Alaska has established a series of state-wide wage laws to supplement those set at the federal level. Among the most notable is the Alaska minimum wage. This law sets the standard for the lowest hourly rate that employers can offer so that employees receive fair compensation and can maintain a basic standard of living.
So, what is the minimum wage in Alaska? Are there any other wage laws that employers in The Last Frontier state need to take into account when they manage employee wages?
In today’s guide, we will explore everything you need to know about the Alaska minimum wage, including its history, current rates, and exemptions. We will also share some handy tips and best practices to help you navigate these regulations and build a fair and compliant workplace.
- Minimum Wage in the U.S.
- Timeline of the Alaska Minimum Wage
- What Is the Current Alaska Minimum Wage?
- Alaska Minimum Wage: Exemptions and Special Cases
- Additional Alaska Wage Laws
- Best Practices for Wage Law Compliance
- How Factorial Can Help
- Centralize your payroll management processes and get ahead🚀
Minimum Wage in the U.S.
The minimum wage in the United States is an important part of the economy, setting the lowest amount that workers can be paid for their work. It helps ensure that employees earn a basic level of income. However, the minimum wage is not the same everywhere; it varies depending on federal, state, and local laws.
Before we delve into the Alaska minimum wage, let’s take a look at how the minimum wage works at these different levels, starting with the nationwide federal rate, then looking at the rules in different states, and finally exploring how some cities and towns set their own minimum wages to meet local needs.
Federal Minimum Wage
As the baseline, the federal minimum wage is the lowest hourly rate employers in the U.S. can legally pay their employees. It is set by the Fair Labor Standards Act (FLSA) and was last raised in 2009 to $7.25 per hour. This rate, which ensures that employers comply with a basic level of compensation regardless of their location or industry, is significantly lower than the median hourly wage of all workers in the United States ($35.00 per hour).
State Minimum Wages
Recognizing regional variations in local economies and the cost of living, there are now many state minimum wage laws that set the threshold higher than the federal rate. These state-level mandates ensure that workers in higher-cost areas receive a wage that reflects their cost of living. For example, the minimum wage is $12.00 per hour in New Mexico, $15.00 per hour in Maryland, and $16.28 per hour in Washington State (the highest rate in the country).
Municipal Minimum Wages
To further address regional economic environments, some cities and counties have implemented local minimum wage mandates that are higher than both federal and state rates. This approach ensures that workers in urban centers (where the cost of living is usually higher) receive a wage that reflects their specific environment.
Industry Regulations
Finally, in addition to regional differences, the minimum wage can also vary based on industry. For example, the minimum wage for tipped employees in the service industry is typically lower than the minimum wage for non-tipped workers. This is because many states expect tipped employees to receive a significant portion of their income from tips.
Timeline of the Alaska Minimum Wage
Alaska’s minimum wage has evolved significantly over the years, with several key milestones marking its development:
- 1991. Alaska established its first state-wide minimum wage, setting the bar at $4.75 per hour. This was a foundational step in establishing wage standards tailored to the state’s economic conditions.
- 1996. The Alaska minimum wage increased to $5.25 per hour. This marked the first significant adjustment in five years, aligning with economic growth and inflation.
- 2003. The minimum wage jumped to $7.15 per hour. This was a notable hike that broke away from the federal minimum rate, addressing the state’s unique cost of living.
- 2009. The Alaska minimum wage was adjusted to $7.25 per hour, aligning with the federal minimum wage. This ensured consistency at the national level during a period of economic downturn.
- 2010. Alaska independently raised its minimum wage to $7.75 per hour, emphasizing the state’s approach to maintaining a living wage above the federal minimum.
- 2015. Voter approval led to an increase to $8.75 per hour. This set the ball rolling for a policy of annual adjustments tied to inflation.
- 2017. Adjusted to $9.80 per hour. This slight increase reflected inflationary pressures and Alaska’s commitment to small, consistent wage growth.
- 2020. The Alaska minimum wage reached $10.19 per hour, crossing the $10 threshold as inflation continued to impact the cost of living.
- 2023. Another increase to $10.85 per hour.
- 2024. The latest update, in January of this year, set the Alaska minimum wage at $11.73 per hour. This increase represented one of the largest adjustments in recent years, driven by significant inflation and a commitment to ensuring a living wage for Alaskan workers.
What Is the Current Alaska Minimum Wage?
