Alaska Minimum Wage: How Much to Pay Employees

Wondering how much to pay employees in Alaska? Read our guide about Alaska minimum wage laws, rules for tipped employees, overtime pay and more.

 

Note: The information below was last updated September 2021.

 

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What is the minimum wage in Alaska?

The minimum wage in Alaska is $10.34 per hour for nonexempt employees, which is higher than the federal minimum wage. That equals $413.60 for a 40-hour week. Alaska requires higher overtime pay in most situations based on the number of hours worked per day or week.

 

Alaska minimum wage laws

The purpose of minimum wage laws is to protect workers from exploitation at the hands of employers. The goal is to provide employees with enough pay to cover basic expenses and avoid extreme poverty. It prevents employers from underpaying their employees, especially those who might be desperate for work.

 

A ballot initiative that passed in 2014 requires that the Alaska minimum wage must be adjusted annually for inflation. The adjustments are based on the Consumer Price Index for urban consumers in the Anchorage metropolitan area (Anchorage CPI-U) for the previous year. Alaska law also requires that the state minimum wage always remains at least $1 more per hour than the federal minimum wage. The most recent increase was in January of 2021 when the Alaska minimum wage increased from $10.19 to $10.34 per hour.

 

There are some exceptions to the minimum wage requirement including student learners and workers employed in agriculture, taking of aquatic life, hand picking of shrimp, domestic service and delivering newspapers to consumers. There is also an exemption for employees under the age of 18 who work less than 30 hours per week. Employers who hire employees who fall under those exemption categories aren’t required to pay the minimum wage amount.

 

If an employer pays less than the Alaska minimum wage when it’s required, the employee can file a wage complaint with the Alaska Department of Labor and Workforce Development. The employer might be liable to the employee for the amount of the unpaid minimum wages plus an additional equal amount equal as liquidated damages. A court can award the plaintiff, which is the employee, a judgment for the amount owed. In many cases, the plaintiff can also be awarded reasonable attorney fees if the court rules in their favor.

 

Alaska minimum wage for servers and other tipped employees

Alaska is one of several states that doesn’t allow a tip credit against the minimum wage for servers and other tipped employees. That means anyone who receives tips must still be paid the state minimum wage of $10.34 per hour before tips. You can’t pay your employees a lower hourly wage just because they receive tips. Other states have a tip credit, which means the employer can pay tipped employees a lower hourly wage. The tips help get the employee up to the minimum wage. 

 

Alaska law defines a tipped employee as someone who “customarily and regularly receives more than $30 a month in tips.” It only includes employees whose primary duties are direct customer service. This typically includes food servers, bartenders, baristas, bellhops, hairstylists and similar professions. Tips are any cash left by a customer or the amount designated as a tip on a credit card receipt. It doesn’t include compulsory service charges on a customer’s receipt.

 

In general, Alaska employers aren’t allowed to handle, take possession of or control employees’ tips. This means any tipped employees must receive the standard minimum wage of $10.34 and receive all of their tips. The exception is providing the employee with cash if a customer leaves the tip on a credit card. Employers can also use a pooling arrangement for tips if they provide a written notice to the employees before starting. This allows the employer to collect all tips and redistribute them to be shared among all tipped employees.

 

Employers are also allowed to take out the amount of the credit card fee from a tip left on a credit card. The amount taken from the employee’s tip cannot exceed the percentage charged by the credit card company as a fee.

 

Alaska minimum wage overtime pay

The minimum overtime pay rate in Alaska is 1.5 times the regular pay rate. Overtime pay is required for Alaska businesses with four or more employees. There are some overtime exemptions for certain types of employees and businesses.

 

An employee who makes minimum wage in Alaska would get paid $15.51 for overtime hours. Overtime pay is required when an employee works more than 40 hours per week or more than eight hours per day. To calculate the overtime pay, multiply the number of hours over 40 per week or eight hours per day by the higher rate. For example, if an employee earns the $10.34 minimum wage and works 10 hours of overtime, then the overtime pay would be $155.10 on top of their normal wages for 40 hours of work.

 

Alaska minimum wage FAQs

What states have a $15 an hour minimum wage?

While no states currently have a $15 an hour minimum wage, several have passed legislation or are making plans to reach this minimum eventually, including California, Florida, Massachusetts, New Jersey and Illinois. For example, California is on track to gradually increase its minimum wage to $15 by 2023. The District of Columbia currently has a minimum wage of $15.20.

 

What is the minimum wage for a 16 year old in Alaska?

Alaska has several exemptions for the minimum wage requirement, including one for any individual under age 18 who works part-time for less than 30 hours per week. Employers don’t have to pay a 16-year-old the minimum of $10.34 per hour if they work less than 30 hours per week. 

 

What is a livable wage in Alaska?

A livable wage is the amount of income required to meet necessary and discretionary expenses. Alaska has a higher cost of living than many states, so the livable wage is higher. According to the MIT living wage calculator, a living wage in Alaska based on a 40-hour workweek for one adult and no children is $15.06 per hour.

 

What is the minimum a salaried employee can make?

Alaska requires all employees to make at least minimum wage no matter how they’re paid, including hourly, piece-rate, commission or otherwise. That means a salaried employee who is eligible for overtime requires a salary equivalent to earning $10.34 per hour, or $413.60 for a 40-hour workweek. Certain exempt employees must receive a salary that’s equivalent to at least twice the current Alaska minimum wage based on a 40-hour workweek, or a minimum of $827.20.

 

What is the federal minimum wage?

The federal minimum wage is $7.25 per hour, which is $3.09 lower than the minimum wage rate in Alaska. Businesses are required to pay nonexempt employees the higher of the federal and state minimum wage amounts, so Alaska businesses must use $10.34 instead of the $7.25 rate.

 

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