General wage and hour compliance notice for all industries

Department of Labor and
Workforce Development
Labor Standards and Safety
Wage and Hour
1251 Muldoon Road, Suite 113
Anchorage, Alaska 99504
Main: 907.269.4900

February 5, 2026

Dear Employer,

The Alaska Department of Labor and Workforce Development, Wage and Hour office is
addressing common wage and hour issues concerning general industry. For the purpose of
education, this letter is being provided as an industry-wide notice to address multiple issues that
appear to be subject to widespread misunderstanding throughout industries in general. Among
the issues that have been the focus of questions, complaints, and subsequent enforcement
activities are:

• The implementation of statutorily required paid sick leave following the passage of Ballot
Measure 1 in the 2024 general election and subsequent new regulation adopted in 2025;

• The absence of written hiring agreements between the employer and the employee;

• Payment of wages and overtime inconsistent with the Alaska Wage and Hour Act;

• Definition of workday, workweek, and year;

• Nonpayment of wages for all hours worked;

• Insufficient or non-existent records of all daily and weekly hours worked by every
employee;

• Contractual benefits between employer and employee;

• Nonpayment or insufficient payment for the time spent in travel and other work-related
duties;

• Employees being incorrectly classified as independent contractors or volunteers;

• Changes to the rate of pay without the required written notice;

• Breaks and meal periods;

• Employees subjected to unlawful deductions from wages, the withholding of paychecks,
or being compelled to reimburse employers without written authorization.

We will address each of these issues in this letter and we are always available to discuss any
follow-up questions you may have.

                                    Paid Sick Leave

Following the passage of Ballot Measure 1 in the 2024 General Election, Alaska has adopted
laws guaranteeing paid sick leave to most employees. Alaska's paid sick leave laws went into
effect on July 1, 2025. All covered employees will accrue sick leave at the same rate, 1 hour per
every 30 hours worked. These hours worked are cumulative. The hours counted for salary-
exempt employees may be limited to 40 hours per week.

The amount of paid sick leave that can be accrued and used in a year is capped depending on the
number of employees an employer has. While accrual and usage are capped, the sick leave
balance is not capped. Unused sick leave must be carried forward into the next year.

Employers who have existing paid time off programs need to review their policies to assure they
meet the minimum standards established by the new law. Employers are free to offer a more
generous plan to their employees if they choose.

Employers are prohibited from interfering with, restraining, or denying the use of paid sick
leave. They cannot require employees to find coverage for missed shifts or take adverse actions
against employees for the usage of paid sick leave. Documented verification of the need for paid
sick leave, such as a doctor's note, can only be requested for paid sick leave usage of more than
three consecutive workdays and must comply with statutory requirements. [1]

The Department has published frequently asked questions to aid with the understanding of
Alaska's new sick leave laws and has provided a link to the ballot measure language. These can
be found at: https://labor.alaska.gov/lss/sick-leave-faq.html.

          Written Hiring Agreements and Changes in the Rate of Pay (see below)

Under Alaska Labor Law, employers must provide all employees with a written hiring
agreement. This must include their rate of pay, where they receive payment, and the established
payday which cannot occur less frequently than once per month (i.e. daily, weekly, bi-weekly, or
monthly). Any time the employer elects to make a change, they must provide the employee with
written notification of the change no later than on the payday before the time of change. The
change cannot be made in the middle of a pay period and cannot be retroactive. [2]

                             Minimum Wage and Overtime

Except as otherwise provided for in law, an employer shall pay to each employee a minimum
wage, for all hours worked in a pay period, whether the work is measured by time, piece,
commission or otherwise.

The current Alaska minimum wage is $13.00 per hour as of July 1, 2025. The minimum wage
will increase to $14.00 on July 1, 2026, and $15.00 on July 1, 2027, due to the passage of Ballot
Measure 1 in 2024. Alaska's minimum wage will return to annual adjustment using the
Consumer Price Index for the previous calendar year on January 1, 2028. Ballot Measure 1 only
changes the minimum wage rate; it does not change to whom the minimum wage applies.

