Alabama Workers' Compensation laws & compensation compliance analysis

Alabama Workers' Compensation: What you need to know

On May 8, 2017, Jefferson County Circuit Judge Pat Ballard struck down the Alabama Workers’ Compensation Act as unconstitutional. Specifically, Ballard held that the $220 weekly limit, established in 1989, on payments for permanent partial disability, as well as fee caps for the attorneys of these workers, were so low that they violated the Alabama Constitution.
Although the decision focused on payments and attorneys’ fee caps, the effect would be to strike down the entire Workers’ Compensation Act if the decision holds. If the Act is unconstitutional, employees would be allowed to sue employers for work-related injuries. Employees would be able to recover for medical treatment, pain and suffering, and—potentially—punitive damages.
Ballard stayed his opinion for 120 days to give the Alabama Legislature an opportunity to fix the issue. It is likely that the case will be appealed.
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Virtually all employers in Alabama must provide workers' compensation insurance coverage for their employees (AL Code Sec. 25-1-1). Insurance is required for all nonconstruction employers that have five or more employees and for all construction employers of any size. Counties and municipalities with a population of more than 2,000 must be covered, but cities with a population of more than 250,000 need not be covered. A few categories of employment are specifically exempted from coverage:
• Domestic servants
• Farm laborers
• Licensed real estate agents operating under licensed brokers
• Independent contractors
• Casual employees
• Employees of municipalities with populations of less than 2,000
• Corporate officers
• Sole proprietors/partners, unless they file an election to follow the workers' compensation laws
Employers that are not obligated to provide coverage may elect to be covered under the Workers' Compensation Act, thereby gaining immunity from other legal actions. Employers that do not elect coverage must inform employees in writing of that fact and must post a notice in a conspicuous place advising all employees and applicants that workers' compensation is not provided.

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