Proposed Regulations for Alaska Paid Sick Leave Law Provide Guidance to Employers Just in Time for July 1st Effective Date

On June 25, 2025, the Alaska Department of Labor & Workforce Development (Department) published proposed regulations interpreting Ballot Measure 1, Alaska’s new statewide Paid Sick Leave law, that took effect on July 1, 2025. While employers had been expecting regulations in early spring 2025, it started to seem unlikely that anything would be published prior to July 1st, particularly after the Alaska governor’s May 9, 2025 Administrative Order 358, which included “a freeze on the promulgation of new regulations by all agencies,” unless “a new regulations package is necessary to protect the safety of the public or to meet other essential State responsibilities.” 

The regulations discussed below are proposed only, and they will undergo a public comment period through July 31st before being finalized, meaning that employers do not have the benefit of final regulations this month while implementing the new law, and the rules could change once finalized. In the interim, the proposed regulations do provide some preliminary direction to employers working toward compliance with the paid sick leave law. 

Counting Employees for Employer Size 

Under the law, different standards apply for employers with 14 or fewer, or 15 or more, employees. The law does not address which employees count towards this threshold. The proposed regulations likewise remain silent on whether employers should base their employee count on their workforce size within Alaska or nationwide. They do, however, say to count full-time, part-time, seasonal, and temporary employees, and to base that calculation on the average number of employees during the previous calendar year; or, for new employers that did not operate during the previous calendar year, the average during the current calendar year.

Alternatives to Carryover

Under Ballot Measure 1, employees must accrue one hour of paid sick leave for every 30 hours worked. The law allows employers with 14 or fewer employees to cap annual accrual at 40 hours, and it allows employers with 15 or more employees to cap annual accrual at 56 hours. It mandates that all unused leave carries over from year to year (with no designated carryover or overall accrual cap).

Ballot Measure 1 does not expressly allow employers to frontload a specific number of paid sick leave hours annually in order to avoid the carryover requirements. However, the proposed regulations would permit an employer to provide an annual grant of paid sick leave instead of tracking accrual. 

Employers would need to grant the full annual allotment of paid sick leave (40 or 56 hours, based on employer size) to full-time employees at the beginning of each full benefit year. 

But under the proposed regulations, proration of the frontload amount is permissible for both employees employed less than a year (e.g., new hires if using a “year” other than an anniversary year) and for part-time employees. The frontloaded amount must meet or exceed what the employee would be entitled to accrue over the time period the frontload amount is intended to cover. For instance, for a full-time (40 hour/week) employee starting work on July 1, the frontload amount would need to total a minimum of 35 hours (1,040 work hours x 1 hour/30 hours worked). For a seasonal part-time employee who historically works, on average, 720 hours over a 4-month seasonal employment period, the frontload amount would need to total a minimum of 24 hours. If the employer’s calculation falls short based on actual hours worked by the employee for that time period, the employer would have an obligation to true-up the prorated grant. 

The proposed regulations also allow an employer to offer employees the choice to carry over unused accrued paid sick leave or have it cashed out at the end of the year. The Department’s Ballot Measure 1 FAQs initially suggested that employers could adopt a policy allowing employees to request a "cash out" of accrued paid sick leave. The proposed regulations further expand on this concept by clarifying: 

• Any such policy must be in writing
• The employee must be given the option to: (1) take a year-end cash-out in lieu of a carryover, or (2) maintain the balance for reinstatement if the employee is rehired within 6 months in lieu of receiving a cash-out on termination
• The employee must acknowledge and voluntarily accept the cash-out in writing 

Employers considering offering cash-out in lieu of carryover should consult with knowledgeable counsel about the knock-on effects this could have under other laws.

When frontloading or cashing out in this manner, unused paid sick leave would not be required to be carried over from one year to the next. 

Using Paid Leave or Paid Time Off Policies for Compliance

As expected, the proposed regulations reinforce the law’s position that employers with a paid leave or paid time off policy that make available an amount of paid leave (a) sufficient to meet the requirements of the law and (b) that may be used for the same purposes and under the same conditions as paid sick leave under the law, are not required to provide additional time, including, under the proposed regulations, if an employee uses paid leave for reasons other than those identified in the paid sick leave law. In order to leverage this existing bank for compliance, however, the proposed regulations would require employers to notify their employees that the policy will be used for paid sick leave compliance. 