Barring any allowable exemptions, an employee who works over 8 hours in a workday and/or
more than 40 straight-time hours in a workweek must be paid 1.5 times their regular rate of pay [3]
(this requirement of the law is referred to as "overtime" [4]). Furthermore, if an employee is paid
multiple rates of pay, the employer has the option to pay the overtime by using a weighted
average formula [5] or 1.5 times the rate of pay for the type of work being performed during the
overtime hours. [6] We recommend employers document which method they will use in hiring
agreements.

If the work is directed by or allowed by the employer or if the employer has reason to suspect
that the employee worked, the time spent working is compensable. [7] This principal is referred to
as work "suffered or permitted" by the employer and extends to work performed by employees
staying late, arriving early, or performing work at home. It is the duty of management to exercise
control and ensure that work is not performed if it does not want it to be performed. An accurate
record of all daily and weekly hours worked must be kept, and most importantly, the employee
must be paid correctly for all these hours.

                                Days, Weeks, and Years

Employers reserve the right to define the workday, workweek, and year as they see fit. If no
definition is made in writing as part of a hiring contract or other agreement, the calendar default
of midnight to midnight, Sunday to Saturday, and January 1 to December 31 is applied. A
workday may be a regularly occurring 24-hour period that begins at any time. A workweek is
seven consecutive workdays. A year may be a calendar year, fiscal year, hiring anniversary, or
other clearly identified period. As overtime is calculated based on workdays and workweeks, this
may affect employee compensation.

                                          Salary

Payment on a salary basis does not eliminate overtime requirements. Salary is a method of
wage payment, it does not grant any inherent exemptions from the law. Salary is most commonly
used to compensate "white-collar" employees that are statutorily exempt from the Alaska Wage
and Hour Act. Individuals who are paid on a non-exempt salary basis must be paid in a manner
consistent with the minimum wage and overtime requirements of the Alaska Wage and Hour Act.

Non-exempt employees must be paid overtime. If a fixed and recurring pay rate for a set period
of time such as weekly or monthly (salary) has been established, "the applicable compensation
basis must be converted to an hourly rate when determining the regular rate for computing
overtime compensation and a written contract must be provided showing the hourly rate, the
overtime rate, and the fixed number of hours worked each week to arrive at the specified, fixed
salary amount. If the contract fails to establish a fixed number of daily and weekly hours that the
salary is intended to compensate, or if the actual hours of work deviate from the hours specified
in the contract without a corresponding adjustment in hourly pay, the salary will be considered to
be compensation for an eight-hour workday and 40-hour workweek, and overtime will be
computed on that basis." [8] In simpler terms, a non-exempt salary agreement is functionally a
contract for a set number of hours worked at a set pay rate. Increases or decreases in hours
worked must be compensated accordingly.

To be properly classified as a salary exempt employee, an employee must meet a three-part test.
First, they must be paid on a salary basis. This means they are paid a fixed rate regardless of
hours worked with limited exception. Second, they must be paid the minimum salary level which
is set at two times the minimum wage for a 40-hour workweek. This is currently $1,040/week
and will increase to $1,120/week on July 1, 2026, and $1,200/week on July 1, 2027. Third, the
employee must meet the duties test by performing work that falls into an approved category of
executive, administrative, professional, computer, or outside sales employee. To determine if an
employee qualifies as a salary-exempt employee consult the Code of Federal Regulations 29
C.F.R. §541, Alaska Statute 23.10.055, and Alaska Administrative Code 8 AAC 15.908, or
contact the Wage and Hour office for additional information.

                                  Compensatory Time

An employer cannot give compensatory time instead of overtime wages as that is not lawful in
Alaska. [9] The employee is entitled to overtime pay when they have worked overtime hours and it
must be paid on their paycheck and shown on the paystub.