As of January 1, 2024, the Alaska minimum wage is $11.73 per hour. This rate is one of the highest in the United States, reflecting the state’s commitment to ensuring that wages keep pace with the cost of living. The Alaska minimum wage is adjusted annually based on the Consumer Price Index (CPI) for the Anchorage metropolitan area. This ensures that the wage goes up as the cost of goods and services rises, helping workers maintain their purchasing power.
The Alaska minimum wage applies to all workers, including those who receive tips. This means that employers cannot use tips as a credit to meet the minimum wage requirement. Moreover, unlike some states, Alaska does not have local municipalities with higher minimum wage rates, so the $11.73 rate applies uniformly across the state.
Finally, while most workers are covered under the Alaska minimum wage, there are specific exemptions, as we will see in the next section.
Alaska Minimum Wage: Exemptions and Special Cases
While Alaska’s minimum wage law covers the majority of workers, there are several exemptions and special cases where the standard minimum wage does not apply. These exemptions are designed to accommodate specific employment situations or job categories where a lower wage may be legally permitted.
Alaska minimum wage exemptions include:
- Executive, administrative, and professional roles. Employees in these roles are exempt if they meet specific criteria related to job duties and salary level. To qualify for this exemption, the employee’s primary duties must involve managing the company or a recognized department, exercising discretion and independent judgment on significant matters, or performing tasks that require advanced knowledge typically acquired through prolonged education. Additionally, you must compensate these employees on a salary basis at a rate above a minimum threshold.
- Agricultural workers. Certain agricultural jobs are exempt, especially those involving small family farms or seasonal work.
- Non-profit organizations. Employees working for some non-profits can be exempt, especially if their work is related to charitable, educational, or religious activities.
- Minors and learners. Minors under 18 and learners or apprentices in structured training programs can be paid a lower wage under specific conditions.
- Domestic service. Finally, casual domestic workers, such as babysitters, are usually exempt from the Alaska minimum wage.
You can find more information on Alaska’s minimum wage exemptions by visiting the Alaska Department of Labor’s official guidelines.
Additional Alaska Wage Laws
Aside from the Alaska minimum wage, the state has a number of additional wage laws that employers need to understand as these can have an impact on an employee’s wages.
Let’s explore these additional Alaska wage laws so you can make sure your employee handbook meets all requirements.
Overtime Pay
Alaska’s overtime pay laws are designed to ensure that workers receive fair compensation for the time they spend on the job, particularly when they work beyond standard hours. Under Alaska law, non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular hourly wage (time and a half) for any hours worked over eight hours in a single workday or 40 hours in a workweek. This is more protective than the federal Fair Labor Standards Act (FLSA), which only requires overtime pay for hours worked beyond 40 in a workweek, regardless of the number of hours worked in a day.
However, there are certain exceptions to these Alaska overtime provisions.
Specifically, under Alaska law, an employee is usually not entitled to overtime pay if they:
- Work in a bona fide executive, administrative, or professional capacity as defined by the Fair Labor Standards Act (FLSA).
- Are employed in agriculture or fishing where certain exemptions apply based on the nature of the work.
- Are covered under a flexible work-hour plan that is part of a collective bargaining agreement or a written agreement with the employer.
- Are employed as a live-in domestic worker, where the employer and employee have a mutual agreement about overtime.
- Work in specific industries or roles, such as small family farms, nonprofit organizations, or for the delivery of newspapers.
Wage Payment
Here are the key requirements under Alaska law regarding the payment of wages to employees:
- Payment frequency. Firstly, Alaska law requires you to pay your employees at least twice a month (semi-monthly or biweekly pay). This is a standard requirement to ensure that employees receive regular and timely compensation for their work.
- Payment timing. Secondly, Alaska law requires you to process wage payments no later than 16 days after the end of the pay period.
- Final paycheck for terminated employees. Thirdly, if you terminate an employee’s contract (whether fired or laid off), Alaska law requires you to provide them with their final paycheck within three working days.
- Final paycheck for employees who quit. Finally, for employees who voluntarily resign, you must pay the final paycheck by the next regular payday.
Pay Discrimination
Alaska also enforces laws against wage discrimination based on gender, race, and other protected characteristics. These laws ensure that employees are paid equally for equal work, regardless of these factors. This aligns with the provisions of the federal Equal Pay Act.
