Staffing agency license in Alabama: a 1965 statute and PEO registration

Alabama is an odd case. The Code of Alabama still contains a 1965 law saying no one may operate a private employment agency without a license from the Commissioner of Revenue, and nothing in the official Code marks it repealed. Yet the Department of Revenue's own business license guide lists employment agencies as needing no license, and I could not find any form, rule or web page through which the department issues one. What is clearly live is the registration regime for professional employer organizations, including an annual certification that temporary help firms must file to show they are not PEOs.

This page sets out what the 1965 statute says, how to handle the gap between the text and practice, the PEO and temporary help filings, and the employer accounts every Alabama staffing firm needs. For how Alabama compares with states that run active licensing programs, see employment agency license requirements.

The 1965 employment agency statute

Title 34, Chapter 10 of the Code of Alabama, "Employment Agencies," has five sections, all from Acts 1965, 1st Extraordinary Session, No. 224. None carries a repeal note. The core rule is in § 34-10-1(a): "No person shall open, operate, or maintain a private employment agency in the State of Alabama without first procuring a license from the Commissioner of the State Department of Revenue."

The rest of the chapter is short:

There is no bond, no individual counselor license, no fee schedule, no refund rule and no cap on what an agency may charge. Operating without the license is a misdemeanor under § 34-10-1(a), "punished as for a misdemeanor"; the chapter does not set a specific fine.

The chapter never defines "private employment agency." It does not distinguish an agency that charges job seekers from an employer-paid search firm, or either from a temporary staffing firm that employs its workers. Whether it was ever meant to reach temp and search firms is not answered by the text.

The gap between the text and practice

The Department of Revenue's quick reference guide to state and county business privilege licenses under Title 40, Chapter 12 lists "Employment Agency" with "None" in the license column, and "Talent Agency" the same way. That guide covers a different title of the Code, so it does not by itself answer the Chapter 34-10 question. But as of October 2026 I found no Revenue form, administrative rule or web page that issues the Chapter 34-10 license, and I could not confirm whether the department enforces it.

A practical way to handle it:

• Ask in writing. Write to the Department of Revenue, cite § 34-10-1, describe your model (employer-paid direct hire, temp staffing, or fees charged to candidates) and ask whether a license is required. File the reply.
• Weigh your model. An agency that charges job seekers is closest to what a 1965 statute was written for and carries the most risk if the law is ever enforced. An employer-paid desk or a temp firm that employs its workers is further from it.
• Check your city. Alabama cities issue their own business licenses, and a city license is likely to be the license you actually need to show.

One other agency-specific rule is clearly live: Ala. Code § 25-1-23 makes it unlawful for an employment agency to refuse to refer, or otherwise discriminate against, someone because of age.

What applies, by business model

PEO registration and the temporary help certification

The Alabama Professional Employer Organization Registration Act, Ala. Code §§ 25-14-1 to 25-14-10, is the active regime. Under § 25-14-5(a)(1) a person "may not provide, advertise, or otherwise hold itself out as providing professional employer services in this state unless the person is registered." The Department of Labor administered it; Act 2024-115 renamed that department the Alabama Department of Workforce, and registration sits in its Workers' Compensation Division.

• Fees. Ala. Admin. Code 480-5-7-.01 sets $1,000 for an initial registration and $500 for renewal. A limited registration is $500 initial and $250 renewal.
• Term. One year, renewed annually.
• Financial standing. Net worth of at least $100,000 on audited or reviewed financial statements; if not met, the department may require a cash deposit or other security. Proof of workers' compensation coverage is also required.
• Limited registration. For an out-of-state PEO licensed in a comparable state, with no Alabama office or solicitation and 50 or fewer Alabama covered employees.
• Penalties. Under § 25-14-8, fines of up to $1,000 per count for prohibited practices, a civil penalty of $100 per count for operating unregistered with each day a separate offense, injunctions, and a Class C felony for a controlling person who fails to remit wages, taxes or insurance funds.

The part most staffing firms miss is in § 25-14-3(7)c. Temporary help services are excluded from the PEO definition, but they "shall annually, at no cost, certify" to the department that they are not providing PEO services. The department's PEO page links the temporary help affidavit and publishes a list of state-approved temporary help services. If you run a temp desk in Alabama, filing that affidavit is the closest thing to a staffing license you can actually obtain, and clients who know the list may check it.

Workers' compensation and unemployment

• Workers' compensation. Under § 25-5-50(a) the law does not apply to an employer that regularly employs fewer than five employees in one business. A temp firm counts the workers on its payroll, so it crosses that line quickly. Failing to insure is a misdemeanor with a fine of $100 to $1,000 under § 25-5-8(e), plus liability for twice the compensation otherwise payable, a court-imposed civil penalty of up to $100 per day, and an injunction. See staffing agency insurance requirements for the other policies clients ask for.
• Unemployment insurance. Under § 25-4-8(a)(1), an employer is liable once it pays $1,500 in wages in a calendar quarter or employs at least one person in 20 weeks of the current or prior year. The Department of Workforce administers it. I found no Alabama rule treating a temp worker who fails to ask for a new assignment as having quit, unlike several other states, so do not rely on one.
• E-Verify. Alabama has its own E-Verify mandate for employers, which a staffing firm meets as the employer of record. See E-Verify requirements in Alabama and E-Verify for staffing agencies.

Entity registration and taxes

• Secretary of State. Under § 10A-1-7.01(c), a foreign entity must register before transacting business in Alabama, and under § 10A-1-7.21 an unregistered entity cannot sue in Alabama courts, which matters when you need to collect a placement fee.
• Business privilege tax. Corporations and LLCs pay an annual tax based on Alabama net worth under § 40-14A-22. It is a tax, not a license.
• City business license. Check the city where your office sits; this is a local requirement separate from anything in the Code.

The setup sequence for a new firm is in how to start a staffing agency.

Special categories

As of October 2026, searching the Code turned up:

• Nurse and health care staffing: no registration statute found.
• Farm labor contractors: no state license found; the federal Migrant and Seasonal Agricultural Worker Protection Act still applies.
• Talent and modeling: no talent agency license found, but § 25-8-61 requires parental written consent and notice to the Child Labor Division before a minor works as a model.
• Day labor: no statute found.

An Alabama checklist

ALABAMA CHECK — [date] — owner: [name]

Model:
  [ ] Employer-paid direct hire: written answer from Revenue on 34-10-1
  [ ] Candidate-paid fees: written answer from Revenue; contract reviewed
  [ ] Temp/contract, we employ: annual temp help certification filed
  [ ] Co-employment of client workforce: PEO registration (25-14-5)

Employer accounts:
  Workers' comp in force (5+ employees)               [ ]
  Department of Workforce UI account                  [ ]
  Revenue withholding account                         [ ]
  E-Verify enrolled                                   [ ]
  Secretary of State registration; city license       [ ]

If a PEO:
  Registration ($1,000 initial / $500 renewal)        [ ]
  Net worth $100,000 or security posted               [ ]
Next review: [date]

Re-check if you start charging candidates or begin co-employing a client's existing staff, since either moves you toward the parts of Alabama law that carry real filings.