Buying workers’ compensation for:


State Fund: No

Insurance Coverage Requirements: Workers’ Compensation is compulsory in Alabama, waivers are not permitted.

Who is Required to Purchase Workers’ Compensation Coverage?

Any business that has five (5) or more employees is required by law to have workers’ compensation coverage. The term employee includes all full or part-time employees, officers of a corporation or members of an LLC. Once the coverage is secured, the employer may choose to exclude the officers or members by filing with the Division an officer exemption form.

Employers of domestic employees, farm laborers, or casual employees and municipalities having a population of less than 2,000 (according to the most recent federal census) are not required to provide coverage but can elect to be covered by the provisions of the Alabama Workers’ Compensation Law.

Factors that Impact Coverage

  • You are a sole proprietor or a partner: In Alabama, you are excluded but have the option to include yourself.
  • You are a corporate officer or member of an LLC: Alabama includes you, but you have the option to exclude yourself.

Failure to Secure Compensation

An employer who fails to secure workers’ compensation coverage as required by law is guilty of a misdemeanor, and upon conviction, is subject to a fine of not less than $100.00 nor more than $1,000.00. In addition, an employer who fails to secure the compensation is liable for 2 times the amount of compensation which would have otherwise been payable for injury or death to an employee. The director may apply to a court of competent jurisdiction for an injunction to restrain threatened or continued violation of any provisions relating to the requirements of insurance or self-insurance. The court may impose civil penalties against an employer in noncompliance with this amendatory act, in an amount not to exceed $100.00 per day. Subsequent compliance with this amendatory act is not a defense.

Proof of Coverage is Required

Employers must post a notice containing information regarding the Ombudsman’s phone number, insurance carrier name and phone number in one or more conspicuous places.

The fines and penalties for noncompliance with the Alabama Workers’ Compensation Act are $1,000 and $100 for every day it takes the Division to get the employer in compliance.

Making a false statement to obtain workers’ compensation benefits (Ala. Criminal Code, Section 13A-11-124) is a Class C Felony under Alabama law. False statements are punishable by up to $5,000 and up to 10 years in prison. Felony theft statutes may also apply.

Independent Contractors

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.

View 20 factors used by the IRS and our independent contractor questionnaire to determine whether you have enough control over a worker to be an employer.

Key Resources

Other Tips

If your insured employs workers in multiple states or your insured’s employees are temporarily working out-of-state, they need to purchase insurance for all the states where their workers are located, according to each state’s laws. Call 1-800-476-2948 and let us walk you through it.

The nature of your insured’s business, number of employees being covered and past coverage and claims are all factors in how much their premium will cost.