If you're running a business in Alaska, here's what surprises most new employers: you need workers' compensation insurance the moment you hire your first person. Not your fifth employee. Not when you hit a certain payroll threshold. Your first employee. And if you think you can skip it or delay it, think again—Alaska doesn't mess around with penalties. We're talking up to $1,000 per employee per day if you're caught without coverage.
The good news? Alaska operates a competitive workers' comp market, which means you can shop around for rates instead of being stuck with a state-run monopoly. But with that flexibility comes responsibility—you need to understand who must be covered, who's exempt, and what happens if you don't comply. Let's break down everything you need to know about Alaska workers' compensation requirements.
Who Needs Workers' Comp Coverage in Alaska?
Alaska law is crystal clear: if you have one or more employees, you must carry workers' compensation insurance or be approved for self-insurance by the Alaska Workers' Compensation Board. There's no wiggle room based on your industry, business size, or whether employees are full-time or part-time. Coverage is mandatory, not voluntary, and there are no opt-out provisions under the Alaska Workers' Compensation Act.
Here's where it gets tricky for many business owners: family members and volunteers count as employees if they're not legal owners with adequate ownership interest. So if you bring your cousin on board to help out and they're not a documented owner of the business, you need to cover them. Same goes for that friend who's "just volunteering" for a few weeks—if they're doing work for your business and aren't an owner, they're technically an employee under Alaska law.
The only exemptions are individual-based, not business-based. That means no industries get a free pass, but certain types of workers might not need coverage. This is an important distinction that trips up a lot of employers who assume their entire business category might be exempt.
Who's Exempt from Coverage?
Alaska's exemptions focus on specific worker categories, not business types. The most common exemptions include sole proprietors and independent contractors who work for themselves. If you're a one-person show running your own business, you're not legally required to buy workers' comp for yourself—though you certainly can if you want the protection.
Business owners and executive officers with at least 10% ownership interest in their company are also exempt. This applies to LLC members, corporate officers, and partners who meet the ownership threshold. The key phrase here is "at least 10%"—if you've got less than that, you're not exempt. Executive officers of municipal, religious, or legally registered nonprofit corporations are exempt unless their organization chooses to cover them.
Other specific exemptions include licensed real estate professionals working on a commission basis, part-time babysitters, commercial fishers, certain taxicab drivers, and professional hockey players and coaches who have their own health insurance coverage. Notice how narrow these categories are. If your worker doesn't fit squarely into one of these boxes, assume they need coverage.
Independent contractors deserve special attention because this is where many employers get into trouble. Just because you call someone an independent contractor doesn't make them one under Alaska law. True independent contractors maintain control over their work methods and schedule while providing their own tools. They meet specific criteria outlined in the Alaska Workers' Compensation Act. If you misclassify an employee as an independent contractor to avoid workers' comp requirements, you're setting yourself up for serious penalties.
Penalties for Non-Compliance: What You're Risking
Alaska doesn't just slap you on the wrist for skipping workers' comp coverage. The state takes employer compliance seriously, and the Special Investigations Unit actively investigates uninsured employers. Here's what you're facing if you operate without required coverage.
Daily fines range from $10 to $1,000 per employee for each day you fail to maintain coverage. Think about that for a second. If you have ten employees and go uninsured for a month, you could be looking at up to $300,000 in penalties. Even at the low end—$10 per employee per day—that's $3,000 for a month with ten employees. The Alaska Workers' Compensation Board decides the penalty amount based on factors like how long you've been uninsured and whether this is a repeat offense.
But it gets worse. If you fail or refuse to get insurance after being notified, Alaska can serve you with a stop work order. This immediately shuts down your business operations. You cannot use employee labor while under a stop work order. If you violate a stop work order, the penalty is a mandatory $1,000 per day for each day you continue operating. There's no range here—it's the full $1,000, and it adds up fast.
Beyond financial penalties, operating without workers' comp leaves you personally liable for any workplace injuries. If an employee gets hurt on the job and you don't have coverage, they can sue you directly. You'll be paying their medical bills, lost wages, and potentially pain and suffering damages out of pocket. Workers' comp exists partly to protect employers from these lawsuits—without it, you're completely exposed.
Competitive Market: What It Means for You
Alaska operates what's called a competitive workers' compensation market. This is actually good news for employers. Unlike monopolistic states where you must buy coverage from a state-run fund at set rates, Alaska lets you shop around with private insurance carriers. Different insurers will quote you different rates based on your industry, claims history, payroll, and safety programs.
This competition can work in your favor, especially if you maintain a clean claims history and implement strong workplace safety practices. Insurers reward low-risk employers with better rates. If your current carrier raises your premium, you can shop for alternatives. Just make sure any carrier you consider is authorized to write workers' comp policies in Alaska—not all insurers operate in every state.
For very large employers with strong financials, self-insurance is an option, but you must be approved by the Alaska Workers' Compensation Board. Self-insurance requires proving you can handle claims costs without a traditional insurer, which usually means posting a substantial security deposit or surety bond. Most small to mid-sized businesses stick with traditional insurance policies.
2025 Updates: Stay-at-Work Program
Starting January 1, 2025, Alaska implemented a new stay-at-work program under AS 23.30.043. This program applies to work injuries that occur on or after that date. The goal is to encourage employers to provide modified duty assignments for injured workers who can't immediately return to their regular jobs but can perform some type of work.
The Division of Workers' Compensation updated its forms to comply with this program and other changes to AS 23.30.041. As an employer, this means you should work with injured employees and their healthcare providers to identify temporary alternative duties they can safely perform during recovery. Not only does this help your employee recover and maintain income, it can also reduce your workers' comp costs by lowering disability payments.
Compliance Requirements and Reporting
Beyond maintaining active coverage, Alaska employers have reporting obligations. You must file annual reports with the Alaska Workers' Compensation Board by March 1 each year. These reports document your payroll, employee classifications, and coverage details. Missing this deadline can trigger compliance reviews and potential penalties.
When a workplace injury occurs, you need to report it promptly to your insurance carrier. Most policies require notification within a specific timeframe—often within 24 to 48 hours for serious injuries. Your carrier will then guide you through the claims process and file the necessary reports with the state. Delaying injury reports can complicate claims and sometimes violate your policy terms.
How to Get Coverage and Stay Compliant
Getting workers' comp coverage in Alaska starts with contacting licensed insurance agents or carriers who write policies in the state. You'll need to provide information about your business type, payroll, number of employees, and job classifications. Your premium is calculated based on these factors along with your industry's risk level.
Don't wait until the last minute. Get quotes from multiple carriers to compare rates and coverage options. Ask about safety program discounts, claims management support, and what happens if you need to add employees mid-policy. Once you select a carrier, your coverage typically takes effect quickly—often within days—but you need an active policy before that first employee starts work.
Maintaining compliance means keeping your policy active, paying premiums on time, accurately reporting payroll, and notifying your insurer when you hire or terminate employees. It also means correctly classifying workers as employees versus independent contractors and documenting those classifications. When in doubt, consult with an employment attorney or insurance professional—misclassification can be costly.
Alaska's workers' compensation requirements are straightforward but strict: cover your employees from day one, or face serious consequences. The competitive market gives you shopping flexibility, but compliance is non-negotiable. Whether you're hiring your first employee or expanding an existing team, make workers' comp coverage a priority from the start. Your business—and your employees—depend on it.
