How Workers' Compensation Works
Alaska payroll professionals play an important role in workers' compensation administration.
Payroll records provide critical wage and employee information used to administer workers' compensation claims, calculate benefits, support insurance audits, and document an employer's compliance with Alaska law.
Understanding Alaska workers' compensation rules is especially important for payroll professionals who are responsible for maintaining employee records, calculating wages, processing payroll after workplace injuries, responding to workers' compensation claims, or providing payroll information to an employer's insurance carrier or claims administrator.
Alaska generally requires employers with one or more employees working in Alaska to obtain workers' compensation coverage, unless the employer has been approved as a self-insurer.
Alaska Payroll And Workers' Compensation Compliance Overview
At A Glance
- Alaska generally requires employers with one or more employees in Alaska to obtain workers' compensation insurance or qualify as an approved self-insurer
- Certain business owners and corporate officers may be exempt from workers' compensation coverage for themselves under Alaska law
- Employers must generally maintain coverage for their employees, including qualifying family members and friends who work as employees
- Alaska does not operate a state workers' compensation insurance fund
- Employers generally obtain workers' compensation coverage through the commercial insurance market or the assigned-risk market
- Eligible employers may apply to become self-insured
- Alaska does not have workers' compensation reciprocity agreements with other states or countries
- Out-of-state employers with employees working in Alaska must generally insure their Alaska workers' compensation exposure
- Alaska provides specific requirements for reporting workplace injuries and illnesses
- Payroll records may be needed to establish wages and support workers' compensation benefit calculations
- Employers must maintain required workers' compensation notices at the workplace
- The Alaska Department of Labor and Workforce Development, Division of Workers' Compensation administers Alaska's workers' compensation system
Alaska Workers' Compensation Coverage Requirements
How Alaska Payroll And Workers' Compensation Work Together
Workers' compensation and payroll are closely connected. When an employee is injured at work, payroll may be asked to provide historical earnings, wages, hours worked, bonuses, employment dates, and post-injury earnings.
Accurate payroll information can help the employer, insurer, or claims administrator determine the employee's applicable compensation rate and administer benefits correctly. Payroll may also become involved when an injured employee.
- Misses work because of a workplace injury
- Returns to work with medical restrictions
- Works reduced hours
- Performs modified or light-duty work
- Receives wages after returning to work
- Receives salary continuation
- Participates in a reemployment program
For these reasons, Alaska payroll departments should have a documented process for responding to workers' compensation claims and producing historical payroll information.
How Many Employees Trigger Workers' Compensation Coverage In Alaska?
Alaska generally requires workers' compensation coverage when an employer has one or more employees in Alaska unless the employer qualifies for an applicable exemption or has been approved as a self-insurer. This means employers should not assume that a small workforce automatically qualifies for an exemption.
Businesses should review their actual workforce and the nature of the work being performed when determining whether Alaska workers' compensation coverage is required.
Are Part-Time Employees Covered?
Part-time status does not automatically eliminate an employer's workers' compensation obligations in Alaska.
Alaska identifies specific categories of work that may be exempt from workers' compensation requirements, including certain part-time babysitters, non-commercial cleaning persons, harvest and transient workers, amateur sports officials, contract entertainers, commercial fishers, and certain other workers.
Employers should review the specific statutory requirements before treating a worker as exempt.
Are Business Owners Covered?
Alaska provides specific exemptions for certain business owners and corporate officers.
The Alaska Department of Labor identifies the following categories as generally exempt from having to insure themselves for workers' compensation liability.
- Sole proprietors
- Partners in a partnership
- LLC members with at least 10% ownership interest
- Certain executive officers of nonprofit corporations
- Executive officers of for-profit corporations with at least 10% ownership interest
These exemptions generally apply to the qualifying owner or officer and do not eliminate the employer's obligation to maintain coverage for employees.
Alaska Workers' Compensation Insurance
Alaska does not have a state workers' compensation insurance fund. Employers generally obtain workers' compensation insurance through authorized private insurance carriers.
Employers that cannot obtain coverage through the voluntary commercial market may be able to obtain coverage through Alaska's assigned-risk market.
Alaska Workers' Compensation Self-Insurance
Eligible employers may apply to self-insure their workers' compensation liability in Alaska. Alaska's requirements for self-insurance include.
- At least five years of business operations in Alaska
- A safety or loss-control program
- At least 100 employees when applicable parent and subsidiary companies are considered
- At least $10 million in net worth
- Financial ability to meet workers' compensation obligations
- Appropriate claims administration capabilities
- Any required security or other conditions imposed by the Division
Most small and midsize employers will therefore obtain workers' compensation coverage through an insurance carrier rather than self-insuring.
