Alabama
Workers' Comp Exemption

The general rule starts at five employees, and owners can be part of that count

Alabama DOL’s insurance-requirements page says an employer that regularly employs fewer than five full- or part-time employees in one business generally is not required to carry workers’ compensation, subject to listed exceptions. The Department’s FAQ specifically states that corporate officers and LLC members are employees for this count.

That makes personal owner exemption and employer threshold separate issues. A corporation may have an officer who elects not to receive personal benefits, yet that officer still matters when the business determines whether it regularly employs five people.

For a small company hovering around the threshold, keep a dated roster that includes full-time, part-time, corporate officer, and LLC-member workers under the Department’s counting guidance. Do not infer the count from payroll tax labels alone.

The under-five exemption has a narrow but important residential-construction exception

The Alabama DOL insurance page says the under-five exemption does not apply to the business of constructing or assisting on-site in construction of new single-family, detached residential dwellings. That is more precise than repeating a broad slogan that all contractors need coverage.

This wording matters for a trade contractor deciding whether a one- or two-person operation falls under the special rule. The relevant questions include what work is being performed, whether it is on-site, and whether the project is construction of a new single-family detached dwelling. A remodeling or nonresidential job should not be forced into that exact exception without separate authority.

Construction companies can also face contract requirements from general contractors that are stricter than the statutory employee threshold. Treat those contract demands as a separate proof question rather than rewriting Alabama’s statutory exception.

The old DOL owner-exclusion forms are legacy records, not the current filing route

Alabama Act 2017-390 changed the owner-election process. The Legislature’s official act summary says the law added an individual LLC-member exemption, removed the annual filing requirement, and provided that the exemption remains in effect until revoked under the statutory procedure.

Alabama DOL then published a notice saying that, effective August 1, 2017, the Workers’ Compensation Division would no longer accept corporate officer exclusions/inclusions because of Act 2017-390. That notice is important because old WC-14/WC-15 PDFs can still surface in search results and can look current when viewed without context.

Use the current carrier-based owner-election record, not an obsolete annual filing

A current file should therefore rely on the written owner election maintained with the workers’ compensation carrier and the post-2017 rule, not on proof that an obsolete annual DOL form was mailed years ago.

Corporate officers and LLC members can reject personal coverage without disappearing from the threshold

The post-2017 rule permits a corporate officer and an individual LLC member to make the personal exemption election through written certification to the employer’s workers’ compensation carrier. The election concerns that owner’s right to workers’ compensation benefits; it is not a statement that the entity has no employees or no policy obligation.

The same owners remain relevant to Alabama’s employee count under Department guidance. A four-person LLC that adds a fifth counted person can cross the general coverage threshold even if one or more members previously elected to be personally exempt.

Keep the carrier acceptance or endorsement together with the current officer or membership records. If the owner leaves the role, the entity changes, or the carrier changes, verify that the old election still corresponds to the current business rather than relying on its continuing duration in isolation.

Do not extend the officer/LLC-member procedure to every business owner by analogy

Current Alabama agency and statutory materials clearly identify the corporate-officer and LLC-member owner election, but they do not publish an equivalent current Department filing for a general partner or a sole proprietor merely because that person owns the business. A sole proprietor with no employees first analyzes whether the employer-level law applies at all; that is a different question from filing an officer exclusion.

Alabama also allows certain otherwise-exempt small employers to elect into the workers’ compensation law voluntarily. That elective employer coverage is yet another mechanism and should not be confused with an individual officer/member choosing not to receive personal benefits under a policy.

When a business converts from sole proprietorship to LLC, re-run the file rather than carrying forward the proprietor’s old assumptions. The new LLC member can be counted for threshold purposes and has a distinct personal-election route.

Alabama compliance should be rechecked at head-count, project-type, and carrier changes

The most important Alabama reset is the employee roster: a business moving from four counted people to five can enter mandatory coverage. For residential construction, the special on-site new-single-family rule can make project type important before the ordinary five-person threshold is reached.

Owner elections add two more reset events. A carrier replacement should prompt confirmation of the written officer/member election, and an entity or ownership-role change should prompt a new eligibility check. The absence of an annual DOL renewal after 2017 does not make those factual changes irrelevant.

For proof requests, provide the document that actually answers the question: policy certificate for employee coverage, carrier record for an owner’s personal election, or a factual explanation of a lawful under-threshold employer. Avoid presenting the old WC-14/WC-15 as a current state-issued exemption.