Workers Comp Insurance Alabama: Requirements, Costs & Exemptions
Alabama's workers compensation laws are different from most states — especially for construction businesses. Here's the complete guide to who needs it, what it costs, and how to avoid common pitfalls.
Quick Answer
Alabama requires workers comp for all construction businesses (regardless of employee count) and non-construction businesses with 5+ employees. Cost: $0.25–$15 per $100 of payroll depending on industry. Penalties for non-compliance: misdemeanor charges, $1,000/day fines, and personal liability for all injuries.
Who Needs Workers Comp in Alabama?
Construction — ALL Businesses
Alabama Code § 25-5-50 requires workers comp for every construction business — even sole proprietors with zero employees.
This includes: general contractors, subcontractors, plumbers, electricians, HVAC, landscapers, painters, roofers, masons, and any trade that performs physical construction work.
Non-Construction — 5+ Employees
Non-construction businesses need workers comp when they reach 5 or more employees (including part-time).
This includes: restaurants, retail stores, offices, salons, medical offices, warehouses, and all other non-construction businesses.
Workers Comp Costs by Industry (2026)
| Industry | Rate per $100 Payroll | Annual Cost ($200K Payroll) |
|---|---|---|
| Office / Clerical | $0.25–$0.50 | $500–$1,000 |
| Retail Store | $0.75–$1.50 | $1,500–$3,000 |
| Restaurant | $1.50–$3.50 | $3,000–$7,000 |
| Landscaping | $3.00–$6.00 | $6,000–$12,000 |
| Plumbing | $3.50–$7.00 | $7,000–$14,000 |
| Electrical | $3.00–$6.00 | $6,000–$12,000 |
| HVAC | $3.50–$7.00 | $7,000–$14,000 |
| Masonry | $5.00–$10.00 | $10,000–$20,000 |
| Roofing | $8.00–$15.00 | $16,000–$30,000 |
Rates based on Alabama NCCI class codes. Actual rates vary by carrier, experience modification, and claims history. Updated April 2026.
Alabama Workers Comp Exemptions
- ✓ Sole proprietors and partners in non-construction businesses (can elect coverage)
- ✓ Domestic employees (housekeepers, nannies)
- ✓ Farm laborers
- ✓ Casual employees not in the employer's usual trade
- ✓ Licensed real estate agents paid solely by commission
- ✗ Construction businesses have NO exemptions — all workers must be covered
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