of $116,277.60. An employee’s salary increases at each step. The highest step a DDP can achieve is “Step 18,” which represents the maximum salary of 3 In 2015, that regulation was amended to exclude the sentence beginning with: “In the event it should prove impossible to obtain qualified personnel at such rate…” See Ala. Admin. Code r. 670-X-8-.02 (2015). In their reply briefs, Reddy and Sellman describe DOE’s omission of this language throughout this case as a “critical oversight.” Because DOE requested that all current DDPs receive an above the minimum initial salary upon hire, including Reddy, Sellman, and Sims, this amendment does not affect the analysis. The 2015 amendment also added that “[t]he above the minimum hiring rate will be based on the recent salary or experience of the new employee or competitive market.” See Ala. Admin. Code r. 670-X-8-.02 (2015). 4 Case: 18-14433 Date Filed: 04/02/2020 Page: 5 of 23 $177,266.40. Thus, pursuant to the Alabama Administrative Code, DOE must receive approval from SPD in order to hire an employee with a salary exceeding $116,277.60 (the minimum rate). See Ala. Admin. Code r. 670-X-8-.02 (1983). SPD provides not only a general floor, but also an individualized ceiling for Merit System employees’ initial salaries. In general, the applicant’s initial salary cannot significantly exceed his current salary: SPD will not approve a request for more than five percent above the applicant’s current salary or salary within the preceding six months. But if the applicant previously contracted with the state entity, SPD determines the maximum allowable salary by calculating the salary that the applicant would have received according to the Merit System had the applicant been employed full-time. The appointing authority may set a Merit System employee’s initial salary within the range permissible under these rules. After they are appointed with a set initial salary, employees’ steps increase based on their length of service and performance. From the start, Merit System employees must successfully complete a six-month probationary period to receive “permanent status,” which qualifies them for a discretionary one- or two-step increase. 4 Thereafter, Merit System employees are eligible for annual raises of one 4 Ala. Admin. Code r. 670-X-8-.04(1) provides: A probationary employee who has successfully completed probation may be granted a performance salary increase effective at the beginning of the first semimonthly pay period after the conclusion of the probationary period, and the first 5 Case: 18-14433 Date Filed: 04/02/2020 Page: 6 of 23 or two steps, depending on their annual performance evaluations. Merit system employees’ steps may increase each year until they reach the maximum step in the applicable range. All Alabama state agencies follow this process. 5