Summary of August 2025 Labor Law Updates for Birmingham, Alabama
August 2025 in Alabama was marked more by administrative changes, the expiration of a tax incentive (overtime tax exemption), and some judicial clarifications rather than sweeping new laws or dramatic court rulings in the employment field. For employers, payroll and tax compliance seem to be the most urgent concerns; for workers and attorneys, understanding limitation periods and procedural requirements (like in Ex parte Spalding and Myers) remains critical. This update is brought to you by our Birmingham, Alabama team at HKM Employment Attorneys
Alabama Department of Workforce — New General Counsel Appointment
Date: August 13, 2025
Summary:
Greg Reed, Secretary of the Alabama Department of Workforce, announced that Arthur F. Ray II has been appointed as General Counsel for the agency. Previously, Ray served as Acting General Counsel and Director of Governmental Affairs. His role includes overseeing legal matters for the Department and helping interface with the Legislature on proposed laws affecting labor, workforce, and unemployment programs.
Implications:
Internal / agency-level change but potentially meaningful: as General Counsel, Ray will influence how labor, unemployment, and workforce rules are interpreted and enforced in Alabama. Employers and lawyers should watch for how this shift may affect litigation strategies, agency policy decisions, and legal guidance coming out of the Department.
Overtime Income Tax Exemption Expiration / Reporting Change
Date: Effective July 1, 2025, but relevant in August for compliance reporting and employer adjustment.
Summary:
Alabama had a temporary law (Act 2024-437) that exempted overtime wages (for non-exempt employees under FLSA) from state income tax. That exemption expired on June 30, 2025. As of July 1, 2025, employers must again withhold state income tax on overtime wages. Also, there are updated reporting requirements: any overtime earned no later than June 30 but paid later (e.g. in July) still qualifies under certain reporting rules. Employers had to update payroll systems accordingly.
Implications:
Payroll systems and tax withholding processes needed to be updated; failure to do so could lead to incorrect withholdings, employee dissatisfaction, or state penalties. W-2 reporting: overtime wages earned during the exemption period must be appropriately identified (“EX OT WAGES”), and there are special instructions for how to include them (or not) in certain boxes. Employers should have communicated these changes to their accounting / payroll departments.
Alabama Supreme Court — August 29, 2025 Opinions of Interest
Date: August 29, 2025
Summary:
At its August 29 session, the Alabama Supreme Court issued several opinions, some of which may affect employers and employment law issues more indirectly. Key among them:
- Myers v. BBH PBMC, LLC (Princeton Baptist Medical Center): The Court reversed a dismissal of a case where the plaintiff’s attorney missed a status conference. The dismissal was improper because despite the missed conference, the attorney had been actively prosecuting the case and had merely overlooked an emailed order. The plurality opinion emphasized that dismissals for failure to appear should be rare when the party has been otherwise participating.
- Ex parte Spalding: The Court reaffirmed its willingness to consider mandamus petitions in cases involving timeliness (statute of repose) even after delays. In the specific case, because the plaintiff waited past the four-year statute of repose under Alabama’s Medical Liability Act, her claims were untimely and subject to dismissal.
Implications:
- Myers v. BBH PBMC: Employers and plaintiffs alike should note that courts may be more forgiving of procedural missteps (like missing a status conference) if overall participation has been diligent. This affects case-management strategy, settlement timing, and how aggressively procedural defaults may be used as a defense.
- Ex parte Spalding: Reinforces the importance of statutes of repose (or limitation) in claims. Employers should ensure they understand when claims expire, especially in medical liability or similar cases. For actions employee-side (e.g. employment law claims), analogous statutes of limitations or repose may also be strictly enforced.
Developments in Alabama Workforce Data & Programs
Date: Various in August 2025
Summary:
The Alabama Department of Workforce reported that employment reached a new record high, although labor force participation rate decreased slightly. Deshler High School launched its first youth pre-apprenticeship program in HVAC (Heating, Ventilation, Air Conditioning). The Department completed its 2025 STEM Teacher Externship Program.
Implications:
These reflect ongoing investment in workforce development, skills training, and education-workforce pipelines in Alabama. Employers seeking skilled labor may benefit from partnerships with schools or apprenticeship programs. For policy watchers, any changes to such initiatives could indicate shifts in how Alabama is addressing labor shortages or technical skill gaps.
Conclusion: Looking Back on Alabama Labor Law Updates from August 2025
In light of Alabama court decisions involving wage and hour violations, contract disputes, discrimination, and whistleblower protections, local representation matters more than ever. At HKM Employment Attorneys in Birmingham, our largest plaintiff-side employment law team handles breach of contract, non-compete agreements, unpaid wages, and many more areas of employment and labor law. With award‑winning contract review, earnings recovery, and confidential, no‑fee‑unless‑we‑win advocacy, our Birmingham attorneys are equipped to translate recent case law into actionable legal strategies. If these stories hit home, don’t hesitate to contact our Birmingham office to explore how we can protect your rights locally
