Alaska Employment Law Update – December 2018

Omnibus Workers’ Compensation Legislation

On August 24, 2018, Alaska Governor Bill Walker signed the state’s comprehensive Omnibus Workers’ Compensation law (H.B. 79), which, among other modifications, defines independent contractors and excludes them from workers’ compensation coverage. Subsequently, and for workers’ compensation purposes, a person is an independent contractor if he or she:

• Has an express contract to perform services;
• Is free from direction and control over the means and manner of providing services, subject only to the right of the individual for whom, or entity for which, the services are provided to specify the desired results, completion schedule, or range of work hours, or to monitor the work for compliance with contract plans and specifications, or federal, state, or municipal law;
• Incurs most of the expenses for tools, labor, and other operational costs necessary to perform the services, except that materials and equipment may be supplied;
• Has an opportunity for profit and loss as a result of the services performed for the other individual or entity;
• Is free to hire and fire employees to help perform the services for the contracted work;
• Has all business, trade, or professional licenses required by federal, state, or municipal authorities for a business or individual engaging in the same type of services as the person;
• Follows federal Internal Revenue Service requirements by:
  • Obtaining an employer identification number, if required;
  • Filing business or self-employment tax returns for the previous tax year to report profit or income earned for the same type of services provided under the contract; or
  • Intending to file business or self-employment tax returns for the current tax year to report profit or income earned for the same type of services provided under the contract if the person’s business was not operating in the previous tax year; and
• Meets at least two of the following criteria:
  • The person is responsible for the satisfactory completion of services that the person has contracted to perform and is subject to liability for a failure to complete the contracted work, or maintains liability insurance or other insurance policies necessary to protect the employees, financial interests, and customers of the person’s business;
  • The person maintains a business location or a business mailing address separate from the location of the individual for whom, or the entity for which, the services are performed; or
  • The person provides contracted services for two or more different customers within a 12-month period or engages in any kind of business advertising, solicitation, or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.

The independent contractor portion of the law is effective November 22, 2018.

Read AK H.B. 79