Posters
Employers in Alaska are required by law to display certain wage-related posters in the workplace to ensure that employees are informed of their rights and obligations under state and federal wage laws. These posters must be placed in a visible location where they can be easily seen by all employees, such as in break rooms or near time clocks.
Alaska state labor law posters:
- Alaska Wage and Hour Act. Firstly, employers must display the “Summary of Alaska Wage and Hour Act” poster, which outlines the state’s minimum wage, overtime rules, child labor laws, and other key wage and hour regulations. This poster is mandatory for all employers in Alaska.
- Federal Fair Labor Standards Act (FLSA). Secondly, employers must also display the federal “Employee Rights Under the Fair Labor Standards Act” poster. This poster provides information on the federal minimum wage, overtime pay, recordkeeping, and child labor laws.
- Other required posters. Finally, depending on the specific circumstances of the workplace, you may need to display additional posters, such as those related to non-discrimination, workplace safety, and workers’ compensation.
You can download the necessary posters from the Alaska Department of Labor and Workforce Development’s website.
Time Tracking & Recordkeeping Requirements
Finally, Alaska follows federal guidelines for time tracking and recordkeeping, in line with the FLSA.
Specifically, under the FLSA, employers must maintain accurate records of all hours worked and wages paid to employees.
These records must include the following information.
Employee information:
- Full name and Social Security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
Work hours and pay:
- Time and day of the week when the employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment..
These records must be kept for at least three years. They must also be accessible for inspection by the U.S. Department of Labor’s Wage and Hour Division.
Best Practices for Wage Law Compliance
And that’s pretty much everything you need to know about the Alaska minimum wage and the state’s additional wage laws. All that’s left now is to make sure that your business meets the requirements of these laws.
With this in mind, we’ve put together a handy list of essential tips and best practices to help you protect your business from potential non-compliance fines and penalties.
Understand the Minimum Wage
As an employer in Alaska, it’s crucial to stay updated on the current minimum wage rates. These can vary based on employee status (but not location). Familiarize yourself with the minimum wage requirements for your specific industry to ensure you’re paying your employees the correct amount.
Implement Accurate Payroll Practices
Maintain accurate and up-to-date payroll records so that your payroll calculations are always processed correctly. Regularly review your payroll records to identify any inconsistencies or errors. Use payroll software to streamline payroll processes and minimize errors. You should also create a payroll checklist to keep you on track during each payroll cycle. That way, you won’t miss any important steps, such as verifying employee hours, ensuring correct pay rates and calculating payroll tax deductions.
Classify Employees Correctly
Properly classify employees as either exempt or non-exempt under the FLSA. This classification determines whether you must offer overtime pay to an employee who works extra hours. Carefully review the duties and responsibilities of each employee to determine their exempt or non-exempt status.
Track Overtime Hours
Accurately track overtime hours worked by non-exempt employees. Implement a system for employees to report overtime hours, such as using timesheets or electronic timekeeping systems. Make sure you pay overtime at the correct rate.
Maintain Accurate Records
Finally, it’s important to maintain accurate and up-to-date records of all employee work hours and wages. Keeping precise records helps ensure employees are paid correctly and on time. Using employee record management software can make this easier. These systems help you maintain accurate and reliable records so that you can focus on other important parts of your business while staying compliant with Alaska wage law.
How Factorial Can Help
Ensuring compliance with Alaska wage law is crucial for employers to avoid potential penalties and legal disputes. Factorial can help you navigate the complexities of Alaska’s employment guidelines and streamline your entire payroll process.
- Automated payroll calculations. Firstly, Factorial’s automated payroll system eliminates manual calculations, reducing the risk of errors and ensuring accurate compensation for all employees. It automatically factors in Alaska minimum wage requirements, overtime pay, holiday pay, and other relevant regulations to ensure compliance with all Alaska wage laws.
- Real-time tracking. Secondly, Factorial’s time tracking feature enables real-time monitoring of working hours, including overtime. This allows you to maintain and generate accurate records and reports and identify and address any issues promptly, ensuring compliance with overtime and time-tracking requirements.
- Comprehensive payroll reporting. Finally, Factorial generates detailed payroll reports, providing valuable insights into employee compensation, overtime trends, and overall payroll expenses.
By leveraging Factorial’s comprehensive payroll solution, employers can effectively manage payroll, comply with Alaska wage laws, and ensure that their employees are compensated in line with Alaska minimum wage rates, fostering a positive and compliant work environment for all.
