An Alabama nonprofit follows the same workers compensation rule as any other employer: once it has five or more employees, it must carry coverage (Alabama Code section 25-5-50). Being a charity or a 501(c)(3) does not change the requirement. What matters is how many paid employees you have, not your tax status.
Who this is for: Alabama nonprofits, from a small volunteer-run group to a staffed community organization, deciding whether they need a policy for their team.
The short version
- Five paid employees is the trigger. A nonprofit with five or more employees must carry workers comp in Alabama, just like a business.
- Tax-exempt status does not exempt you. Being a 501(c)(3) has no effect on the workers comp requirement.
- Volunteers usually do not count. Unpaid volunteers are generally not employees, so they usually do not count toward the five, but confirm how a stipend affects that.
- Board members are usually not employees. Unpaid directors and officers generally do not count, though a paid executive director does.
- Grants and contracts may require it anyway. Funders and landlords often demand coverage below the state minimum.
Who counts at a nonprofit
| Person | Counts toward the five? | Notes |
|---|---|---|
| Paid full-time staff | Yes | Counted like any employee |
| Paid part-time staff | Yes | Part-time paid work generally counts |
| Unpaid volunteer | Usually no | Not an employee; confirm if a stipend is paid |
| Unpaid board member | Usually no | Not an employee for the count |
| Paid executive director | Yes | A paid employee like any other |
Volunteers and injuries
Volunteers are the piece nonprofits ask about most. A volunteer is generally not an employee, so a purely volunteer group is usually under the requirement. But an injured volunteer is not covered by workers comp either, and your general liability policy may not treat a volunteer as fully protected. If volunteers do anything physical, ask us how to protect them, because relying on the assumption that they are covered is a common gap. Paying a volunteer a regular stipend can also turn them into an employee for the count, so confirm with the Alabama Department of Labor before you assume.
Why nonprofits buy it below five
Plenty of small Alabama nonprofits carry workers comp even with two or three staff. Grant agreements, government contracts, and landlords frequently require proof of coverage, and a single staff injury without it can drain a small operating budget. If a funder is asking for proof, see how to get a policy in Alabama.
A Birmingham example
Illustrative, not a quote. A Birmingham food-bank nonprofit has three paid staff and a rotating group of volunteers. With three paid employees it is under the state requirement, but a county grant requires proof of workers comp, so the group buys a policy. The board also asks us about the volunteers who lift and load, and we walk through how to protect them since comp will not. See the trade detail on our workers comp for nonprofits page.
Real questions Alabama owners ask
Does an Alabama nonprofit need workers comp?
If the nonprofit has five or more employees, yes, under Alabama Code section 25-5-50. Tax-exempt status does not change the requirement; it is based on how many paid employees you have.
Do volunteers count toward the five employees?
Usually not. Unpaid volunteers are generally not employees, so they normally do not count. Paying a volunteer a regular stipend can change that, so confirm with the Alabama Department of Labor if you pay volunteers.
Are our board members counted?
Usually not. Unpaid directors and officers are generally not employees for the five-employee test. A paid executive director, on the other hand, counts like any other employee.
Does being a 501(c)(3) exempt us from workers comp?
No. Federal tax-exempt status has no effect on the state workers comp requirement. A nonprofit with five or more employees must carry coverage the same as a for-profit business.
Are our volunteers covered if they get hurt?
Not by workers comp, because they are not employees. Your general liability policy may not fully protect them either, so ask us about coverage for volunteers who do physical work rather than assuming they are protected.
A grant requires proof of coverage but we have three staff. What now?
You can buy a policy voluntarily even though the state does not require it at three employees. This is common for nonprofits, because grants, government contracts, and landlords often require proof of coverage.
Do paid part-time staff count?
Yes. Paid part-time employees generally count toward the five in Alabama. A nonprofit with a few part-time paid roles can reach the requirement even without five full-time staff.
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 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?
- 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 workers comp does not cover
- Alabama nonprofit 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.