Alaska Wage and Hour Act: Overtime, Sick Leave, and Penalties

The Alaska Wage and Hour Act, codified at AS 23.10.050 through 23.10.150, sets the minimum wage, overtime pay, paid sick leave, recordkeeping, and youth employment rules that most private-sector employers in the state must follow. It runs alongside the federal Fair Labor Standards Act, and where the two overlap, employers must apply whichever law is more protective on that issue.¹ Alaska’s minimum wage, daily overtime trigger, and paid sick leave mandate are generally stricter than federal law, so those state rules control for most workers.

Which Employers and Workers Are Covered

The Act reaches most private-sector employers in Alaska, including corporations, partnerships, and sole proprietorships. Coverage isn’t universal, though. The overtime requirement doesn’t apply to employers with fewer than four employees in the regular course of business, and AS 23.10.060(d) carves out several industries entirely, including agriculture, commercial fishing, small forestry operations of 12 or fewer employees, and small-circulation newspapers.²

Before assuming a worker is covered or excluded, check the full statutory exemption list. Titles don’t decide the question; the actual work does.

Minimum Wage Rates

Alaska’s minimum wage is $13.00 per hour through June 30, 2026. It rises to $14.00 on July 1, 2026, then to $15.00 on July 1, 2027. After that, the rate adjusts annually based on the Consumer Price Index for urban consumers in the Anchorage metropolitan area.³ These figures come from Ballot Measure 1, which Alaska voters approved in November 2024.

A statutory floor guarantees the state minimum wage stays at least two dollars above the federal minimum wage. If future inflation adjustments ever narrowed that gap, the state rate would reset automatically.³

Alaska does not permit tip credits. Tipped employees must receive the full minimum wage before gratuities.³ Public school bus drivers are entitled to twice the state minimum wage, which will be $28.00 per hour effective July 1, 2026.⁴

An employee cannot legally agree to accept less than the statutory minimum. Deductions for uniforms, tools, or other job-related items cannot pull effective pay below the minimum wage for any pay period.

Overtime Pay Rules

Alaska requires overtime pay after eight hours in a single day, not only after 40 hours in a week. This daily trigger is the biggest difference between Alaska and federal law, and it regularly catches employers who schedule long shifts while planning around the 40-hour weekly rule alone. Overtime also applies to weekly hours above 40, but the statute avoids double-counting: hours that already earned daily overtime don’t count again toward the weekly threshold.²

The overtime rate is one and one-half times the employee’s regular rate of pay. Getting that regular rate right is where employers stumble. Nondiscretionary bonuses, shift differentials, and certain commissions fold into the regular rate before the multiplier applies. Truly discretionary bonuses and most employer-paid benefits are excluded. When an employee works at different rates in the same workweek, the regular rate is typically the weighted average.

On-call time can count as hours worked when the employer’s restrictions are tight enough that the employee cannot realistically use the time for personal purposes. Someone required to remain on-site or respond within minutes is generally working; someone who simply carries a phone usually is not.

Alaska does allow a limited workaround through the Voluntary Flexible Work Hour Plan, which permits shifts of up to 10 hours per day without triggering daily overtime. The plan must be approved by the Department of Labor and Workforce Development, and employee participation must be genuinely voluntary. Signed copies stay in each participating employee’s personnel file.⁵

Exempt Employees and the Salary Threshold

Executive, administrative, and professional employees are exempt from minimum wage and overtime, along with outside salespeople and certain computer professionals.⁶ To qualify, the employee must pass both a salary test and a duties test.

Alaska sets the exempt salary floor at twice the state minimum wage for a 40-hour workweek, so the threshold moves whenever the minimum wage does:

Through June 30, 2026: $1,040 per week, or $54,080 annualized.⁴
From July 1, 2026: $1,120 per week, or $58,240 annualized.⁷

Employers paying exempt employees at or near the current threshold need to raise those salaries by July 1, 2026, or reclassify the positions as non-exempt and start tracking hours and paying overtime.

Salary alone is not enough. Executive employees must primarily manage a business or department, regularly direct at least two full-time employees, and hold meaningful authority over hiring or firing.⁸ Administrative employees perform non-manual work related to business operations and exercise independent judgment on significant matters. Professional employees perform work requiring advanced knowledge in a specialized field gained through prolonged education. Outside sales employees primarily make sales away from the employer’s place of business. For computer professionals, Alaska applies the federal FLSA duties test and hourly rate.⁶

Misclassifying a non-exempt worker as exempt is one of the most expensive mistakes an Alaska employer can make. Job titles don’t matter; actual duties do. An “Assistant Manager” who spends most shifts stocking shelves and running a register is not an exempt executive.

Paid Sick Leave

Ballot Measure 1 added a paid sick leave mandate that took effect July 1, 2025. Every employer covered by the Act must now provide paid sick leave that accrues at one hour for every 30 hours worked. Annual caps depend on employer size:⁹

Employers with 15 or more employees: workers can accrue and use up to 56 hours per year.
Employers with fewer than 15 employees: the cap is 40 hours per year.

