Alabama classifies gig workers—like rideshare drivers or delivery personnel—as independent contractors (ICs) under state law, provided they meet criteria such as controlling their work schedule, using their own equipment, and working for multiple platforms. A groundbreaking 2025 Portable Benefits Act (effective December 31, 2025) allows voluntary, tax-advantaged contributions to ICs’ health, retirement, or insurance accounts without reclassifying them as employees or triggering workers’ comp obligations.
Classification Criteria
Workers qualify as ICs if they retain autonomy over how, when, and where they perform services, per Alabama precedents and statutes like SB 150, which explicitly shields gig platforms from employee claims. Platforms must issue 1099s for earnings over $600 annually and cannot mandate exclusivity or set hours to preserve IC status.
Benefits and Protections
The new law offers portable benefits portability across gigs, with employer deductions and tax-free receipt for workers, positioning Alabama as a gig-friendly state. ICs lack employee perks like minimum wage guarantees, overtime, or unemployment but gain flexibility and these optional supports.
Risks of Misclassification
Courts apply ABC tests or IRS 20-factor analysis if disputes arise; treating ICs like employees (e.g., uniform mandates) risks fines or backpay claims. Gig firms should document independence to comply.
SOURCES
[1](https://www.fisherphillips.com/en/news-insights/alabama-launches-first-in-the-nation-tax-friendly-portable-benefits-for-independent-contractors-and-gig-workers.html)
[2](https://www.phelps.com/insights/alabama-enacts-law-that-establishes-portable-benefits-for-independent-contractors.html)
[3](https://www.tsrsa.org/sed-porttitor-efficitur-orci-eu-felis-in-orci-eget-tempor-massa/)
[4](https://www.postercompliance.com/blog/labor-law-compliance-for-gig-workers-what-employers-need-to-know/)
[5](https://ogletree.com/insights-resources/blog-posts/alabama-eyes-portable-benefits-for-freelancers-and-gig-workers/)