                          Accurate Record of Hours Worked

An employer shall keep an accurate record of all the daily and weekly hours worked by each
employee. [10] This recordkeeping requirement applies to all employees regardless of how they are
compensated or how they are classified to include salary-exempt employees. A mere record of
hours scheduled may not be sufficient to account for all the hours actually worked by the
employee. As a best practice, employees should also keep a record of hours separately from their
employer's so they can check the employer's accounting for accuracy at the time of payment.
This record could also serve as evidence of hours worked in the event of a dispute over wages
occurs, such as when an employee is directed to finish a task after having clocked out. [11]

The burden to keep hours is borne by the employer under statute. Requiring an employee to keep
a timesheet does not absolve an employer of this responsibility. Failure of an employee to follow
employer reporting policy or issues with electronic reporting systems also do not resolve
employers of the responsibility to maintain employee records and ensure employees are paid on
the appropriate payday. Failure to follow employer policies may result in adverse administrative
actions up to and including termination, it cannot result in the withholding of pay.

                                      Wage Claims

Claims for unpaid overtime or minimum wage must be filed with our office within two years
from the date the work was actually performed. You should file a claim as soon as you are aware
that you may be owed additional wages and if you are unable to resolve the issue with your
employer directly. The Department can refuse to accept a claim for a variety of reasons such as
the claim is not valid or enforceable, your employer has filed for bankruptcy protection, you
have waited too long to file, or the claim exceeds the statutorily allowable amount of $20,000.

The time it takes to resolve a wage claim can range from several days to a year or more. Many
things can speed up or slow down the payment of a claim. If your records are complete and your
employer is cooperative, the process is faster. However, if your records are poor or your
employer is uncooperative, it may take longer.

The Department must ensure that your employer is given the opportunity to defend themselves
from your claim. This is called "due process." Timeframes used by the department are consistent
with those used by the courts and may be extended based on case specific situations.

Wage claims are not the only option to recover unpaid wages. You can hire an attorney or take it
to small claims court.

                       Holiday Pay, Vacation Pay, Severance Pay

There is no law that says employers have to give holiday, vacation, or severance pay. It depends
on whether your employer has promised to pay this type of pay. These are considered contractual
benefits that are between the employer and employee. The employer should have provisions in
the contract identifying how these benefits are to be paid, and these provisions must follow all
applicable laws.

                                       Travel Time

The employer must determine whether time spent in travel is working time. In contrast to regular
home to work travel, which is not compensable, if time spent in travel is part of the principle
activity of the employee's work day, such as going to the bank to make a deposit, or going to
purchase materials for the job. [12] When an employee has been directed to provide labor at one job
site and is then assigned to provide labor at a second job site, the time spend in travel between
the two sites is also compensable time.

                   Right to Return Transportation and Subsistence

An employer who provides, pays for, or agrees to provide or pay for transportation for a person
from the place of hire to a point inside or outside the state to employ the person shall, when the
job comes to an end, provide the person with return transportation to the place of hire, or to a
destination agreed upon by both parties. [13] This is defined as all transportation costs to return the
employee to the original place of hire. [14] Return transportation does not include the employees
family, vehicles, or belongings. These matters would be handled under the cover of a contract.

The employer is not required to pay for the employees return transportation if the employee was
terminated for fighting, intoxication, lying on job application, or having unexcused absences
from duties for more than three consecutive scheduled workdays. If the employee quits, the
employer is not required to pay for return transportation unless they quit because the employer
misrepresented wages, lodging or working conditions, or quit for health or safety reasons.

                                         On-Call Time

An employee who is required to remain on call on the employer's premises or so close thereto
that the employee cannot use the time effectively for their own purposes is working while "on
call". An employee who is not required to remain on the employer's premises but is merely
required to leave word at the employees' home or with company officials where the employee
may be reached is not working while on call.

