Alabama Workers Compensation

Workers compensation insurance in Alabama helps protect employers and workers when an employee becomes injured or contracts a disease as a direct result of their work. Learn about AL workers compensation laws, work-related injury reporting and key considerations for complying with workers comp laws.

Understanding workers compensation in Alabama

Alabama may be known for its Southern charm, but its workforce is anything but laid back. Alabama is home to a wide range of vibrant and diverse industries. Some of the lines of work include delivering technological innovations needed for the life sciences, hospitality on the Gold Coast and automobile manufacturing.

Who is required to carry workers compensation insurance in Alabama?

An employer with five or more employees, other than contractors, is required by law to provide workers compensation insurance coverage.

The term “employee” includes all full or part-time employees, officers of an S corp or other corporation, or LLC members.

Employers of domestic employees, farm laborers or casual employees, and municipalities with 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 under state workers compensation law.

Who can receive workers compensation benefits in Alabama?

Injured employees are generally eligible to receive workers compensation benefits. Some individuals are automatically included in or excluded from workers compensation in Alabama.

Corporations: Officers (who are paid for their services) are included in coverage and may elect to be excluded from coverage.
Partnerships: Partners are excluded from coverage and may elect to be included in coverage.
Sole Proprietorships: Sole proprietors are excluded from coverage and may elect to be included in coverage.
Limited Liability Companies (LLCs): Members are included in coverage and may elect to be excluded from coverage.

Alabama requirements to consider

Employees who are intoxicated may not be eligible for workers compensation benefits if the intoxication was the proximate cause of the injury or death.
If an employee willfully violates a safety rule or regulation set by the employer and known to the employee, their workers compensation claim may not be compensable.

Overview of workers compensation requirements in Alabama

Understanding Alabama workers compensation is essential for employers. Being aware of state requirements helps employers comply with the law and support employees. This is an overview of the fundamentals of employer responsibilities and the benefits employees may receive under AL workers compensation law.

Alabama workers compensation employer responsibilities overview

Compensable injuries

Generally, injuries arising out of and in the course of employment, regardless of whose fault it is, have potential for workers compensation benefits. This includes occupational diseases and cumulative trauma injuries.

Occupational diseases and cumulative trauma injuries are conditions that develop over time in the workplace.
The employee must show that the employment caused the condition and placed the employee at an increased risk of developing as compared to the general public.
Claims must be supported by medical evidence linking the condition to work-related duties.

Posting notices

Alabama employers are required to display the “Workers' Compensation Notice” poster (WCC #1) in a conspicuous location at the workplace. This poster informs employees of their rights and responsibilities under Alabama workers compensation law.

Providing medical treatment 

Employers or their insurance carriers have the right to select the treating physician for the injured employee.

If the injured employee is dissatisfied with the initial physician selected by the employer, and if further treatment is required, the employee may advise the employer/carrier and be entitled to select a second physician from a panel of four physicians selected by the employer/carrier. All referrals from the physician of record must be pre-approved by the employer/insurer.
While reasonably necessary medical care resulting from the injury is covered, certain services must be certified through utilization review to confirm they are medical necessary.
If the injured employee refuses to comply with a reasonable request for examination or refuses to accept medical treatment or rehabilitation offered by the employer, their right to compensation may be suspended during the refusal period.

Providing lost wages (indemnity) 

Employers can be responsible for lost wages, including decrease in pay due to modified job responsibilities. The employee benefits section gives a more in-depth explanation of the types of wage benefits employers may be responsible for.

Prompt reporting and forms

Employers should encourage employees to promptly notify them of any accident or injury. Once aware of a work-related injury, the employer should make sure the injured employee understands they can seek medical treatment if needed. The employer should notify their insurer right away of any work accident or injury so that their insurer can timely report to the Workers’ Compensation Division of the Alabama Department of Labor.

Employers or their insurer may need to report claim information throughout the claim process.

Prompt reporting is essential to avoid penalties and provide timely benefits for injured employees.

Record keeping

Employers should maintain thorough documentation, including details about what happened, when, where, and witnesses involved. Accurate record keeping and prompt reporting to their workers compensation insurer can play a key role in a timely and complete investigation and handling of the claim.

The employer should continue to maintain and provide necessary information to their insurer throughout the claim process as it is vital for efficient claim handling and compliance with the workers compensation law.

Penalties

Employers who fail to comply with workers compensation laws may face penalties, including fines and potential legal action.

