What Alaska employers should know about workers’ compensation coverage

Why do Alaska businesses need workers’ compensation insurance?

Workers’ compensation is often referred to as a safety net, because it provides partial income replacement to employees that get sick or injured while at work (and need time to recover). Furthermore, coverage also has benefits for employers. In most cases, employees cannot sue their employers for damages related to their injuries or illnesses (if they are covered by workers’ compensation).

Which employers in the state of Alaska must provide workers’ compensation insurance?

The Alaska Workers’ Compensation Act requires each employer with one or more employees in Alaska to obtain workers’ compensation insurance, with a few exceptions.

What if you employ family and friends, or occasionally have “volunteers” who complete tasks? There are no exemptions for family, friends, or “volunteers” for a for-profit business. All individuals performing work for the business who are not legally named as owners with adequate ownership interest, and who are not bona fide independent businesses, are employees who must be insured.

Are there any exceptions to this rule?

There are a few exceptions, according to Alaska’s Department of Labor, however, there are no exemptions for types of businesses. The exemptions are based on the type of work performed by individuals or based on the type of employee. Here are some examples the state of Alaska lists on their website.

• Part-time baby-sitters
• Cleaning persons (non-commercial);
• Harvest help and similar part-time/transient help (call division to discuss specific situations);
• Sports officials for amateur events;
• Contract entertainers;
• Commercial fishers as defined in AS 16.05.940;
• Taxicab drivers under specific contractual arrangements;
• Participant in the Alaska temporary assistance program engaged in work activities required under AS 47.27.035;
• Professional hockey team players and coaches if those persons are covered under a health care insurance plan;
• Qualified real estate licensee under specific contractual arrangements; and
• Persons defined as transportation network company drivers.

There are also exemptions for different types of business owners and C-suite employees. As of 2019,  the following types of owners or executives do not have to insure themselves with a workers compensation policy, according to the Alaska Department of Labor and Workforce Development:

• Sole proprietors
• Partners in a business partnership
• Members of a limited liability company (LLC) who hold at least a 10% ownership interest
• Executive officers of for-profit corporations who hold at least a 10% ownership interest

Are there penalties for non-compliance in Alaska?

Yes, not having insurance can result in unfavorable outcomes for a business, as per Alaska’s employer’s guide to the Workers’ Compensation Act.

• If non-compliant, businesses could be fined between $10 and $1,000 per employee for each day they fail to provide coverage.
• Employers may be served with a stop work order if they fail or refuse to insure employees.
• Continuing to use employee labor after service of a stop work order can result in a $1,000 per day penalty for each day of violation.

Also, keep in mind that employers are not allowed to pass the premiums from a policy onto their employees. In Alaska, it is illegal for employers to charge workers any portion of workers’ compensation premiums, and doing so is considered a misdemeanor.

How do employers purchase workers’ comp coverage in Alaska?

There are a couple of ways to go about this. You can research private insurance companies and compare quotes. If you have an insurance agent (or broker), it could be a good idea to ask them to help you obtain a workers’ compensation policy that is a good fit for you and your employees.

If you do choose to purchase insurance through a private insurance company, be sure to do your due diligence and ensure that the carrier is “specifically authorized by the Alaska Division of Insurance to write workers’ compensation policies in Alaska,” per the Employer’s Guide to the Alaska Workers’ Compensation Act. Businesses that need help finding an authorized carrier are encouraged to call the Alaska Division of Insurance at (907) 269-7900.

If purchasing coverage through a private carrier is not possible for some reason, employers should be able to purchase self-insurance through Alaska’s Assigned Risk Pool, which is administered by the National Council on Compensation Insurance (NCCI).

NCCI may be contacted at 800-622-4123 and found online at: https://www.ncci.com.

For more information, we’ve included resources from the state of Alaska below.

Alaska’s Department of Labor and Workforce Development

Employer’s guide to workers’ compensation in Alaska

List of employer forms

Take a closer look at workers’ compensation

Not only is having a workers’ comp policy required by law, but it also makes sound business sense. This type of policy protects (and provides peace of mind) to both workers and their employers. In addition, employers can rest easy knowing they have coverage should a worker experience an incident while on the job.

Employees can focus on their work knowing that there are safeguards in place, should they suffer illness or injury during their work day. If you have any questions on obtaining a policy, our team is here to help.