Alabama PEO Law FAQs
Does Alabama require PEOs to register with the state?
Yes. Alabama requires PEOs to register with the Alabama Department of Labor (Workers' Compensation Division) before operating in the state, under the Alabama Professional Employer Organization Registration Act, Act No. 2006-229. A limited registration exists for qualifying out-of-state PEOs.
What bond or security do Alabama PEOs need to provide?
Alabama does not require a bond. Instead, registrants must maintain a minimum net worth of $100,000 at all times, or post a cash deposit with the Alabama State Treasury or other security acceptable to the Director. Registration certificates are valid for one year and are renewed annually.
What is Alabama's unemployment insurance (SUI) taxable wage base?
Alabama's SUI taxable wage base is $8,000 per employee per calendar year. The new employer rate is 2.7%. PEOs report client wages by client while remitting under their own account number and experience rate.
Does Alabama have a state-run workers' compensation fund?
No. Alabama does not operate a state-run workers' compensation fund. Coverage is obtained through approved commercial carriers, the assigned risk pool, group self-insurance funds, or individual self-insurance.
What is the minimum wage in Alabama?
Alabama's minimum wage is $7.25 per hour, which matches the federal minimum wage. The state has not adopted a separate higher minimum wage.
Does Alabama require paid leave for employees?
No. Alabama does not mandate paid family leave or paid sick leave. The state is not among jurisdictions with paid sick leave laws, and a PEO operating without registering is liable for a civil penalty of $100 per day.