Employers would be able to create a paid sick leave “subbank” within the larger paid time off balance, meaning that the protections of the law would only apply to those 40 or 56 hours per year, based on employer size, and the excess hours would not be governed by the law’s other provisions.

Finally, the proposed regulations would also allow employers to adopt a policy whereby any available paid leave balance is automatically applied to an absence from work – regardless of the reason for the absence. 

Employee Notice and Verification of Absences 

As proposed, the regulations would allow employers to require employees to provide up to 10 calendar days’ notice for foreseeable absences if such a timeline is included in an employer’s written policy. Employers can also adopt a policy provision requiring their employees to make a reasonable effort to schedule use of paid sick leave in a manner that does not unduly disrupt the employer’s operations, such as by avoiding scheduling a medical appointment during peak business hours, when work is time-sensitive, or when a mandatory meeting is scheduled. If an employee fails to do so, per the proposed regulations, the employer may deny the employee’s request. 

For unforeseeable absences, the proposed regulations indicate that employees must notify their employer before the start of their shift or as soon as possible, depending on the circumstances. 

If employees use paid sick leave on four or more consecutive workdays, the proposed regulations track Ballot Measure 1 in allowing employers to require that the employee provide “reasonable” documentation to substantiate the need for leave. However, in order to exercise this option, the proposed regulations indicate that any such requirement must be outlined in a paid sick leave policy that was provided to the employee. Per the regulations, the employer would not be required to pay the employee for their sick leave until that requested verification has been returned. 

Using Paid Sick Leave

The proposed regulations allow employers to use a “reasonable” calculation to determine how many hours of paid leave to apply to an absence when employees work an indeterminate-length shift. The methodology must be applied consistently to similarly situated employees and could include the number of hours worked by a replacement worker or an employee who worked a similar shift; alternatively, employers could use a 30-day lookback period to determine the employee’s average number of daily hours. 

Calculating the Regular Rate of Pay for Paid Sick Leave 

The statute does not indicate how employers calculate the paid sick leave rate of pay. Under the proposed regulations, employees must be compensated for sick leave at their “regular rate” of pay or the applicable minimum wage, whichever is greater. More notable, however, is that the Department is proposing that the “regular rate” is to be calculated using the same methodology that applies to overtime pay calculations, which would include variable pay such as commissions, certain bonuses, and shift differentials.

Employer Notice Requirements 

The Department previously declined to publish a sample or template employee notice that employers could use to satisfy their obligation to provide notice of the entitlements under the law by July 31 and to new hires. However, the proposed regulations indicate that the employer’s written notice must address the following points: (1) the employee's entitlement to paid sick leave when employment begins; (2) the rate at which the employee will accrue paid sick leave; (3) the authorized purposes under which the employee may use paid sick leave; (4) the employer's intention to use a paid time-off program to meet the requirements under the paid sick leave law, if applicable; (5) other reasonable notice or verification requirements imposed on the employee when using paid sick leave; and (6) notice that retaliation by the employer for the employee's lawful use of paid sick leave or otherwise exercising their rights under the paid sick leave law.

In addition, the proposed regulations outline potential methods for distribution of the mandatory notice including by (1) distributing the written notice to each employee personally, by mail, email, or by including the notice in a paycheck; (2) incorporating the written notice into a print or electronic handbook or manual made available to employees; or (3) posting the written notice in a conspicuous and accessible location in each workplace. Even though these proposed regulations suggest that individual distribution of the notice is not the only method of compliance, employers will not have final regulations confirming that fact prior to the July 31 mandatory notice deadline, and they should take that into consideration when determining how to send out their customized notice document. 

Paystub Reporting 

The statute does not require that paid sick leave information be included in a paystub. The regulations, however, propose to revise a pre-existing paystub rule to require that written or electronic paystubs also include paid sick leave accrued and used in the calendar year and the employee’s paid sick leave balance. This potential requirement should be particularly noted by employers with a more generous paid time off policy attempting to create a paid sick leave “subbank” of protected hours, as described above, to ensure that their timekeeping system has the functionality to report on the accrual and usage of the smaller subbank, and not just the overall paid time off bank. 

What’s Next 

Employers should take note of the proposed regulations while implementing their Alaska paid sick leave compliance strategy this month and be sure to watch for the final regulations later this summer or early fall. Employers might consider submitting comments on the proposal themselves, through an industry association, or via counsel. Finally, if the mandatory notice has not yet been sent to employees, any working draft likely deserves a second look based on the preliminary guidance we now have before it is distributed and/or published prior to the end of the month.