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State battles non-resident hire with
tax investigation, subpoenas records


January 11, 2005

Juneau, Alaska - Alaska Department of Labor and Workforce Development Commissioner Greg O'Claray announced Friday that the Employment Security Division unemployment tax section is conducting audits of Alaska oil producers for compliance with Alaska law.

The department served major Alaska producers with subpoenas last Monday and Tuesday requiring companies to turn over employment and accounting records to the department by January 24.

"We're putting the teeth in Governor Frank Murkowski's Alaska Hire initiative," O'Claray said. "All indications are that this industry has entirely too many non-resident workers in the high-paying jobs."

The audits will allow the department to determine if work performed is properly classified as employment or subcontractor services. It also allows the state to determine if companies are properly reporting all wages paid for services performed in Alaska even if workers live outside the state.

O'Claray said, "The department will also find out if oil companies are correctly classifying employees versus independent contractors. When companies fail to properly classify services as employment, the Unemployment Insurance Trust Fund takes a hit that must be made up by all Alaska businesses that report correctly."

In Alaska, employers and employees contribute to the Unemployment Insurance Trust Fund so money is there for Alaskans in time of need. Money paid in unemployment benefits circulates in the Alaska economy while workers are out looking for new jobs.

"When workers are improperly categorized it affects everyone," O'Claray said. Records will be examined by department auditors and a determination will be made that could lead to companies paying additional unemployment taxes to the state.

According to department records - based on information reported by oil producers - about 825 workers are non-residents. Payroll records show that a resident Alaskan in the oil industry earns an average $80,000 a year while a non-resident is paid about $90,000 or more per year.

"With an average annual salary of $90,000, that is more than $74 million a year in paychecks going to non-Alaskans," O'Claray said. "These numbers are atrocious."

Source of News:

Alaska Department of Labor & Workforce Development
Web Site


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