A Birmingham restaurant employs a cook, a dishwasher and two servers. One server works Fridays. The owner plans a brunch hire but assumes workers’ comp can wait because fewer than five employees share a shift.
That is the wrong number.
Alabama’s rule concerns how many employees the business regularly employs, including part-time staff. The count is not limited to the people working at the same time or the number of full-time-equivalent positions on the payroll.
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Quick Answer: When Does an Alabama Restaurant Need Workers’ Comp?
An Alabama restaurant generally must carry workers’ compensation insurance when it regularly employs five or more employees. Full-time and part-time staff count. The state’s workers’ compensation FAQ also includes corporate officers and LLC members.
A corporate officer or individual LLC member may elect exemption from coverage. That does not remove the person from the count used to determine whether the five-employee threshold applies. Coverage and threshold status are separate questions.
A smaller restaurant may still elect coverage, and a contract may require it.
The Five-Employee Rule at a Glance
Staffing situation | Question to resolve | Practical response |
|---|---|---|
Four regular employees, including a weekend server | Are any officers or LLC members also included in the count? | Check the complete roster and business structure. |
Four regular employees plus a new part-time server | Will the fifth person be employed regularly? | Resolve coverage before training or scheduled work begins. |
Six employees split between morning and evening shifts | Are all six employed by the same business? | Count the business roster, not only the busiest shift. |
Three employees plus temporary agency staff | Who employs and insures the additional workers? | Review the contract, working arrangement and agency coverage. |
Two restaurants operated by one business | How many people does the business regularly employ? | Review the legal employer, shared staff and both rosters together. |
These are not legal determinations. Alabama Code § 25-5-50 uses the phrase “regularly employs less than five employees in any one business.” Review borderline arrangements before work begins.
Who Belongs in the Employee Count?
Start with a roster of people, not full-time-equivalent hours. A server working two shifts each week is still a person on the roster, as are a closing manager and a weekend dishwasher. They do not have to be present together.
The Alabama Department of Workforce’s compliance FAQ includes full-time and part-time employees, corporate officers and LLC members. An officer or individual LLC member exempt from coverage may still count toward the threshold. Do not subtract that person simply because the policy treats the person differently.
StarNet’s broader workers’ comp insurance guide for restaurants explains covered injuries and benefits. This page stays focused on Alabama’s employee threshold.
What Does Regularly Employed Mean?
A Gulf Coast café may add servers every summer. A Tuscaloosa dining room may schedule extra help on home-game weekends. Both should look beyond a quiet week and describe the actual staffing pattern.
Alabama uses the word regularly, but its public guidance does not provide a fixed number of shifts or days for every short-term situation. A predictable seasonal roster, repeated weekend work and one unusual event may present different facts.
Keep start dates, schedules, payroll and notes about temporary assignments. If the answer depends on whether someone is regularly employed or genuinely casual, ask a qualified Alabama adviser before assigning work.
The Fifth Hire and the Policy Start Date
Suppose the new brunch server trains on Thursday and works on Saturday. If that person brings the regularly employed roster to five, settle the insurance requirement before Thursday—not after the first customer order.
A quote or proposed certificate does not prove coverage is active. Confirm the effective date, named insured, locations and included or excluded people. The policy must identify the correct legal business.
Provide realistic payroll and actual duties. The carrier may later compare estimates with payroll and classifications. StarNet’s workers’ comp audit guide explains that process.
Owners, Multiple Locations and Outside Labor
Corporate officers and LLC members may affect the count even when treated differently for coverage. Ask how an exemption election is documented, but do not treat it as an automatic subtraction from the threshold.
If one business operates two restaurants, do not assume each address receives a separate four-person allowance. Check the employing entity and whether staff move between locations.
A 1099 or invoice does not settle outside-labor questions. Determine who hires, directs and insures agency staff or recurring contractors. Request contracts and insurance evidence where appropriate.
What If the Restaurant Has Fewer Than Five Employees?
A four-person kitchen can still produce a serious burn, fall or lifting injury. Being below the threshold does not make the medical bills disappear. General liability generally addresses third-party claims; it is not a workers’ comp substitute for employees.
Alabama’s insurance requirements guidance explains that an employer outside the mandate may elect coverage. Ask about employer’s liability protection, included owners and the required steps. Requesting a quote alone may not complete the election.
The lease may also require workers’ comp without repeating the state threshold. StarNet’s restaurant lease insurance checklist explains why insurance obligations should be checked before signing or renewing a lease.
Records and Coverage Questions to Prepare
Maintain a dated roster showing staff, officers and LLC members. Record start dates, schedules, employing entities, locations and duties, including delivery or catering work.
Before binding coverage, ask:
Who is included, and who has elected exemption?
Has an exempt person been incorrectly removed from the threshold count?
Are the correct legal entity and every operating location listed?
What payroll and classifications are being estimated?
When does coverage become effective?
What must be reported after another hire or location opening?
Workers’ comp premium commonly depends on payroll and classifications, while the threshold concerns employees. StarNet’s restaurant workers’ comp class-code guide explains how duties may affect rating.
Other Alabama Restaurant Coverage to Review
The five-employee rule answers one workers’ comp question. It does not protect the restaurant’s equipment, customers or income.
General liability may address covered customer claims. Commercial property can protect equipment and inventory, while business income coverage may help after certain covered losses interrupt operations. StarNet’s commercial property guide and business interruption guide explain those exposures.
Alcohol service and employee deliveries may require liquor liability or auto coverage. For the broader picture, see StarNet’s restaurant insurance overview.
Frequently Asked Questions
Do part-time servers count toward Alabama’s five-employee rule?
Yes. Alabama includes part-time employees. Count the people the business regularly employs, not only those working at the same moment.
Do corporate officers and LLC members count?
Alabama’s compliance guidance includes corporate officers and LLC members in the employee count. The individual’s business role and coverage treatment should still be documented carefully.
Does an exempt officer or LLC member still count toward the threshold?
Generally, yes. Alabama law states that an officer’s or individual LLC member’s coverage exemption does not change that person’s employee status for determining whether the threshold has been reached.
Does one extra weekend worker automatically trigger coverage?
Not in every situation. The answer depends on whether the person is regularly employed and on the complete roster. Describe repeated, seasonal and one-time work accurately before deciding.
Can an Alabama restaurant with four employees buy workers’ comp?
Yes. An employer below the general mandatory threshold may explore voluntary coverage. Confirm the policy terms and the steps needed for an effective election.
Does a second restaurant receive a separate five-person threshold?
Do not assume that it does. Review the legal employer, business structure, shared employees and both rosters with a qualified adviser.
Contact StarNet Insurance Group
The fifth name on a roster can change an Alabama restaurant’s workers’ comp obligations before it changes the size of any single shift.
This article provides general educational information, not legal advice or a guarantee of coverage. Laws, employment relationships, ownership elections, contracts and policy terms should be reviewed for the specific business.
Contact StarNet Insurance Group to review your employee count, proposed hire date, policy timing and broader restaurant insurance needs.
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