The national guide covers how workers' compensation works: the no-fault, exclusive-remedy bargain, the policy's two coverage parts, and premium rating. Alabama's law is the Workers' Compensation Act, Ala. Code Title 25, Chapter 5. It is administered by the Alabama Department of Workforce, and contested claims are decided in the circuit courts, not by a state commission (25-5-1, -8, -50).

Who must be covered

• The Act applies to employers that regularly employ five or more employees in any one business (25-5-50(a)).
• The small-employer exemption does not apply to businesses that build, or help build on site, new single-family detached homes. Those employers are covered even with fewer than five employees.
• Exempt unless they elect coverage: employers of domestic employees and farm laborers, casual employment, small employers, and small municipalities.
• An exempt employer elects coverage by filing written notice with the Department of Workforce and posting a copy at the workplace.
• Corporate officers and LLC members may elect to be exempt by filing a written certification with the employer's insurer. The election takes effect the first day of the next month (25-5-50(b)).

Securing compensation

• An employer may insure with an authorized insurer or qualify to self-insure (25-5-8).
• Two or more employers may also pool their liabilities under an approved group self-insurance agreement (25-5-9).
• Alabama has a competitive market with no state monopoly fund.

What is compensable

• Compensation is paid, without regard to negligence, for injury or death from an accident arising out of and in the course of employment (25-5-51).

• No compensation is payable when the injury is caused by:

  • willful misconduct or intent to injure
  • willful refusal to use safety appliances
  • intoxication or illegal drug impairment
  • refusing a post-accident drug test after a written warning that refusal forfeits benefits

  The employer must prove these defenses.

• Preexisting conditions. A worker who knowingly misrepresents a preexisting condition in writing, after the employer's required bold-type warning, is barred from compensation if that condition is later aggravated at work. When an earlier condition prolongs disability, the employer pays only for the disability the accident alone would have caused (25-5-58).

Exclusive remedy and third parties

• Workers' compensation is the exclusive remedy against the employer. Immunity extends to co-employees and the insurer, except for a co-employee's willful conduct as the Act defines it (25-5-53, -11).
• A worker hurt by a third party, such as the maker of a defective machine, may collect compensation and sue that third party (25-5-11).

Benefits

Choosing a doctor. The employer chooses the treating physician. A dissatisfied worker may pick a second physician from a panel of four named by the employer (25-5-77).

Deadlines

• Notice of injury. The employee gives written notice within 5 days. Unless excused, no compensation is payable without written notice within 90 days (25-5-78).
• Filing a claim. A claim is barred unless settled or filed in court within two years after the accident or the last compensation payment (25-5-80).
• Settlements. A settlement for less than statutory benefits needs a judge's approval that it is in the employee's best interest. It can be set aside for fraud or coercion within six months (25-5-56).

Guaranty protection

If a workers' compensation insurer becomes insolvent, the Alabama Insurance Guaranty Association pays covered workers' compensation claims in full. Other claims are capped at $300,000 (27-42-8).

Common exam traps

• Coverage is required at five employees, but builders of new single-family homes are covered with fewer.
• Domestic and farm employers are exempt unless they elect coverage.
• Disputes go to circuit court. The Department of Workforce administers the Act.
• TTD is 66 2/3% of average weekly earnings, and the waiting days are paid back at 21 days.
• Notice is due in 5 days, with a 90-day outside limit. Claims are filed within two years.
• Co-employees are immune except for willful conduct.