                        Independent Contractor, Volunteer, or Employee?

Frequent calls to Wage and Hour have also raised the issue of workers being classified as
independent contractors rather than employees. When determining whether or not the
relationship between the business and the alleged employee is subject to the Alaska Wage and
Hour Act and the Fair Labor Standards Act (FLSA), it must be determined "whether the worker
is dependent upon finding employment in the business of others. If the facts show such a
dependency, the worker is an employee." [15] Employers are encouraged to review the factors
established by the Alaska Supreme Court (see footnote #14). In general, workers should be
treated as employees to avoid issues with agencies such as Wage and Hour, Workers'
Compensation, Unemployment Insurance taxes, and IRS taxes, unless the alleged employer can
clearly demonstrate that a worker is an independent contractor. The mere possession of an
Alaska business license, the provision of an IRS 1099 form, or simply calling someone an
independent contractor is not enough to substantiate independent contractor status.

With regard to volunteers, a for-profit business is barred from using volunteer labor. [16]

                                           Change Rate of Pay

The employer can change the rate of pay as long as the employee is given written notice of the
change the payday before it takes effect. For example, if the employee's normal payday (the day
the employee is paid their wages) is on the 20th of the month, the employer could give the
employee written notice of a change in the rate of pay any day up to and including the 20th. All
work done by the employee after the 20th would be at the new rate.

A contractual clause that merely advises an employee of the possibility of a future change does
not constitute notice of an actual change in pay. The statutory timing requirement "on the
payday before the time of change" requires notice that is contemporaneous with the change
itself. Notice provided months or years in advance does not satisfy the plain-language
requirements of the statute.

For example, a clause in a hiring agreement stating that an employee's rate of pay may be
reduced if the employee is late more than three times in a month, or if the employee fails to
submit a timesheet, does not notify the employee that a pay reduction will occur at a specific
time. Because such provisions do not provide notice of the actual change when it is
implemented, they do not constitute adequate notice under the statute.

                                 Breaks and Meal Periods

Employers are required to provide break periods of at least 30 minutes for minors ages 14
through 17 who work 5 or more consecutive hours and are going to continue to work. Employers
are not required to give breaks for employees 18 and over. If your employer allows breaks, and
they last less than 20 minutes, you must be paid for the break. If your employer allows meal
periods, the employer is not required to pay you for your meal period if it lasts more than 20
minutes and you do not work during that time.

                                         Deductions

An employer and employee may enter into a written agreement to provide for deductions of
monetary obligations of an employee. An employer may not require compensation from an
employee to which they are entitled through force, intimidation, or threat of dismissal from
employment, or any other manner. A written agreement for deductions is not valid if it would
reduce the employee's wage rate below the statutory minimum wage and overtime rates.

An employer may not deduct from an employee's wages any of the following:

  •   Customer checks returned due to insufficient funds or any other reason,
  •   Non-payment for goods or services as a result of theft or credit default,
  •   Cash or cash register shortages, unless the employee admits willingly and in writing to
      having personally taken the specific amount of cash that is alleged to be missing,
  •   Lost, missing, or stolen property, unless the employee admits willingly and in writing to
      having personally taken the specific property alleged to be lost, missing or stolen,
  •   Damage or breakage costs, unless clearly due to willful conduct of the employee and the
      employee has acknowledged responsibility in writing.

An employer shall give each employee a written or electronic statement of earnings and
deductions for each pay period. The statement of earnings and deductions must contain the
employee's:

  •   Rate of pay;
  •   Gross wages;
  •   Net wages;
  •   Beginning and end dates of the pay period;
  •   Federal income tax deductions;
  •   Federal Insurance Contribution Act deductions;
  •   Alaska Employment Security Act contributions;
  •   Board and lodging costs;
  •   Advances;
  •   Straight time and overtime hours actually worked in the pay period;
  •   Other authorized deductions;
  •   Sick leave used in the accrual year established under 8 AAC 15.107; and
  •   Sick leave balance. [17]

