What Are the Overtime Laws in Alaska?
Overtime laws define the conditions under which employees may receive additional compensation for work performed beyond their standard hours. They are vital for ensuring that employees are fairly compensated for extra work. Overtime laws are important for both employees and employers. They provide employees with additional compensation for extra time and benefits for working beyond their regular hours. At the same time , these laws also protect employers from excessive labor costs and help them plan their staffing needs accordingly. The State of Alaska has its own laws regarding overtime and wage payment. These laws outline the minimum requirements that employers and employees must meet. The Alaska Wage and Hour Act (AS 23.10.050-150) outlines the state’s overtime laws. Alaska overtime law is similar to federal law. It requires employers to pay non-exempt employees one and one-half times their regular pay rate for all hours worked over 40 hours per week. Several exceptions apply.
What Is Overtime in Alaska?
Overtime refers to the hours worked by non-exempt employees in excess of a certain number of hours in a work week for which an employer is required to pay at least one-and-a-half times an employee’s regular rate of pay. Alaska law defines overtime as "time worked in excess of 8 hours in any one day or 40 hours in any one week." In contrast to the federal Fair Labor Standards Act (FLSA) which includes a detailed framework for establishing a "workweek," there is no definition of "workweek" in Alaska’s wage and hour laws.
The likely rationale for this difference is that Alaska has no provision for alternative work schedules. In areas that are subject to both federal and Alaska law, there are several reasons why it is still advisable to abide by the federal FLSA’s definition of workweek and use a workweek that allows employers to implement various alternative work schedules. Federal law provides for multiple workweeks. For example, the definition of "workweek" in federal law means a "fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods." The Fixed Workweek regulation allows private sector employers to establish a fixed and regularly recurring 168-hour workweek over which overtime is computed. The flexibility associated with this type of workweek allows for both staggered and compressed schedules. Also, certain portions of Alaska’s wage and hour laws are preempted by federal law, so avoiding such conflicts should be considered when designing a workweek.
Overtime Pay in Alaska
A significant detail in the Alaska wage and hour law is that there are different overtime rates for employees and employers of various sizes. Alaska law requires larger employers to pay higher rates of overtime than smaller employers.
So, what exactly do those rates look like in an overtime calculation? Employees working for small employers must receive time-and-a-half for all hours worked over 8 hours for a day or 40 hours in a week. An employer employs 1-3 employees if it has a gross annual dollar volume of at least $225,000, regardless of whether or not it does business outside of Alaska. For employers with 4-10 employees, they must pay a rate of one and half times an employee’s regular hourly rate for all hours worked in excess of 8 hours in a calendar day or 40 hours in a workweek. An employer employs 4-10 employees if it has a gross annual dollar volume of at least $570,000, regardless of whether or not it does business outside of Alaska. Finally, an employer with more than 10 employees must pay one and a half times an employee’s regular hourly rate for all hours worked in excess of 8 hours in a calendar day or 40 hours in a workweek. An employer employs more than 10 employees if it has a gross annual dollar volume of at least $1 million, regardless of whether or not it does business outside of Alaska.
It is important for employees to realize that hours worked over 8 hours or 40 hours a week are paid at the state-mandated rates, even if they are below the federal minimum wage for overtime. This means that time and a half does not have to exceed the federal minimum of $7.25 per hour. This often creates a complication under the Fair Labor Standards Act (FLSA). Generally, employees must receive overtime under both state and federal law, and if one law is more advantageous to the employee, they should receive the better overtime rate. However, when the state law overtime rate and the federal overtime rate have the same number of hours but the state rate is above the federal, it can be difficult to determine the employee’s overtime. In federal law, an employer compensates overtime based on the employee’s average hourly rate for a workweek, whereas the Alaska overtime law is based on the employee’s regular hourly rate. If a court were to apply the Alaska overtime rate to federal overtime pay and apply the federal rules for prorating the overtime rate for all hours worked in that workweek, the employee would be compensated according to the law that benefits them more, typically the higher Alaska hourly rate.
Alaska Overtime Pay Exceptions
Certain employees are exempt from Alaska state overtime pay laws if they fall into specific categories, either by virtue of their occupation or the duties they perform. The situation is somewhat complicated because the state law does not follow the federal guidelines, which govern employment law and could also serve as a good example of what categories of workers usually fall under a "white-collar worker" umbrella. Alaska overtime law does not cover, for instance, certain categories of professionals, including doctors, lawyers, teachers, accountants, computer programmers and scientists. The state law states that the exemption applies to only those who spend at least half of their time doing work that requires advanced knowledge in a field of study and job skill that requires many years of specialized work experience or formal education.