Unused leave carries over into the following year, though the annual usage cap still applies. Employers who front-load the full annual allotment at the start of the year don’t have to allow carryover.⁹ Exempt employees who normally work 40 hours a week accrue based on 40 hours per week, regardless of actual hours logged.¹⁰

Employees can use sick leave for their own illness, injury, or preventive care; to care for a family member with a health need; or for absences related to domestic violence, sexual assault, or stalking. Employers cannot demand proof of illness unless an employee takes more than three consecutive workdays off, and even then a simple note confirming the leave was necessary is enough. The employer has no right to details about the medical condition.⁹

An existing paid time off policy can satisfy the requirement if it matches or exceeds the accrual rate and permits the same uses. No separate sick leave bank is required in that case.¹⁰

Final Paycheck Deadlines

When employment ends, all wages become due immediately. An employer who terminates a worker must pay within three working days of the termination date. When an employee quits, the employer has until the next regular payday that falls at least three days after receiving notice of the resignation.¹¹

The penalty for missing these deadlines is steep. A late employer can owe the employee’s regular daily wage for every working day between the demand for payment and actual payment, capped at 90 working days. The penalty is calculated at the straight-time rate for an eight-hour day, so for a worker earning $20 per hour the maximum reaches $14,400.¹¹

Meal and Rest Breaks

Alaska has no state-mandated meal or rest break for employees 18 or older. Federal law is similar: the FLSA doesn’t require breaks either, though short breaks of 5 to 20 minutes that an employer chooses to provide are generally considered compensable work time.

Minors are treated differently. Employees under 18 scheduled to work six consecutive hours must receive a 30-minute break during the workday, and those working five consecutive hours are entitled to a 30-minute break before continuing.¹²

Youth Employment

Anyone under 17 must obtain a work permit from the Alaska Department of Labor before starting a job, and a fresh permit is required each time the minor changes employers. Parental or guardian consent is also required.

No minor under 18 may work more than six days in a workweek. Additional limits apply to younger workers:¹²

14- and 15-year-olds during school: combined school and work hours cannot exceed nine hours in a day. Work is limited to between 5 a.m. and 9 p.m., with a maximum of 23 hours per week.
14- and 15-year-olds during school vacations: up to 40 hours per week, still between 5 a.m. and 9 p.m.

All minors under 18 are barred from hazardous occupations, including mining, logging, roofing, excavation, demolition, work with explosives or radioactive materials, and operating power-driven woodworking or metalworking equipment. Workers under 16 face additional restrictions, including a blanket prohibition on construction, manufacturing, and any establishment that serves alcohol. No one under 19 may sell tobacco as part of their employment, and no one under 21 may work in any branch of the cannabis industry.¹³

Recordkeeping Requirements

Employers must keep payroll records for at least three years at the location where the employee works. Required records include the employee’s name, address, and occupation; rate of pay and amount paid each pay period; and hours worked each day and each workweek.¹⁴ The Commissioner of Labor can require additional payroll information and inspect records at any reasonable time.

These records are your primary defense in a wage dispute. If an employee claims unpaid overtime and no daily hour records exist, the employee’s estimate is likely to be accepted. Electronic timekeeping systems should capture daily start and stop times, not just weekly totals, because Alaska’s daily overtime rule makes day-by-day data essential. Pay stubs should itemize gross wages, hours worked, deductions, and net pay. Altering timekeeping records to reduce reported hours exposes the employer to back pay, liquidated damages, and potential criminal penalties.

Penalties for Violations

The Act enforces violations through civil liability and criminal penalties, and the math gets uncomfortable quickly.

An employer who fails to pay minimum wage or overtime owes the unpaid wages plus an equal amount in liquidated damages, effectively doubling the bill. The court also awards the employee’s attorney fees and costs. A limited good-faith defense exists for overtime violations: if the employer proves by clear and convincing evidence that the violation was made in good faith and with reasonable grounds for believing the conduct was lawful, the court may reduce or eliminate liquidated damages.¹⁵ That’s a high bar. Not knowing about the daily overtime rule doesn’t clear it.

Any violation of the Act or its regulations can also trigger criminal prosecution. On conviction, penalties include a fine between $100 and $2,000, imprisonment of 10 to 90 days, or both. Each day a violation continues counts as a separate offense.¹⁶

The Alaska Department of Labor and Workforce Development investigates wage complaints and can bring enforcement actions on an employee’s behalf. A payroll audit around each July 1 minimum wage increase — checking the exempt salary threshold, daily overtime calculations, and sick leave accruals — costs far less than defending a claim with doubled damages and mandatory attorney fees on the other side.

1
U.S. Department of Labor. Fact Sheet #27 – New Businesses Under The Fair Labor Standards Act (FLSA)
2
Justia. Alaska Statutes 23.10.060 – Payment for Overtime
3
Justia. Alaska Statutes 23.10.065 – Minimum Wages
4
Alaska Department of Labor and Workforce Development. Alaska Minimum Wage Will Increase July 1, 2025
5
Alaska Department of Labor and Workforce Development. Voluntary Flexible Work Hour Plan
6
Alaska Department of Labor and Workforce Development. Minimum Wage Standard and Overtime Hours
7
Alaska Department of Labor and Workforce Development. Wage and Hour
8
U.S. Department of Labor. Fact Sheet #17B – Exemption for Executive Employees Under the Fair Labor Standards Act
9
Alaska Department of Labor and Workforce Development. Minimum Wage and Paid Sick Leave Frequently Asked Questions
10
Alaska Division of Elections. Ballot Measure No. 1
11
Justia. Alaska Statutes 23.05.140 – Pay Periods; Penalty
12
Alaska Department of Labor and Workforce Development. Summary of Alaska Child Labor Law
13
Alaska Department of Labor and Workforce Development. Child Labor Law Summary
14
Justia. Alaska Statutes 23.10.100 – Employer to Keep Records
15
Justia. Alaska Statutes 23.10.110 – Remedies of Employee; Attorney Fees; Offers of Judgment; Settlement; Waiver
16
Justia. Alaska Statutes 23.10.140 – Penalty