Short answer: Yes. Alaska requires every employer with one or more employees in the state to buy workers' compensation insurance unless the Workers' Compensation Board approves self-insurance. There is no opt-out for ordinary businesses, no state fund and no reciprocity with other states. Stop orders and penalties up to $1,000 per employee per day apply to uninsured employers.
The one-employee rule
The Division of Workers' Compensation employer requirements page states the rule plainly: each employer having one or more employees in Alaska must obtain workers' compensation insurance, unless approved as a self-insurer. The Division's Employer's Guide to the Workers' Compensation Act adds that coverage is mandatory, not voluntary, and that there are no "opt out" provisions under the Act.
Owner and executive exemptions (for themselves only)
Effective August 1, 2019, certain owners and executives are exempt from having to insure themselves:
- Sole proprietors of a sole proprietorship
- Partners in a partnership
- LLC members with at least a 10% ownership interest
- Executive officers of municipal, religious and legally registered nonprofit corporations (not employees unless the corporation elects coverage)
- Executive officers of for-profit corporations with at least a 10% ownership interest
Those people must still maintain coverage for employees, including family members and friends who work for the business.
Work-type exceptions, not business-type exceptions
The Division says there are few exceptions, and none based on the type of business. Exceptions are based on the type of work an individual performs. Examples include part-time baby-sitters, non-commercial cleaning persons, certain harvest help, amateur sports officials, contract entertainers, commercial fishers as defined in AS 16.05.940, taxicab drivers under specific contracts, certain real estate licensees and transportation network company drivers. Special statutes also pull high school work-study students, volunteer EMTs and volunteer firefighters into coverage through the state or local fire department.
No state fund and no reciprocity
Alaska does not operate a state workers' compensation insurance fund. Coverage comes from the voluntary commercial market or, if you cannot find a carrier, Alaska's Assigned Risk Pool administered by NCCI. Alaska also has no reciprocity agreements with other states or countries. An out-of-state employer with employees working in Alaska must insure under the Alaska Act through an insurer admitted and licensed in Alaska.
Penalties for going uninsured
AS 23.30.075 and AS 23.30.080 give the Division and Board strong tools. If an employer fails to insure or provide security:
- The Board may issue a stop order prohibiting use of employee labor until coverage is in place.
- Failing to comply with a stop order can bring a civil penalty of $1,000 a day and a three-year ban on public contracts with the state or a political subdivision.
- The Division may petition for a civil penalty of up to $1,000 for each employee for each day the employer remains uninsured.
- Criminal conviction under AS 23.30.075(b) carries a $10,000 fine and possible imprisonment of up to one year; corporate officers with authority to insure can be personally liable for benefits.
The Division's Special Investigations Unit investigates uninsured employers and can petition for those penalties. Injured workers of uninsured employers may turn to the Workers' Compensation Benefits Guaranty Fund after a Board finding that the employer is responsible and fails to pay.
Evidence of compliance and investigations
Employers must file evidence of compliance as required by AS 23.30.085. Failure to file creates a rebuttable presumption that the employer has failed to insure. The Division's Special Investigations Unit investigates fraud by employers, injured workers and care providers, and it petitions the Board for penalties when coverage lapses or stop orders are ignored. Contact the unit at 907-269-4002 with coverage questions.
The Benefits Guaranty Fund, created in 2005, pays benefits after a Board finding that an uninsured employer is responsible and fails to pay. That fund protects workers; it does not excuse an employer from buying a policy.
Family members still count
Owner exemptions never silently cover children, spouses or friends on the payroll. The Division's employer page is explicit: exempt owners must still maintain coverage for employees, including family members and friends. A spouse on the books is an employee for Act purposes unless a separate statutory exclusion applies to that person's work type.
Bottom line
If you have even one employee working in Alaska, plan on an admitted Alaska workers' compensation policy before that person starts. See our workers' compensation insurance overview.
Questions? Contact Alishahi Insurance or call (877) 711-4545. See insurance in Alaska.
Frequently asked questions
Is workers' comp required in Alaska?
Yes. Every employer with one or more employees in Alaska must insure or be Board-approved as a self-insurer.
Do sole proprietors need workers' comp in Alaska?
Sole proprietors need not cover themselves, but they must cover any employees, including family members who work for the business.
Does Alaska have a state workers' comp fund?
No. Coverage is through private admitted insurers or the NCCI-administered Assigned Risk Pool.
What is the penalty for an uninsured Alaska employer?
Civil penalties can reach $1,000 per employee per day, plus stop orders, public-contract bans and possible criminal fines.
Must out-of-state employers cover workers in Alaska?
Yes. Alaska has no reciprocity; out-of-state employers must insure Alaska Act exposure through an Alaska-admitted insurer.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.