Alaska Has No Workers' Compensation Reciprocity
Alaska does not have workers' compensation reciprocity agreements with other states or countries. This is particularly important for employers with employees who travel to Alaska or work temporarily in Alaska.
Alaska states that out-of-state employers with employees working in Alaska must insure their Alaska workers' compensation exposure under Alaska law. Employers with multistate employees should therefore review Alaska coverage separately rather than assuming that another state's workers' compensation policy automatically satisfies Alaska requirements.
Alaska Payroll Records And Workers' Compensation
Alaska's workers' compensation benefit system uses wage information in determining applicable benefits, and the Alaska Workers' Compensation Division provides an online benefit calculator based on the date of injury and type of benefit.
Payroll Information That May Be Needed For An Alaska Workers' Compensation Claim
Payroll departments should be prepared to provide information such as.
- Employee name and identification information
- Date of hire
- Date of injury
- Employment status
- Job title and classification
- Regular wages
- Gross weekly earnings
- Hours worked
- Overtime
- Bonuses and other compensation
- Periods of unpaid leave
- Wage changes
- Post-injury earnings
- Modified-duty wages
- Salary continuation payments
- Other compensation information relevant to the claim
Payroll should retain supporting documentation rather than relying solely on a current payroll register.
Historical payroll reports, timekeeping records, earning-code information, wage changes, and other compensation records may become important when a workers' compensation benefit calculation is reviewed.
Alaska Workers' Compensation Benefits
Alaska workers' compensation benefits are calculated under state law using applicable statutory formulas and wage information.
The Alaska Workers' Compensation Division provides an online benefits calculator and states that the date of injury determines the applicable compensation calculation. Because benefit amounts and formulas can change, employers and payroll professionals should use the Division's current benefit calculator when determining applicable benefits.
Temporary Total Disability Benefits
Temporary Total Disability benefits may be payable when an employee is unable to work because of a compensable workplace injury. The applicable benefit calculation depends on factors including the employee's wages and the date of injury.
Payroll professionals should provide accurate wage information to the insurer or claims administrator rather than attempting to independently determine the employee's final workers' compensation benefit.
Temporary Partial Disability
Temporary Partial Disability may apply when an injured employee returns to work but has reduced wage-earning capacity.
Payroll should accurately track post-injury wages when an employee returns to work with restrictions. This information can be important to the claims administrator when determining whether partial disability benefits apply.
Permanent Partial Impairment
Alaska also provides benefits for qualifying permanent partial impairment. The amount of a permanent partial impairment benefit depends on the applicable statutory calculation and the employee's impairment rating.
Payroll professionals generally will not determine the medical impairment rating, but payroll records may still be relevant when coordinating the overall claim.
Reemployment Benefits
Alaska provides reemployment benefits for qualifying injured workers. Payroll may become involved when an employee participates in an approved reemployment plan and earns wages during that process.
Alaska Workers' Compensation Injury Reporting
Employees and employers have specific responsibilities when a workplace injury or illness occurs. Alaska's current employee guidance states that a work-related injury, illness, or death generally must be reported to the employer in writing within 15 days of the event or within 15 days after the employee discovers the condition and believes it is work-related.
Employers should establish an internal procedure that promptly routes injury information to the appropriate HR, safety, insurance, and workers' compensation personnel.
Alaska Report Of Occupational Injury Or Illness
Alaska provides Form 07-6101, Report of Occupational Injury or Illness. However, the Alaska Workers' Compensation Division notes that employers should contact their insurer or claims administrator regarding the method of reporting injuries.
Many insurers and claims administrators use their own forms or electronic reporting procedures, and an employer's reporting obligation may be satisfied when the carrier or claims administrator reports the injury electronically to the Division.
Payroll should therefore follow the employer's established workers' compensation reporting procedure rather than assuming that payroll itself must submit every report directly to the state.
Alaska Workers' Compensation And Modified Duty
An injured employee may return to work with restrictions or modified duties. When that happens, payroll should coordinate with HR, management, the employee's supervisor, and the workers' compensation administrator.
Payroll should document.
- The date the employee returned to work
- Hours worked
- Wages earned
- Changes in job duties
- Modified or light-duty assignments
- Changes in compensation
- Salary continuation
- Other payments related to the employee's workers' compensation status
Accurate post-injury wage information can be particularly important when determining whether temporary partial disability benefits apply.
