How many employees before I need workers' comp in Alabama?

Alabama counts almost everyone toward its five-employee workers-comp threshold. Full-time and part-time workers both count. Corporate officers and LLC members count. The main exclusion is genuine independent contractors. So a business with three full-time employees and two part-timers is at five and needs coverage.

What does the counting rule actually include?

The Alabama Department of Labor states the core rule directly: a business is covered once it has "less than five (5) employees, full-time or part-time and including officers of a corporation." Alabama Code Sec. 25-5-50(b) extends that same counting rule to LLC members - an officer or an individual LLC member may separately elect to exempt themselves from coverage, but that election "does not otherwise change his or her status as an employee for the purpose of determining the threshold number of employees." So part-time status does not exclude someone from the count, and being an officer or LLC member does not put someone outside it either.

Do seasonal workers count?

Seasonal employees count the same way part-time employees do - the law does not carve out a lower threshold or a separate exemption for workers who are only on payroll part of the year. A business that ramps up seasonal staff and crosses five employees, even briefly, is subject to the same requirement as a business with five year-round employees. There is no separate lower bar for a business that only occasionally reaches five people - the requirement applies once the threshold is met, however temporarily.

What about independent contractors?

Genuine independent contractors are excluded from the count. The caution is in how "genuine" gets decided: misclassification is judged on the real working relationship - how much control the business exercises, whether the work is central to the business, how the person is paid - not on the label a contract uses. Calling someone a contractor does not make them one if the underlying relationship looks like employment.

Example: an LLC with two members and three part-time staff is at five employees. The members are not "owners outside the count" - Alabama's rule puts them inside it - so the LLC needs workers-comp coverage even though it might not think of its own members as "employees" in the everyday sense.

See Alabama commercial insurance and when workers comp is required in Alabama, or Alabama insurance requirements generally. A coverage review can walk through a specific business's headcount against the threshold.