Unique Aspects Of Alabama Payroll Law And Practice

The Alabama State Agency that oversees the collection and reporting of State income taxes deducted from payroll checks is: Alabama requires that you use Alabama form  "A-4, Employee's Withholding Exemption Certificate" instead of a Federal W-4 Form for Alabama State Income Tax Withholding.

Not all states allow salary reductions made under Section 125 cafeteria plans or 401(k) to be treated in the same manner as the IRS code allows.  In Alabama cafeteria plans: are not taxable for income tax calculation; are taxable for unemployment insurance purposes.   401(k) plan deferrals are: not taxable for income taxes; are not taxable for unemployment purposes.

Alabama requires Magnetic media reporting of quarterly wage reporting if the employer has at least 250 employees that they are reporting that quarter. Unemployment records must be retained in Alabama for a minimum period of five years.  This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.

There is also no general provision in Alabama State Law covering paying overtime in a non-FLSA covered employer. Alabama State new hire reporting requirements are that every employer must report every new hire, rehire and recall.  The employer must report the federally required elements of: The Alabama new hire-reporting agency can be reached at 334-353-8491 or on the web at www.dir.state.al.us/nh.htm

Alabama does allow compulsory direct deposit but the employee's choice of financial institution must meet federal Regulation E regarding choice of financial institutions. In Alabama there are no statutory requirements concerning pay frequency or the lag between when the lag time between when the services are performed and when the employee must be paid. Nor for that matter does Alabama have legal provisions concerning when a terminated employee, voluntary or involuntary, must be paid.

Deceased employee's wages must be paid when normally due to the surviving spouse or custodian of minor children. In Alabama the payroll laws covering mandatory rest or meal breaks are only that: minors under 16 must have 30 minutes rest after five hours of work. There is no provision in Alabama law concerning record retention of wage and hour records therefor it is probably wise to follow FLSA guidelines. Please note that this article is not updated for changes that can and will happen from time to time.