Alaska Workers' Compensation: Who Needs Coverage and Who Is Exempt
Alaska Workers' Compensation: Who Needs Coverage and Who Is Exempt
If you have even one employee working in Alaska, you need workers' compensation insurance. The basic rule is simple, but the owner exemptions and the type-of-work exemptions catch many business owners off guard. This guide explains who has to carry alaska workers compensation coverage, which owners can opt out, which types of work are exempt, and how to buy alaska workers comp insurance once you know you need it.
This is informational content, not legal, insurance, or tax advice. Confirm your situation with the agencies and professionals named below.
Who must carry workers' compensation in Alaska
Alaska requires coverage for any employer with one or more employees in Alaska. The only alternative is self-insurance, and it applies only if the Workers' Compensation Board approves it. You cannot decide on your own to self-insure. The Alaska Department of Labor and Workforce Development (DOLWD) publishes the employer requirements at labor.alaska.gov/wc/er-profit.html.
The trigger is headcount, not revenue, payroll size, or industry. One part-time employee is enough. Out-of-state businesses are included too. If your company is based in another state but has a worker in Alaska, that worker must be covered. Alaska does not have reciprocity with other states, so do not assume a policy from your home state will satisfy the rule. Confirm the arrangement with DOLWD and your insurer before the worker starts.
Family members and friends who work for you must still be covered. Being related to the owner, or being a friend of the owner, does not remove the requirement.
Owners and officers who do not have to insure themselves
Since August 1, 2019, the following owners do not need to insure themselves:
- Sole proprietors.
- Partners.
- LLC members with at least 10% ownership.
- Executive officers of a for-profit corporation with at least 10% ownership.
Executive officers of municipal, religious, and registered nonprofit corporations are not treated as employees unless the corporation elects to cover them.
These carve-outs cover the owner or officer personally. They do not reduce the number of workers you must insure. If you hold less than 10%, or your role is not that of an executive officer, do not assume you are excluded. Confirm your status with DOLWD, because the exemption depends on ownership percentage and corporate role, not just your job title.
How the owner exemption works in practice
A few common setups show where the lines fall:
- Sole proprietor with one part-time employee. You do not need to insure yourself. The part-time employee must be covered.
- Two-member LLC with a hired driver. Each member who holds at least 10% ownership is outside the requirement. The driver is an employee and must be covered, unless the driver falls within one of the type-of-work exemptions described below.
- Family business with a relative who works summers. The owners may be exempt, but the relative is a worker and must be covered. Family ties do not change that.
- Two-member LLC where one member holds 5%. That member does not fit the ownership carve-out. Ask DOLWD how that person should be treated before they start working in the business.
Exemptions based on the type of work
Alaska's exemptions turn on the type of work a person does, not the type of business you run. A company in an exempt field can still have employees who must be covered. A worker in an exempt role can work for a business that insures everyone else. The current exemptions include:
- Commercial fishers as defined in AS 16.05.940.
- Certain taxi and transportation network company (TNC) drivers. The word certain matters. Check with DOLWD which drivers and which arrangements qualify.
- Part-time babysitters.
- Harvest help.
Do not treat these labels as self-explanatory. Each exemption has a defined scope, and a worker who fits the everyday meaning of a term may not fit the legal one. Get the definition from DOLWD or the statute before you rely on an exemption. If you classify a covered worker as exempt by mistake, an injury claim lands on your business instead of an insurer. That is the costliest mistake in this area, and it is avoidable with a short phone call.
Who needs coverage at a glance
| Situation | Coverage required? | Notes |
|---|---|---|
| Employer with one or more employees in Alaska | Yes | Unless the Workers' Compensation Board approves self-insurance |
| Sole proprietor or partner (the owner) | No, for the owner | Since August 1, 2019. Employees still must be covered |
| LLC member with at least 10% ownership (the member) | No, for the member | Members below 10% should confirm with DOLWD |
| Executive officer of a for-profit corporation with at least 10% ownership | No, for the officer | Confirm ownership and role with DOLWD |
| Executive officer of a municipal, religious, or registered nonprofit corporation | Not an employee | Unless the corporation elects coverage |
| Family member or friend who works for you | Yes | Relationship does not remove the requirement |
| Commercial fisher (AS 16.05.940) | Exempt by type of work | Confirm the definition with DOLWD |
| Part-time babysitter or harvest help | Exempt by type of work | Confirm the definition with DOLWD |
| Certain taxi and TNC drivers | Exempt for certain drivers only | Confirm which drivers qualify with DOLWD |
| Out-of-state employer with an Alaska employee | Yes | Alaska has no reciprocity with other states |
Where to buy coverage
Alaska has no state workers' compensation fund, and it is not a monopolistic state. You buy your policy from a private insurer and compare quotes. Look for an admitted insurer, meaning a company licensed to write workers' compensation in Alaska.
If no admitted insurer will write your policy, you can apply to the assigned risk pool run by the National Council on Compensation Insurance (NCCI). Call NCCI at 800-622-4123. Treat the pool as the fallback, not the first stop. Ask about its pricing and terms directly, and compare them against private quotes before you accept.
Premiums are generally based on your payroll and on the classification of each worker's job. Give your insurer an accurate headcount, accurate job descriptions, and accurate payroll figures. A policy written on wrong numbers can leave you with the wrong coverage or a premium adjustment later.
Steps to take before your first Alaska hire
- Count every person who works for you in Alaska, including part-time workers, family members, and friends.
- Decide which owners fall under the self-coverage exemption, and confirm any doubtful case with DOLWD.
- Check each role against the type-of-work exemptions, using the statutory or agency definition rather than the everyday job title.
- Request quotes from admitted insurers. If none will write the policy, contact the NCCI assigned risk pool at 800-622-4123.
- Keep coverage in force for every period you have a covered worker, and ask DOLWD what proof of coverage it expects you to keep on file.
Keep workers' compensation separate from your business license
Workers' compensation is a separate requirement from business licensing, and owners often mix the two up. Alaska has one statewide business license under AS 43.70, issued by the Division of Corporations, Business and Professional Licensing within the Department of Commerce, Community, and Economic Development (DCCED). It costs $50 for one year or $100 for two years. Forming an LLC or corporation is a different filing with the same division's Corporations Section.
Local general business licenses are set by each city, and they differ. Some cities require one, while Anchorage, Ketchikan, and Homer do not. Confirm the requirements with the city where you will operate. Neither the statewide license nor a local license replaces workers' compensation coverage, and the coverage does not replace either license.
When to talk to a professional
An Alaska-licensed insurance agent can compare quotes and confirm that the policy covers every worker you have. An Alaska attorney should review ownership structures, executive officer roles, and any dispute over whether a worker is an employee or exempt. A CPA can explain how payroll and owner pay affect your premium and your tax filings. The more owners, entities, and mixed roles your business has, the more worth it is to get that review before your first hire.
Disclaimer: This article is informational content, not legal, insurance, or tax advice. Alaska statutes, board rules, and agency guidance change. Confirm current requirements with the Alaska Department of Labor and Workforce Development at labor.alaska.gov before you make decisions.