Other categories of exemption under Alaska state law include "salesman" and service providers, those who do teaching work, and those categorized as creative professionals, such as writers and musicians. Condition management workers such as nurses and surgical personnel, executive employees, administrative employees and "professionals" are also exempted from coverage under Alaska state overtime laws.
While there are many exceptions to these overtime provisions, it is recommended that business owners and managers check with the Alaska Department of Labor and Workforce Development to make sure that classifications are correct.
Calculating Overtime in Alaska
Under both the Fair Labor Standards Act (FLSA) and Alaska-specific wage and hour law, any hours worked in excess of 8 in a single day or 40 in a single week are considered overtime hours that must be compensated at the rate of time-and-a-half of the regular hourly rate. But determining what that regular hourly rate is, especially in situations where commissions and bonuses are paid or flexible schedules are implemented, can be complicated. Below we provide a step-by-step guide for determining overtime compensation in a few standard and non-standard pay situations under Alaskan wage and hour law.
For salaried employees who work 5 days per week and 8 hours per day:
Straight time: Total Salary ÷ 5 days ÷ 8 hours = $XX hourly rate
Time-and-a-Half: $XX hourly rate X 1.5 = $XX hourly rate
If an employee works a 10 hour shift, with two paid breaks totaling 2 hours, the calculation for the regular hourly rate would look as follows:
Total Salary ÷ 5 days ÷ 10 hours = $XX hourly rate
Time-and-a-half: $XX hourly rate X 1.5 = $XX hourly rate.
If an employee receives pay for only certain hours worked, for example in the case of on-call employees, and does not receive pay for all hours of a shift, the employer needs to calculate the hourly rate based on the amount of pay the employee receives per shift divided by the number of hours worked. For example, if an employee works 5 hours per day for 5 days, and is paid $100 per day, the following calculations apply:
Regular Hourly Rate: $100 ÷ 5 hours = $20 per hour
1.5: $20 x 1.5 = $30
So if the employee worked a standard 5-hour workweek, earning $2,600 ($100 per day, 5 days per week) he or she would earn $300 in overtime ($30 for each hour of OT, 10 hours per week).
Using the same example, so long as the employee earns at least $11.54 per hour, he or she would not be entitled to a higher regular hourly rate for overtime purposes. However, if the employee makes more than $11.54 per hour, the regular hourly rate for purposes of calculating overtime would be the greater of $11.54 or the lowest of the employee’s actual regular rates for the week.
If an employee works 12-hour shifts in Alaska, compensating the employee at a rate of time-and-a-half his or her regular hourly rate for each hour over 8 hours per day or 40 hours per week is the easiest way to ensure compliance. However , you can also consider paying straight time for the first 2 hours, and the regular hourly rate for the next 2 (i.e., hours 9 through 12) instead of time-and-a-half for all. The math looks like this:
Total Weekly Salary: 5 days per week x 12 hours per day = 60 hours per week
Straight time: $XX per hour (time-and-a-half = $XX)
$X x 2 hours x 5 days = $XX salary — straight time
$XX x 2 hours x 5 days = $XX salary — regular rate
Total for standard straight time is therefore $XX for a week. Note that our math assumes no breaks for each 12-hour day and that the employee does not work overtime beyond 60 hours in any given week. If he or she does, those additional hours are calculated at time-and-a-half the regular hourly rate.
Total Salary ÷ 60 hours worked/week = regular rate
$100,000 ÷ 60 = $1,666.66
Regular Hourly Rate: $1,666.66 ÷ 5 days ÷ 8 hours
Regular Rate + Time-and-a-Half = $1,666.66 ÷ 60 hours x 1.5 = $2,500
$2,500 – $DMV = $XX
($DMV ÷70% of $1,666.66 − $XX for each overtime hour = total)
Calculation for pay stub:
Pay Rate: $1,666.66
Overtime Rate (incl. DMV): $2,500
Overtime Rate (excl. DMV): $XX
The lower of $XX or $2,500 is the recommended regular hourly rate for overtime calculations.
