New hiring laws in Alabama for 2027: the state background check service, veterans' preference policies, overtime and nonresident tax rules and what staffing agencies should check

As of November 2026, Alabama's 2026 regular session made a handful of changes that reach private hiring. The biggest is Act 2026-374 (SB118), in force since October 1, 2026: the Alabama Law Enforcement Agency now runs a background check service that any public or private employer may use, with the candidate's express permission. From January 1, 2027, Act 2026-574 (HB307) lets private employers adopt a written veterans' preference policy that also covers military spouses. Two tax changes affect offers and payroll: an overtime deduction of up to $1,000 for tax years 2026 to 2028 (Act 2026-604) and, from tax year 2026, no withholding for nonresidents who work 30 or fewer days in Alabama (Act 2025-334).

Alabama passed no pay transparency, salary history, non-compete, AI or new E-Verify rule in 2026. Each item below links to the enrolled act on the Legislature's ALISON site. The standing checklist (Department of Workforce unemployment account, Department of Revenue withholding, Form A-4, E-Verify, seven-day new-hire reporting) is in our Alabama hiring hub; this page is the dated list of what is new.

Which Alabama hiring laws changed in 2026, and what changes in 2027?

Alabama acts and the federal rules that apply to Alabama employers, sorted by date.

How does the new Alabama background check service work?

Act 2026-374 requires the Alabama Law Enforcement Agency (ALEA) to set up the Alabama Background Check Service for noncriminal justice purposes and repeals the older law on releasing criminal history. Three rules matter to an employer. The candidate "shall provide express permission for the release of information" before ALEA disseminates anything. The employer must keep that permission "for a period of three years or for the term of the subject's association with the requester, whichever is longer." And no check may be run on anyone under 18 "without parental consent." ALEA may also set up an Alabama Rap Back Program, joined to the FBI's service, that notifies enrolled employers of new criminal history events for a fee of up to $12, and misuse of a background check report is a Class B felony.

A state check sits beside, not instead of, the federal rules: if you use a background screening company, the FCRA's disclosure, authorization and adverse action steps still apply. The full picture, including what a name-based search returns, is in Alabama background check laws. With the EEOC's 2012 guidance rescinded on October 28, 2026, a job-related review using the Green factors from the 1975 Eighth Circuit case (the nature and gravity of the offense, the time since it and the nature of the job) is still a sound way to decide and document; Title VII still applies.

Can Alabama employers prefer veterans and military spouses from 2027?

Yes, voluntarily. Section 3 of Act 2026-574, effective January 1, 2027, says "a private employer may adopt a voluntary veterans' preference employment policy," which "shall be in writing and applied uniformly to the hiring and promotion decisions of the employer." It may cover a veteran who gives the employer a copy of the DD-214, the veteran's spouse with the DD-214 and proof of marriage, and the spouse of an active duty service member with proof of active status and marriage, for as long as the member serves and up to 180 days after discharge. An employer that adopts a policy "shall notify the Alabama Department of Workforce," which will publish a registry, and the act says such a policy "shall not be considered a violation of any state or local law." The same act adds five points to state merit system tests for spouses of veterans and active duty members, ten for spouses of members who died in the line of duty, and lets local governments grant similar preferences.

If you adopt one, write it before January, apply it the same way to every opening, ask for the documents at the application stage rather than at the offer, and keep the notice you send the department.

What changes in Alabama payroll taxes for 2026 offers?

• Short visits by out-of-state staff. Act 2025-334 adds Code of Alabama 40-18-2.2 for tax years from January 1, 2026. Pay to a nonresident is exempt if the work in Alabama is "on 30 or fewer days in the calendar year," the person worked in more than one state that year, is not a professional athlete, entertainer or public figure, and lives in a state with a similar exclusion or no income tax. Once the person exceeds 30 days, the employer "shall withhold and remit tax to this state for every day in that calendar year, including the first 30 days." Track Alabama workdays for traveling consultants and project staff.
• Overtime. Act 2026-604 gives a deduction "not to exceed one thousand dollars ($1,000) per taxpayer" for qualified overtime compensation, defined by reference to 26 U.S.C. § 225, for tax years 2026 through 2028. Keep overtime clearly separated on pay statements so employees can claim it.
• Student loan help. Act 2026-551 makes the exclusion for employer payments on an employee's qualified education loan permanent from tax year 2026, which makes loan repayment a cleaner recruiting benefit.

Which licenses and certificates changed?

• Compacts. From October 1, 2026 Alabama is in the PA Licensure Compact (HB156), the Athletic Trainer Compact (SB160) and the Esthetics Licensure Compact (SB163). Compact privileges start only when each compact's commission issues them, so check before a start date.
• Teachers. HB520 creates an expedited career and technical education certificate for teachers certified in another state, and SB149 a five-year Military Veteran Temporary Teaching Certificate with two years of mentoring. Both require a criminal background check.
• Industry instructors. The TRAIN Act lets employers loan qualified employees to teach career and technical programs under a workforce teaching certificate, with state tax credits from 2027 capped at $10 million a year statewide.
• Elevator mechanics. HB568 moves license renewal from every two years to every year and lengthens emergency and temporary licenses.

Which 2025 Alabama laws already in force still shape hiring?

• Records and licenses. Act 2025-388 (October 1, 2025) created a process for asking a licensing board whether a conviction disqualifies someone, limited denials for convictions not directly related to the occupation, and gave employers immunity from certain claims when they hire a person granted an order of limited relief; see Alabama ban-the-box rules.
• Independent contractors. Act 2025-119, the Portable Benefits Act (December 31, 2025), lets independent contractors set up portable benefit accounts, with contributions deductible as a business expense for the hiring party.

What did not change in Alabama?

• E-Verify for every employer under the Beason-Hammon Act; see E-Verify requirements in Alabama.
• No pay range law, and Alabama's salary history rule is unchanged; see Alabama salary history law.
• Non-competes under Code of Alabama 8-1-190; see Alabama non-compete law.
• Drug testing and recording: see Alabama drug testing laws and Alabama recording consent for interviews, which still needs only one party's consent.
• No AI hiring law; see AI hiring laws by state.

What should Alabama employers do before January 1, 2027?

1. Add an ALEA permission form to the application packet if you will use the state service, and keep signed permissions for at least three years.
2. Decide on a veterans' preference policy; if you adopt one, put it in writing, apply it uniformly and notify the Department of Workforce.
3. Set up day counting for nonresident employees who travel into Alabama.
4. Check Form I-9 versions: paper forms should be the 01/20/25 edition or the 08/01/23 printing that expires 05/31/2027, and electronic systems should show the 05/31/2027 version, which matters for E-Verify too.
5. Review reverification dates for employees on EADs in the affected categories.
6. Update criminal history procedures so they no longer cite the 2012 EEOC guidance.

What does this mean for staffing agencies in Alabama?

The background check service is the change agencies will use most: it gives a direct state source for screening temporary workers, provided each worker signs the permission and the agency keeps it for three years or the length of the relationship. Agencies that send consultants across state lines should apply the 30-day nonresident rule to their own payroll, and agencies that place clinicians, athletic trainers, estheticians, teachers or elevator mechanics should check the new compact and certificate routes. PEO registration and temporary help certification with the Department of Workforce did not change; see our Alabama staffing agency guide and employer of record in Alabama. Other states' 2027 changes, for staff you place outside Alabama, are in new hiring laws for 2027.