FAQ – Workforce Alabama

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An Alabama worker is an employee if an employee/employer relationship exists between the business and the worker. This means if a business has the right of control over the worker, whether or not they actually exercise the right, the worker is an employee. Alabama law provides that common law factors assist in making determinations.

Under the Alabama UC law, except for certain non-profit organizations and government entities, an employer becomes subject to taxes when any one of the following conditions are met:

Non-Farm Business Employers
When the employer has employed one or more workers on some day in 20 or more different weeks, whether or not consecutive, during the current or preceding calendar year, or has paid wages of $1,500 or more in any calendar quarter during the current or preceding calendar year.

Household Domestic Employers
Domestic employers become subject when they pay domestic workers in a private household, college club, fraternity or sorority house a total of $1,000 or more in cash wages in any calendar quarter during the current or preceding calendar year.

Agricultural Employers
When the employer has had 10 or more agricultural workers in 20 or more different weeks during the current or preceding calendar year, or has paid a total of $20,000 in wages to agricultural workers during any calendar quarter of the current or preceding calendar year.

An employer becomes subject by acquiring the trade or business or all the assets of another employer, subject to Alabama Unemployment Tax. An employer can also become a successor by acquiring a segregable part of the organization, trade or business of another such employer, provided that part would itself have been an employing unit subject to Alabama Unemployment Tax if it represented the entire business of the predecessor.

Services performed in the employ of a church or convention or association of churches—or an organization operated primarily for religious purposes and controlled or supported by a church or convention or association of churches—are not considered covered employment.

Non-profit organizations are liable for Alabama Unemployment Tax unless they are exempt from income tax under section 501(a) of the Internal Revenue Code and are classified as a Section 501(c)(3) organization. Organizations classified under Section 501(c)(3) become liable only after they have had four or more individuals in employment in each of 20 different weeks within either the current or preceding calendar year.

You can open an Alabama Unemployment Tax account by completing an application (Form SR-2). Employers should submit an application as soon as liability has been established. You may request an application from the Status Unit:

50 North Ripley Street
Montgomery, AL 36130.
Phone: (334) 954-4730

You can download your tax rate notice by logging into eGov, provided your company is not a new company with a 2.70% initial rate. Employers with a 2.70% rate will be able to download a computer-generated tax rate notice once their individualized tax rate is determined.

Employers newly liable under the Alabama UC law pay tax at the rate of 2.70% on the first $8,000 of wages for each employee. Subsequent rates are determined by Experience Rating.

A new employer that acquires a business of another liable employer (the predecessor) is assigned the experience (benefit charges and taxable payroll) of the predecessor. If proper notification and wage transcripts are provided within the time prescribed by law, the new employer may be entitled to a rate based on partial acquisition of the predecessor.

An employer that has operated long enough to qualify for experience rating earns a tax rate based on the employer’s own experience, modified by statewide experience and shared cost. An employer’s rate can vary based on rate schedules and shared cost provisions.

The rate is computed using the three most recent complete fiscal years of benefit charges and taxable payroll. Benefit ratios and shared cost are applied as defined under the law to determine the tax rate.

When an individual files a claim, monetary and non-monetary determinations are made. Benefit charges may increase an employer’s tax rate and result in higher tax payments.

A temporary agency seeking relief of benefit charges for school services employees must file an affidavit with the Status Unit. Relief is considered only if 75% or more of the agency’s employees are employed within a school system.

Contact your local field tax representative.

One percent per month on contributions due until paid.

The penalty is $25 or 10% of taxes owed, whichever is greater.

No. Quarterly reports must be filed online via eGov.

The employer is taxed on the first $8,000 paid to a worker during the calendar year.

No. The Quarterly Contribution and Wage Report must be filed online for each quarter.

Submit a completed UC-10-C (Statement to Correct Information) form online via eGov.

Log in to eGov and use the “View/Reset Previously Entered Wage Reports” option. For other reports contact Audit & Cashiering.

When filing online, delete the line with the incorrect information and add the correct data. To correct previously submitted reports submit Form UC-10-C online.

Yes. All taxes due are payable.

Reports are due the last day of the month following the end of each quarter: January 31, April 30, July 31 and October 31.

Yes.

Yes.

Yes. You are required to report quarterly and pay post-petition taxes.

If the employee has the option of the benefit or cash, the wages are reportable for Alabama UC purposes.

Yes.

The New Hire program is a registry for reporting newly hired employees, recalled workers and job refusals. Its purpose is to combat fraud and keep employer tax rates from rising.

Employers are required to display the posters for Alabama Child Labor Law, Worker’s Compensation Notice and Job Insurance.