Alaska Workers' Compensation And Payroll Taxes
Workers' compensation benefits should not automatically be processed in the same manner as ordinary wages. Payroll should identify the nature of each payment and coordinate with the employer's tax, HR, insurance, and workers' compensation professionals to determine the appropriate payroll and tax treatment. Employers should maintain clear records distinguishing.
- Regular wages
- Workers' compensation payments
- Salary continuation
- Modified-duty wages
- Other payments associated with an injury or workers' compensation claim
Alaska Workers' Compensation Employer Notice
Alaska requires employers to post an Employer's Notice of Insurance in conspicuous locations at the workplace. The Alaska Workers' Compensation Division identifies Form 07-6120 as the Employers' Notice of Insurance and states that the completed form must be posted in three conspicuous places on the employer's premises. Payroll and HR departments should coordinate with management to ensure that required workplace notices remain current.
Payroll Training Resources
Payroll professionals responsible for workers' compensation administration should understand how workers' compensation rules interact with payroll records, wage calculations, employee classifications, injury reporting, benefits, and payroll processing.
Payroll Training Center provides payroll education and training for professionals responsible for payroll compliance, wage administration, employee records, and related employment requirements.
Recommended Workers' Compensation Training
Learn the fundamentals of workers' compensation, including claims, benefits, employer responsibilities, and return-to-work considerations.
Develop a stronger understanding of workers' compensation classifications, experience modification factors, premium management, and insurance audits.
Build specialized knowledge for professionals involved in workers' compensation and employee recovery.
Most-Used Training Courses:
Recommended Online Training Courses
Find Seminars, Webinars, And Online Training In Your Area
Alaska Workers' Compensation Compliance Checklist
- Determine whether the business is required to maintain Alaska workers' compensation coverage
- Review the workforce for covered employees and applicable exemptions
- Review owner, LLC member, partner, and corporate officer status
- Confirm that employees working in Alaska are properly covered
- Review workers' compensation requirements for multistate employees
- Obtain coverage through an authorized insurance carrier or qualify for self-insurance
- Maintain accurate employee classifications
- Maintain complete payroll and wage records
- Establish a procedure for reporting workplace injuries
- Know the employer's insurer or claims administrator reporting procedure
- Track pre-injury earnings
- Track post-injury earnings
- Maintain records of modified-duty work
- Maintain documentation of salary continuation
- Provide accurate payroll information to the claims administrator when requested
- Review applicable Alaska benefit requirements based on the date of injury
- Maintain required workers' compensation notices
- Monitor changes to Alaska workers' compensation laws and administrative requirements
Frequently Asked Questions About Alaska Workers' Compensation
Does Alaska require workers' compensation insurance?
Generally, yes. Alaska requires an employer with one or more employees in Alaska to obtain workers' compensation insurance unless the employer has been approved as a self-insurer or an applicable exemption applies.
How many employees must an Alaska business have before workers' compensation is required?
Alaska generally requires coverage when an employer has one or more employees. There are specific statutory exceptions based on the type of work performed.
Does Alaska have a state workers' compensation fund?
No. Alaska does not have a state workers' compensation insurance fund. Employers generally obtain coverage through private insurance carriers or, when eligible, the assigned-risk market.
Can an Alaska employer self-insure?
Yes, but an employer must meet Alaska's self-insurance requirements and receive approval. Requirements include financial and operational qualifications.
Does Alaska have workers' compensation reciprocity with other states?
No. Alaska does not have workers' compensation reciprocity agreements with other states or countries. Out-of-state employers with employees working in Alaska should review Alaska's requirements separately.
How quickly must an employee report a workplace injury in Alaska?
Under Alaska's current guidance, employees generally must report a work-related injury, illness, or death in writing within 15 days of the event or within 15 days after discovering the condition and believing it is work-related.
What workers' compensation form is used in Alaska?
Alaska provides Form 07-6101, Report of Occupational Injury or Illness. Employers should also follow the reporting procedures established by their workers' compensation insurer or claims administrator because many carriers use their own forms or electronic reporting systems.
What payroll records are important for an Alaska workers' compensation claim?
Payroll may need to provide information about an employee's gross earnings, wages, hours, overtime, bonuses, employment dates, wage changes, and post-injury earnings. Accurate historical payroll records can help support workers' compensation benefit calculations.
Where can employers find official Alaska workers' compensation information?
The Alaska Department of Labor and Workforce Development, Division of Workers' Compensation provides official information about employer requirements, benefits, forms, insurance, self-insurance, and workers' compensation administration.
