Alaska Independent Contractor Agreement Template

Introduction

Key Things to Know

1. 1

   Alaska applies three different tests to the same worker depending on which act is in play, and the state says so. The Employer Guide to the Alaska Workers Compensation Act states that the Act requirements are completely independent of the Internal Revenue Service and other federal, state, or local laws, so it is possible for the same workers to be considered independent contractors under some agencies but employees under others.

2. 2

   Unemployment insurance uses an ABC test with the burden on the business. Under AS 23.20.525(a)(8) service is employment whether or not the common law relationship of master and servant exists, unless and until it is shown to the satisfaction of the Department that the individual is and will continue to be free from control and direction both under the contract and in fact, that the service is performed outside the usual course of the business or outside all of its places of business, and that the individual is customarily engaged in an independently established trade of the same nature.

3. 3

   Prong B of that test is disjunctive, but the state reads the place of business branch narrowly. The Department of Labor and Workforce Development guidance states that the premises where work is done is the employer place of business, giving a construction job site as an example of the usual place of business for a contractor. Businesses relying on the location branch rather than the usual course branch should expect that gloss to be applied.

4. 4

   Workers compensation runs on a statutory checklist, not a control test. AS 23.30.230(a)(12) treats a person as an independent contractor only if all seven of criteria (A) through (G) are satisfied and at least two of the three in (H) are as well. The Division of Workers Compensation states that the criteria in the definition are all-inclusive, so a strong showing on six of the seven does not carry the point.

5. 5

   Criterion (A) is the only place in Alaska law where a contract is an element of contractor status: the person must have an express contract to perform the services. Express means the terms are actually stated, not implied from conduct, so an oral agreement satisfies it. The statute prescribes no wording, no format, and no signature requirement, and nothing in it gives a written contract more weight than a spoken one beyond the ease of proving what was agreed.

6. 6

   The paper cannot do the work, and both agencies say so in print. The Employment Security Tax office publishes that written contracts with employees that state they are independent contractors responsible for their own taxes are null and void and are not sufficient to alter the real status between the employer and the worker. The workers compensation guide is to the same effect: an employer cannot make an employee an independent contractor by issuing a Form 1099, by verbal or written agreement, or by forcing the worker to get a business license.

7. 7

   Wage and hour uses economic dependence. The Alaska Wage and Hour Act analysis asks whether the worker is dependent upon finding employment in the business of others, weighing the right to control the manner of performance, the opportunity for profit or loss from managerial skill, investment in equipment or employment of helpers, whether special skill is required, the permanence of the relationship, and whether the service is an integral part of the business. No single factor controls, and the state guidance instructs that workers be treated as employees unless the alleged employer can clearly demonstrate otherwise.

Alaska Requirements for Independent Contractor Agreement

• Alaska Express Contract Is a Mandatory Element for Workers Compensation (AS 23.30.230(a)(12)(A))

  A person is an independent contractor for workers compensation purposes only if the person has an express contract to perform the services. Express means the terms are actually stated, so an oral agreement qualifies and no writing, wording, or format is prescribed. Because the criterion is mandatory rather than one factor among many, an engagement with no articulated contract fails the definition regardless of how independent the work actually is.

• Alaska Workers Compensation All-Inclusive Checklist (AS 23.30.230(a)(12)(A) to (H))

  All seven of criteria (A) through (G) must be satisfied, covering an express contract, freedom from direction and control over means and manner, bearing most operational expenses, opportunity for profit and loss, freedom to hire and fire helpers, holding required licenses, and following Internal Revenue Service requirements on an employer identification number and business or self-employment tax returns. At least two of the three criteria in (H) must also be met. The Division of Workers Compensation states that these criteria are all-inclusive.

• Alaska Control Safe Harbor for Results, Schedule, and Monitoring (AS 23.30.230(a)(12)(B))

  The freedom from direction and control criterion is expressly subject to the right of the party for whom the services are provided to specify the desired results, the completion schedule, or the range of work hours, and to monitor the work for compliance with contract plans and specifications or with federal, state, or municipal law. Scope of work, deliverable, milestone, and inspection clauses can therefore be drafted with specificity without that specificity alone defeating contractor status.

• Alaska Unemployment Insurance ABC Test (AS 23.20.525(a)(8))

  Service performed by an individual is employment whether or not the common law relationship of master and servant exists, unless and until it is shown to the satisfaction of the Department that the individual is and will continue to be free from control and direction both under the contract for performance of service and in fact, that the service is performed outside the usual course of the business or outside all of its places of business, and that the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature.

• Alaska Wage and Hour Economic Realities Test (AS 23.10.050 to 23.10.150; Jeffcoat v. State, 732 P.2d 1073 (Alaska 1987))

  Coverage under the Alaska Wage and Hour Act turns on whether the worker is dependent upon finding employment in the business of others. The factors are the right to control the manner of performance, the opportunity for profit or loss depending on managerial skill, investment in equipment or materials or the employment of helpers, whether the service requires a special skill, the degree of permanence of the relationship, and whether the service is an integral part of the business. No single factor is controlling.

• Alaska Contract Labels Do Not Alter Status (Department of Labor and Workforce Development guidance)

  The Employment Security Tax office publishes that written contracts with employees stating they are independent contractors responsible for their own taxes are null and void and are not sufficient to alter the real status between the employer and the worker. The Employer Guide to the Alaska Workers Compensation Act states that employers cannot make an employee an independent contractor by issuing a Form 1099, by verbal or written agreement, or by forcing the worker to get a business license.

• Alaska Secondary Criteria to Record in the Agreement (AS 23.30.230(a)(12)(H))

  At least two of three must apply: the person is responsible for satisfactory completion and subject to liability for failure to complete, or maintains liability or other insurance necessary to protect the employees, financial interests, and customers of the business; the person maintains a business location or business mailing address separate from the hiring party; or the person provides contracted services for two or more different customers within a twelve month period or engages in advertising, solicitation, or other marketing reasonably calculated to obtain similar contracts.

• Alaska Place of Business Reading of Prong B (AS 23.20.525(a)(8)(B))

  Prong B is satisfied either by work outside the usual course of the business or by work outside all of the places of business of the enterprise, but state guidance reads the second branch narrowly, treating the premises where the work is done as the employer place of business and giving a construction job site as an example of the usual place of business for a contractor. A business relying on the location branch should expect that reading rather than a literal off-site analysis.