After giving allay an item, it recieves a tag CanPickUpLoot: 1b, which allows it to equip armor.

Reproduction steps:
Give allay an item.
Place a dispenser with a piece of armor next to it.
Activate a dispenser.
An allay now wears said item.

This only applies to allays that hold something.

An expected behaviour would be that dispensers wouldn't be able to equip items on allays.