The calculation for an employer who pays commissions based on sales would look like this:
Total Salary plus Commissions ÷ Total hours worked = Regular Rate
Regular Hourly Rate ÷40-hour week x 1.5 = Overtime Rate
Timesheet calculation (employer pays commission):
Total Salary ÷ 40 = Regular Rate x 1.5 = Overtime Rate
Timesheet calculation (employer pays commission): (note that this is an approximation, as commissions are not guaranteed)
Regular Rate ÷ 40 = Overtime Rate
Salary ÷40 = Regular Rate
(Divide by 40 to convert to hourly rate ratio)
$12.50 ÷40 = $3.13
$3.13/2 = $1.56
$1.56 + $1.00 = $2.56
$2.56 x 10 hours overtime = $26.00
$3.13 x 30 hours = $93.90
Regular Rate ÷ 40 = Overtime Rate
Studies show that no more than 70% of the average regular rate should be paid as a commission, although this number changes depending on industry. For example, the hospitality industry often pays higher commissions, while retailers generally pay only 10%.
Filing a Claim Over an Overtime Violation
Employees who believe that they have not been paid overtime in accordance with Alaska’s labor laws have several options available to them. For most wage and hour claims, the employee may file a complaint with the DOL or may file a private action with the Alaska State Circuit Court.
The DOL provides a simple form for employees to complete that includes their name, address and telephone number. The form also provides the name and address of the employer and a general description of the violations, including any relevant dates and amounts. The employee can submit the complaint online, by mail, or in person to the DOL. Once a complaint is received, the DOL’s LEC is responsible for gathering the facts of the claim to determine if a violation has occurred. If it has, the investigation proceeds as a formal complaint of wage claim, under time limits provided by statute for the filing of a complaint, and is assigned to an investigator. Complaints that do not meet the criteria of a formal complaint are treated informally by the LEC who will investigate the claim but provides no wage claim protection for the employee. Depending on the information provided by the employer, the DOL may handle claims through informal means and attempt to reach a satisfactory settlement. A wage claim that names an employer or business constructed from a combination of companies or individuals will be investigated under the best evidence available law. Employers that provided both overtime and straight time hours for a single job that did not have separate and distinct employers status are handled by the DOL under the best evidence available laws.
Employees may also find it useful to contact the Anchorage DOL office at their telephone number (907) 269-4839.
Updates to Alaska Overtime Laws
Alaska has gone through some changes in its overtime rules over the past few years. While the basics regarding the main requirements of overtime still largely hold true, some nuances have changed. As an employee, an employer, or a lawyer it is important to know and understand these changes so to remain compliant with the law or protect your rights.
One of the biggest changes came at the end of 2016, when Alaska’s minimum salary requirement for the executive, professional, administrative and computer employee exemptions saw a significant increase. Prior to December 30, 2016, employees had to make at least $684 Per Week, or $35,568 annually. After 2016, that number jumped to $12,516.65 per month, or $150,199.85 annually. Obviously, this increase is substantial. However, it brings Alaska’s salary requirements more in line with the 2019 federal change. Under the policy as of the writing of this article, Alaska’s minimum salary requirement is slightly less restrictive than the federal requirement of $35,568 annually. As time goes on, employees will likely be more frequently classified as non-exempt under the federal regulations. It is important to understand how an employee’s duties and responsibilities affect their classification, rather than only looking at the state minimum salary requirements.
Employers argued that Alaska’s increase was too high. At the end of 2016 in particular, many claimed that the expected minimum wage increase would lead to a higher rate of unemployment, especially among older and/or lower skilled workers. These arguments were never substantiated, of course, and overtime laws continued to evolve as time went on.
Conclusion: Fulfilling Fairness
In summary, employees in Alaska are generally entitled to required overtime pay for all hours worked in excess of 8 per day or 40 per week. Certain occupations are exempt from this rule including computer systems analysts, licensed practical nurses, and certain medical professionals. In addition, there are special rules that apply to employees that are regularly employed in the operation of recreational establishments including ski resorts, water and amusement parks, and places of entertainment. Some agreements and types of work may qualify for overtime exemptions under federal law . For example, there is a significant body of case law interpreting overtime rules applicable to outside sales employees, professional workers, administrative workers, and other categories of workers. While the general principals and requirements vary these exemptions are often raised in overtime disputes.
Fairness in the workplace is vitally important for employee morale and optimum performance. Unfortunately, many employers, sometimes unknowingly, violate Alaska wage and hour laws. Training and communication with regard to overtime laws, is the critical first step to decrease risk and improve compliance.