                                      Final Paycheck

If the employment is terminated by the employee, payment is due at the next regular payday that
is at least three days after the employer received notice of the employee's termination of
services. If employment is terminated by the employer, regardless of the cause for the
termination, payment is due within three working days after the termination. [18] The day of firing,
weekends, and bank or state holidays, are not included in these three days. If an employer
violates this statute, the employer may be required to pay the employee a penalty in the amount
of the employee's regular wage, salary or other compensation from the time of demand to the
time of payment, or for 90 working days, whichever is the lesser amount.

                           Workers' Compensation Coverage

Any business operating in Alaska with even one part-time employee is required to carry workers'
compensation insurance under Alaska Statute 23.30.075. The policy must be bound in the State
of Alaska; Alaska is not a reciprocal state and does not recognize coverage bound in any other
state or country, even if the policy purports to cover an injury occurring in Alaska. There is no
exemption for family members or friends for purposes of workers' compensation liability.
Employee status is determined using the independent contractor definition found in Alaska
Statute 23.30.230(a)(12). The criteria in this definition are all-inclusive. Penalties for not having
workers' compensation coverage are severe. It is a crime under the Alaska Workers'
Compensation Act for employers to misclassify employees or deduct all or any portion of
workers' compensation premiums from an employee's paycheck. If you have questions
regarding workers' compensation requirements, please download and review the Employer's
Guide to the Alaska Workers' Compensation Act at
https://labor.alaska.gov/wc/publications/employer_guide_to_wc_act.pdf or contact the Alaska
Division of Workers' Compensation at (907) 269-4980.

                          Unemployment Insurance Coverage

An employer misclassifying a worker as an independent contractor instead of an employee may
be liable for penalties and interest for failure to report the worker and pay associated taxes. If you
have questions regarding unemployment tax requirements, please contact Employment Security
Tax at (888) 448-3527.

                                         Resources

In conclusion, a business that is involved in practices that are not consistent with Alaska wage
and hour laws must correct the discrepancies immediately to avoid future enforcement actions.
We hope that your organization will take this opportunity to conduct an internal review and
voluntarily make any wage adjustments. We have noted several applicable statutes and
regulations for your review. Employers are encouraged to conduct a complete review of Alaska's
wage and hour laws and regulations as published in the Pamphlet 100 publication, which can be
found at: https://labor.alaska.gov/lss/forms/pam100.pdf. Our website can be found at:
https://labor.alaska.gov/lss/whhome.htm.

Wage and Hour provides a cost-free counseling service to Alaska employers, and we invite you
to take advantage of this service. A regular, monthly webinar is offered to employers and
employees concerning wage and hour laws. Check our website for the webinar schedule and
contact our office at (907) 269-4900 for registration. In addition, an investigator is on duty each
business day to answer any questions you may have.

Alternatively, you may wish to contact a private attorney. The Alaska Lawyer Referral Service
may be able to assist you with locating an attorney to address your specific concerns. You may
contact this office at 1-800-770-9999 or visit the following website for additional information:
https://www.alaskabar.org.

[1] AS 23.10.067
[2] AS 23.05.160
[3] 8 AAC 15.100
[4] AS 23.10.060
[5] 29 CFR §778.115
[6] 29 CFR §778.419
[7] 29 CFR §785.11
[8] 8 AAC 15.100
[9] 8 AAC 15.100(d)(2)
[10] AS 23.05.080
[11] Wage and Hour Advisory Memorandum No. 2006-2
[12] 29 C.F.R. §785.38
[13] AS 23.10.380
[14] 8 AAC 20.030(a)
[15] Jeffcoat v. State, Dept. of Labor, Sup. Ct. Op. No. 3162 (File No. S-1444), 732 P2d 1073 (1987)
[16] AS 23.10.055(6)
[17] 8 AAC 15.160
[18] AS 23.05.140