The Alaska Department of Labor & Workforce Development has adopted final regulations clarifying key implementation and compliance issues under the state’s new Paid Sick Leave (PSL) law, which took effect on July 1, 2025. These final rules, effective September 25, 2025, provide necessary detail for Alaska employers to finalize their paid leave policies and ensure compliance.
Key Clarifications from the Final Rules
The regulations address several aspects of the law, including calculating the rate of pay, use of leave and the definition of a benefit year.
- Rate of Pay. Employers are required to use the same formula applied to calculate the regular rate of pay for overtime when determining pay for paid sick leave. For employees working at multiple rates, employers may now use either the “weighted average” method based on the workweek or the “rate in effect” method based on the shift.
- Definition of Day. The final rules remove the proposed definition of a “full day” as no more than eight hours. As a result, employees may receive full pay for a sick day even if their regular workday exceeds eight hours, and employers may deduct more than eight hours of leave from the employee’s leave bank for such absences.
- Benefit Year and Accrual Year and Front-Loading. Employers must establish a 52-week benefit year for compliance; otherwise, the calendar year will be used by default.
- Carryover. All accrued, unused paid sick leave must be carried over to the next benefit year, even if it exceeds the annual usage cap.
- Front-Loading Alternative. Employers are not required to allow carryover if they choose to front-load the full annual allotment of sick leave at the beginning of each benefit year. Front-loaded hours can be prorated for part-time employees or those hired mid-year.
Other Unchanged Regulations
While the final regulations introduced several key changes, the following provisions remain consistent with the original regulations.
- Accrual and Usage Caps Based on Employer Size. The final rule uses full-time equivalents (FTEs) to determine employer size. All eligible employees must accrue at least one hour of paid sick leave for every 30 hours worked.
- Employers with 15 or More FTEs: May cap annual sick leave accrual and usage at 56 hours per benefit year.
- Employers with Fewer than 15 FTEs: May cap annual sick leave accrual and usage at 40 hours per benefit year.
- Notice and Verification Requirements. The final regulations clarify the employer’s right to request notice and documentation for employee absences:
- Advance Notice: Employers may require up to 10 calendar days’ advance notice for foreseeable absences. Employees must notify the employer as soon as possible for unforeseen absences.
- Verification of Absence: Employers can require documentation to verify the reason for sick leave only if the absence lasts more than three consecutive scheduled workdays. Employers cannot require details of an illness or sensitive medical issues.
- Written Notice and Policy Requirements. Employers have two new written notice requirements:
- A written notice must be provided to employees if an existing Paid Time Off (PTO) policy will be used to satisfy the PSL obligations. PTO policies satisfy the law if they meet the minimum accrual and usage requirements.
- Employers must provide written notice detailing sick leave entitlements, accrual rates, authorized uses, and verification requirements. This notice can be distributed, posted in a prominent location, or included in an employee handbook.
- Reinstatement on Rehire. If an employee separates from the company with an unused sick leave balance and is rehired within six months, the employer must reinstate the employee’s previous unused sick leave balance.
Next Steps for Employers
Compliance with these final rules is essential, particularly for ensuring proper PTO policy integration and consistent application of the notice and verification rules.
- Update Policy and Handbook: Review and update your employee handbook and PTO policies to explicitly define your PSL benefit year and ensure they meet the minimum accrual rates and usage rules based on your FTE count.
- Determine Front-Loading Strategy: Decide whether your organization will use the accrual method or the front-loading method and communicate the policy to employees in writing.
- Establish FTE Count: Calculate your business size using the FTE method defined in the regulations to determine whether the 40-hour or 56-hour cap applies.
- Review Notice & Verification Procedures: Ensure your policy clearly states your rules for advance notice and documentation for extended absences.
- Stay Informed: Employers should review the final rules to see whether and/or how their policies and practices need to be adjusted. Employers should also review the state’s frequently asked questions (FAQs) for additional guidance on implementing leave.