Alabama workers compensation employee benefits overview

Calculating Average Weekly Wage (AWW) in Alabama

An employee’s Average Weekly Wage (AWW) is a set calculation based on state requirements. It is used to help determine workers compensation wage benefits. Correct benefit amounts can be determined after an employee’s AWW is calculated.

In Alabama, AWW is calculated from earnings, including overtime and bonuses, during the 52 weeks before the injury.
If an injured employee has not been employed for 52 weeks, the AWW can be based on the wages of a similar employee.
Employers must provide accurate wage records to assist in this calculation.

Temporary Total Disability (TTD) benefits

Temporary Total Disability (TTD) benefits compensate injured employees who are temporarily unable to work due to a work-related injury or condition, based on the work status provided by the authorized treating provider.

Benefits begin after a 3-day waiting period and are paid retroactively if the disability lasts more than 21 days.
Injured employees receive 66 2/3% of their Average Weekly Wage (AWW).
TTD benefits are provided until the injured employee reaches Maximum Medical Improvement (MMI). MMI is the point at which the medical condition has stabilized, and further treatment is unlikely to significantly improve the injured employee’s condition.
Minimum and maximum rates apply.

Temporary Partial Disability (TPD) benefits

Temporary Partial Disability (TPD) benefits are available to injured employees who can return to work in a limited capacity, earning less than their pre-injury wages.

Injured employees receive 66 2/3% of the difference between their pre-injury Average Weekly Wage (AWW) and their post-injury earnings, subject to state maximum limits.
TPD benefits continue until the injured employee reaches Maximum Medical Improvement (MMI) or returns to full-duty work.
TPD benefits are limited to a maximum of 300 weeks. 
Minimum and maximum rates apply.

Permanent Partial Disability (PPD) benefits

Once an injured employee reaches Maximum Medical Improvement (MMI), the authorized treating physician may assign an impairment rating or recommend a functional capacity evaluation (FCE). Permanent Partial Disability (PPD) benefits compensate injured employees for permanent impairments from a work-related injury.

For body parts listed in the statute, PPD benefits are paid at 66 2/3% of the Average Weekly Wage (AWW) for the number of weeks set by statutory schedule for the body part multiplied by the impairment rating. 
Body parts not listed in the statute are considered whole body injuries and are paid at, except for the neck, back, and shoulders, 66 2/3% of the AWW for 300 weeks multiplied by the impairment rating, less a credit for Temporary Total Disability (TTD) weeks paid.
A judge has the broad discretion to determine the final impairment rating, regardless of the physician’s rating.  
Minimum and maximum rates apply.

Permanent Total Disability (PTD) benefits

Permanent Total Disability (PTD) benefits are provided to injured employees permanently unable to perform any gainful work due to a work-related injury.

Payments are 66 2/3% of the Average Weekly Wage (AWW), subject to state maximum limits.
These benefits may last for life, or if the injured employee remains totally disabled.

Fatality benefits

In the event of a work-related death, dependents may receive a percentage of the injured employee’s Average Weekly Wage (AWW), within state limits. The employer or carrier is also responsible for funeral expenses up to the statutory maximum.

Vocational rehabilitation

Employers can choose to require employees to undergo vocational rehabilitation at the employer’s expense.

Medical benefits

Workers compensation covers all reasonably necessary medical care related to a work-related injury or illness. This includes visits to approved healthcare providers, surgery, hospital care, physical therapy, prescription medications, and necessary medical supplies and equipment.

The employer or their insurer have the right to select the initial treating physician. If dissatisfied with that provider, the injured employee is permitted to change physicians but must follow statutory requirements to do so.
Most treatment is subject to utilization review for medical necessity.
Employees are not responsible for any copayments or deductibles.

Legislative updates

Regulations, laws and potential changes that can shift your course

As the nation’s largest writer of workers compensation insurance, Travelers is committed to understanding new and evolving legislation, regulations and trends at the state level. Our employees serve on regional and national associations, boards and committees to advocate on behalf of our customers and the industry. We educate stakeholders on the impact legislation can have on businesses. By taking an active role in the legislative process, we participate in the important dialog around worker safety and advocate for best practices industry-wide so all can benefit from our workers compensation expertise.

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Why choose Travelers

Care for the employee, confidence for the employer

Employees are at the heart of every business. That's why Travelers is here to help employers keep them safe and support them when accidents happen. Our experienced teams guide both employers and their injured employees through recovery, from getting the right care to returning to work as soon as medically appropriate. In fact, 70% of injured employees return to work within 30 days.

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