If your Alabama LLC has five or more employees, you must carry workers compensation (Alabama Code section 25-5-50). With four or fewer you are not required to by the state. Your own coverage as a member is a separate question from whether the business must insure its staff, and owners get those two questions mixed up all the time.
Who this is for: Alabama LLC owners, single-member or multi-member, deciding whether the business needs a policy and whether they belong on it.
The short version
- Five employees is the line. An LLC with five or more employees must carry workers comp in Alabama; below five the state does not require it.
- Your hired staff count. W-2 employees count toward the five whether they are full-time or part-time.
- Members are treated differently from staff. Working members are often counted, but you can usually look at leaving your own injuries off the policy. Confirm how you are counted with the state.
- Contracts can require it even at one employee. A general contractor, landlord, or client can demand proof of coverage regardless of the state minimum.
- A single-member LLC with no staff usually needs no policy, but often still buys a small one to satisfy a contract.
Two questions LLC owners mix up
Keep these separate and most of the confusion disappears.
| Question | Answer for an Alabama LLC |
|---|---|
| Does my LLC have to insure its employees? | Yes, once the LLC has five or more employees |
| Do my hired workers count toward the five? | Yes, full-time and part-time employees count |
| Do I, as a member, have to be on the policy? | Working members are often counted, but you can usually elect to leave your own coverage off; confirm with the state |
| Do I need a policy with zero employees? | Not by state law, but a contract may still require one |
Should you put yourself on the policy?
Even when you can leave yourself off, some members choose to be covered. If you do physical work, a comp policy that includes you pays your medical bills and part of your lost income after an on-the-job injury, which your personal health plan may not fully cover for a work injury. If you leave yourself off to save premium, make sure you have another plan for a bad week. A quick way to know what a policy would cost is to see how Alabama prices workers comp.
Proof of coverage when you have no employees
Many single-member LLCs get asked for proof of workers comp by a general contractor or client even though they have no staff and no legal duty. One common answer is a small policy that covers little more than the paperwork, sometimes called a ghost policy, which produces the proof of coverage the contract wants. See how to get a policy in Alabama for the options.
A Montgomery example
Illustrative, not a quote. A Montgomery LLC does commercial painting with two owner-members and four painters on payroll. That is six people working in the business, so Alabama requires a policy and the four painters must be covered. The two members decide to include themselves because they are on ladders every day. When a general contractor asks for proof before a job, the LLC produces it the same day. We check that the painters are rated on the right kind of work so the price is not inflated. See the trade detail on our workers comp for contractors page.
Real questions Alabama owners ask
Does my Alabama LLC need workers comp?
If the LLC has five or more employees, yes, under Alabama Code section 25-5-50. With four or fewer the state does not require it, but a contract with a general contractor, client, or landlord can still make you carry it.
Do LLC members count toward the five employees?
Working members are often counted in Alabama, but the details depend on how you are set up. Your hired W-2 staff always count. Confirm how members are counted with a licensed advisor or carrier; any election to leave a member's own coverage off is now provided to your insurance carrier, not filed with the Alabama Department of Labor.
Do I have to cover myself as an LLC member?
Usually you can leave your own injuries off the policy, even when the business must cover its staff. Some members include themselves anyway if they do physical work, because comp pays medical bills and part of lost wages.
Does a single-member LLC with no employees need workers comp?
Not under state law, because you have no employees to cover. Many single-member LLCs still buy a small policy because a general contractor or client requires proof of coverage before they can work.
My LLC only has part-time help. Does that change anything?
Not the count. Part-time employees generally count toward the five in Alabama, so five regular part-timers still makes coverage mandatory. Hours do not decide whether a worker counts.
I work alone but a client wants proof of coverage. What can I buy?
A small policy that mainly produces proof of coverage, sometimes called a ghost policy, is a common way for an LLC with no employees to meet a contract requirement. We can explain whether it fits your situation.
Will my personal health insurance cover a work injury?
Often not fully. Many health plans limit or exclude injuries that happen at work, which is one reason a working member sometimes chooses to be on the comp policy rather than rely on personal 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)
- Workers comp: the owner's overview
- 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
- What is a ghost workers comp policy?
- Alabama contractor 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.