Introduction to employment laws in Alabama
Overview
Alabama is subject to numerous state and federal labor laws that protect employees from discrimination based on age, religion, sexual orientation, gender, or race.
Complying with Alabama’s specific employment laws in combination with federal regulations is critical for businesses to avoid legal issues and hefty fines, which is why we’ve put together this useful guide.
Employing in Alabama: Key employment laws and practices
Standard work hours
In Alabama, there are no state laws regulating the number of hours employees can work per day or week. However, full-time employees generally work 30 to 40 hours per week.
Contractual employees adhere to the conditions defined in their contracts regarding their work hours. Self-employed professionals or freelancers set their own work hours based on the scope of their projects or individual agreements with their clients. The employer does not typically provide benefits for contractual workers.
Minimum wage and overtime
Alabama is one of five states that has not adopted a state minimum wage law, so it adheres to the federal minimum wage of $7.25 per hour, which has not changed since 2009.
Non-exempt employees who work more than 40 hours a week are entitled to overtime pay of 1.5 times their regular pay rate. Exempted employees typically include those earning more than $684 per week who meet certain criteria related to their job duties.
Insurance and benefits
Employee benefits in Alabama entail various insurance options, including health, vision, and dental insurance. Employers may also offer retirement plans such as 401(k) plans. Note that state-specific regulations govern these benefits.
Benefit type | Description |
Health insurance | Coverage for medical costs |
Vision insurance | Coverage for eye care |
Dental insurance | Coverage for dental care |
401(k) retirement plan | Savings plan for retirement |
Multiplier makes it easy to manage benefits for Alabama employees.
Meal and rest periods
In line with Alabama employment laws, there are specific requirements regarding work breaks and meal periods. Alabama does not have any state laws mandating employers to provide employees with meal or rest breaks. Thus, in Alabama, HR compliance primarily depends on federal labor law standards under the Fair Labor Standards Act (FLSA).
The FLSA does not mandate meal or rest breaks but stipulates that if an employer decides to provide short breaks (typically lasting about 5 to 20 minutes), these must be counted as paid work hours. Conversely, a meal break typically entails a longer rest period (usually 30 minutes or more) during which the employee is completely relieved from duty.
Note that employers in Alabama must provide a 30-minute meal or rest period to employees ages 14 and 15 scheduled to work 5 continuous hours.
Anti-discrimination laws
Alabama follows federal laws when it comes to anti-discrimination in the workplace. These federal laws include the Civil Rights Act, which prohibits discrimination based on race, color, religion, sex, or national origin; the Americans with Disabilities Act (ADA), which prohibits discrimination against individuals with disabilities; and the Alabama Age Discrimination in Employment Act (AADEA) prohibits employers with 15 or more employees from discriminating against employees aged 40 and over.
Alabama law prohibits employers from paying disparate wages based on sex or race for equal work requiring equal skill, effort, education, experience, and responsibility under similar conditions. Differences in wages can only be based on a seniority system, a merit system, a production-based system, or any factor other than sex or race. In matters of discrimination, Alabama HR compliance involves adhering to both state and federal laws.
Easily onboard employees in Alabama?
Leave policies
Alabama employment laws do not stipulate specific leave policies for employees. This means employers typically follow federal guidelines set out by the Family Medical Leave Act (FMLA), granting eligible employees up to 12 weeks of unpaid leave for medical or family-related reasons each year.
Leave type | Description |
Vacation leave | Not mandated by law, but commonly offered by employers |
Sick leave | Not mandated by law, but commonly offered by employers |
Parental and maternity leave | Up to 12 weeks of unpaid leave under FMLA |
Bereavement leave | Not legally required, but typically offered by employers |
Jury duty | Employers must provide full pay for hours served on jury duty |
Military leave | Unpaid leave must be granted for military duty or training |
Termination laws
Alabama follows the “at-will” employment doctrine, which allows employers and employees to terminate their working relationship at any time and for any reason unless a contract specifies otherwise.
However, several exceptions exist, including the prohibition of termination due to discriminatory reasons, retaliation, or violation of public policy. Alabama does not mandate severance pay unless it is specified in an employment contract or company policy.
Safety and health
Alabama follows federal guidelines set by the Occupational Safety and Health Administration (OSHA) to ensure workplace safety. Employers are required to provide a workplace free from known dangers that could harm their employees. Certain industries have specific safety standards that must be followed.
Alabama employment laws also encompass safety and health regulations. The state implements the Alabama Clean Indoor Air Act that bans smoking in public places, including workplaces. However, employers with five or more employees can set up designated smoking areas within their premises or implement a total smoking ban.
Furthermore, particular provisions pertain to weapons in workplaces. Employers cannot prevent an employee from keeping a gun in their privately owned vehicles in employer-owned parking lots, provided certain conditions are met. Additionally, state law prohibits the manual use of wireless communication devices for text-based activities while driving.
Alabama requires all employers with five or more regular employees to have workers’ compensation coverage. Workers’ compensation in Alabama can cover expenses related to work-related accidents, illnesses, repetitive injuries, missed wages, ongoing care, funeral costs, and disability. Benefits include medical treatment, partial wage replacement, and disability payments.
Taxes in Alabama
Taxation is a significant part of Alabama HR compliance. Both employers and employees need to contribute to federal and state taxes. While the federal taxes include Social Security and Medicare, state taxes generally encompass income tax.
Type of tax | Employer rate | Employee rate |
Federal Unemployment Tax (FUTA) | 0.65%–6.8% | N/A |
State Unemployment Insurance Tax (SUTA) | 6.2% | N/A |
FICA – Social Security | 6.2% | 6.2% |
FICA – Medicare | 1.45% | 1.45% |
Federal income tax | N/A | 10%–37% |
State income tax | N/A- | 2%–5% |
Managing Alabama employees with an Employer of Record (EOR)
To tap into the Alabama talent pool, it’s critical to understand the full extent of the state’s employment laws and HR guidelines. Luckily, you don’t have to navigate this complex landscape alone.
If you’re hiring US talent from abroad, Multiplier’s Employer of Record (EOR) solution allows you to employ full-time workers in Alabama legally and compliantly without setting up local entities.
Additionally, with our global payroll platform, paying employees in Alabama is no longer a complex task. This single interface gives you a unified view of your payroll operations across your workforce, including those in Alabama.
At Multiplier, we understand the complexities of HR compliance and the importance of staying up-to-date with changes in Alabama employment laws. Book a demo today.
FAQs
In Alabama, full-time employment typically involves working between 30–40 hours per week. However, there is no law that officially defines these hours.
Under the federal Affordable Care Act, employers with 50 or more employees must offer statutory health insurance to their full-time employees. Some employers choose to offer supplemental health insurance, although this is not a legal requirement.
No, there are no laws in Alabama that require organizations to offer a 401k retirement plan to their employees. However, many choose to do so as part of their comprehensive benefits package.
There are no state or federal laws requiring employers in Alabama to provide paid or unpaid vacation or sick leave. However, the federal Family and Medical Leave Act (FMLA) entitles eligible employees to up to 12 weeks of unpaid sick leave per year.
Alabama is an “at-will” state, meaning both employers and employees can end the employment relationship without reason, provided it’s legal. There are no requirements for employers or employees to provide notice of termination unless otherwise stated in the employment contract.
