In Alabama you must carry workers compensation once you have five or more employees, full-time or part-time (Alabama Code section 25-5-50). With four or fewer employees the state does not require it, though plenty of owners buy anyway, because a single serious injury can cost more than years of premium.
Who this is for: Alabama owners trying to figure out whether the law reaches them yet, and what changes as they grow past four employees.
The short version
- The trigger is five, with one construction carve-out. Five or more employees makes coverage mandatory (Alabama Code section 25-5-50). The one exception: employers who build, or assist on-site in building, new single-family detached homes are covered no matter how few workers they have, even with one to four, though a qualifying independent contractor can file an affidavit of exemption.
- Part-time and seasonal usually count. Alabama counts regular part-time and seasonal workers toward the five, so you cannot stay under the line just by keeping people part-time.
- Owners are counted differently. Sole proprietors and partners are not employees by default. Working corporate officers and LLC members are often counted, so confirm your own status with the state.
- Below five, you are not required but not protected. A business under the threshold has no injury-lawsuit shield and can be sued in regular court over a workplace injury.
- Coverage should be in place before the fifth hire starts. Once you are subject, an injured worker is covered, so do not wait until after someone gets hurt.
How Alabama counts to five
The count is about people working in your business, not just full-time payroll. Here is how the common cases land.
| Worker or owner | Counts toward the five? | Notes |
|---|---|---|
| Full-time employee | Yes | Must be covered once you are subject |
| Regular part-time or weekend staff | Yes | No hours minimum for the count |
| Seasonal staff you rehire each year | Usually yes | A regular seasonal pattern counts |
| A true one-off casual helper | No | Work outside your usual business is not counted |
| Sole proprietor or partner | No | Not an employee by default; may opt in |
| Working corporate officer or LLC member | Often yes | Confirm how you are counted with the state |
| A 1099 worker you control day to day | Usually yes | See Alabama's control test for contractors |
Exemptions that leave a worker out
Some workers are outside the Act no matter your size. Domestic workers in a private home, farm laborers, and truly casual help whose work is not part of your regular business are the main examples. A relative you actually put on payroll to do your regular work is generally an employee like anyone else, so do not assume family or part-time status makes the requirement go away. When you are unsure whether a specific role counts, the Alabama Department of Labor is the place to confirm.
Below the threshold: not required, but exposed
With four or fewer employees you are not required to carry workers comp, and you are also outside the protection the Act gives employers. That cuts both ways. The upside is no state mandate yet. The downside is that the injury-lawsuit shield, which normally stops a hurt worker from suing you directly, does not protect a business that is not covered. A serious injury at a four-person shop can turn into a lawsuit and a bill you pay yourself. Many small Alabama owners buy a policy voluntarily for exactly this reason. If a client or general contractor requires coverage, see how to get a policy.
A Huntsville example
Illustrative, not a quote. A Huntsville cleaning company has three full-time cleaners and two steady part-timers. That is five people working in the business, so Alabama requires a policy even though two are part-time. The owner puts coverage in place before the busy season, and when a cleaner strains a back lifting equipment, comp pays the medical bills and part of the lost wages instead of turning into a lawsuit. We make sure the payroll is rated on the right kind of work so the price is fair.
Real questions Alabama owners ask
Do I need workers comp for my Alabama business?
Once you have five or more employees, full-time or part-time, yes, under Alabama Code section 25-5-50. With four or fewer the state does not require it, but many owners still buy it to avoid a lawsuit or a large out-of-pocket bill.
How many employees trigger workers comp in Alabama?
Five, with one exception. The requirement starts at five or more employees, and part-time and seasonal workers generally count toward the five. The exception is building new single-family detached homes: those employers are covered no matter how few workers they have, though a qualifying independent contractor can file an affidavit of exemption.
Do part-time and seasonal workers count toward the five?
Yes. Alabama generally counts regular part-time and seasonal workers the same as full-timers for the five-employee test. Keeping people part-time does not keep you under the line.
I only have four employees. Do I still need coverage?
The state does not require it below five employees, but you also lose the Act's protection against being sued over an injury. Many four-person shops buy a policy anyway for that reason and to meet contract demands.
Does a new hire have to be covered right away?
Yes, once your business is subject to the Act. Put a policy in place before your fifth person starts, because an injury on day one is still covered and still your responsibility.
Can I avoid coverage by using 1099 contractors?
Usually not. If a worker is really an employee under Alabama's control test, they count toward the five and must be covered no matter what the paperwork says. Misclassifying workers is a common and costly mistake.
Who enforces the workers comp requirement in Alabama?
The Alabama Department of Labor, Workers' Compensation Division. It oversees the system, handles disputes, and can act against an employer that fails to carry required coverage.
Why Alabama owners choose Morrow
- We shop the right market for you. In Alabama you buy workers comp on the open market from any private insurer licensed in the state, because Alabama has no state fund, and if no carrier will take you the NCCI-run assigned risk plan is the guaranteed fallback, so we can shop your rate freely and still have a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Alabama guides
Every Alabama business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Alabama (start here)
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- Workers comp vs employers liability
- Alabama cleaning workers comp
This guide is general information, not legal advice. Alabama rules and penalty amounts can change, so verify current requirements with Alabama Department of Labor, Workers' Compensation Division or a licensed advisor before you rely on them. Last updated: July 2026.