Alaska voters approved a ballot measure (Initiative 1) introducing annual minimum wage increases over the next three years and mandatory Paid Sick Leave (PSL) for private employers. Understanding the key provisions of Initiative 1 is essential for ensuring compliance. Below are key highlights of the minimum wage increases and PSL requirements.
Minimum Wage Increases
Effective January 1, 2025, the first minimum wage increase will raise the rate to $13 per hour, and by 2027 the minimum wage will increase to $15 per hour. Beyond 2027, the minimum wage will be adjusted for inflation.
Paid Sick Leave (PSL)
Coverage and Eligibility
Covered employees include those who are not exempt from the minimum wage under state law as defined by AS Section 23.10.070; individuals covered by the federal Railroad Unemployment Insurance Act; and other exempt categories under Section 23.10.069 of the proposed law.
Covered family members are defined broadly, including biological, adopted, foster, and in loco parentis relationships, as well as grandparents, grandchildren, and others whose close association is equivalent to a family relationship.
Accrual and Use of PSL
Current employees begin accruing PSL on July 1, 2025, and those hired after this date will begin accruing on their first day of employment.
Employees will accrue PSL at a rate of one (1) hour for every thirty (30) hours worked up to the following maximums:
- 15 or More Employees: Employees may accrue up to 56 hours per year.
- Less Than 15 Employees: Employees may accrue up to 40 hours per year.
It is currently unclear whether employer size is determined based solely on employees working in Alaska.
Employers may cap annual PSL usage at 40 or 56 hours, depending on employer size.
Alternatively, employers can frontload PSL at the beginning of the year, matching the expected annual accrual.
Carryover Requirements
Unused PSL must carry over into the next year, but usage can still be capped at the annual accrual maximums of 40 or 56 hours.
The “year” can be a regular, consecutive 12-month period determined by the employer.
Qualifying Reasons for Leave
Employees can use PSL for the following reasons:
- Self-Care: For their own physical or mental health conditions, including treatment or preventive care.
- Family Care: To care for a family member with a health condition requiring medical attention.
- Public Health Emergencies: For business closures due to public health orders or to care for a child whose school is closed for the same reason.
- Safe Leave: To seek services related to domestic violence, sexual assault, or stalking.
Increments of Use
Employees can take PSL in hourly increments or the smallest increment the employer’s payroll system uses for tracking absences.
Employee Notice Requirements
When the need for PSL is foreseeable, employees must provide advance notice and schedule their leave to minimize disruptions. If the need is unforeseeable, employees must notify their employer as soon as practicable.
Employers may request reasonable documentation for absences longer than three (3) consecutive workdays but cannot require details about the illness or safe leave circumstances.
Employer Notice Requirements
Employers must provide written notice to employees by July 1, 2025, and to new hires thereafter. The notice must include accrual rates, protections against retaliation, and information on reporting violations.
Combination with Paid Time-Off Policies
Employers with PTO policies that meet or exceed PSL accrual requirements and allow for the same uses are not required to provide additional PSL.
Payment at Separation and Rehire Provisions
Employers are not required to pay out unused PSL at separation. However, employees rehired within six months are entitled to reinstatement of any previously accrued but unused PSL.
Next Steps
While it is expected that regulations will be forthcoming, employers should review the full text of Initiative 1 and any forthcoming regulations to understand their obligations, including the following:
- Employers should develop or revise policies to clearly outline accrual rates, qualifying reasons for leave, carryover provisions, and documentation requirements.
- Employers who will frontload PSL should draft written agreements and include any details about deductions of advanced leave at separation.
- Train human resources personnel and managers on the new requirements to ensure consistent communication and application of the law.
- Maintain accurate records of employees’ PSL accrual and usage to demonstrate compliance by ensuring their HRIS and/or payroll system can accurately track the accrual and usage of PSL.
