The State of Alaska has agreed to pay $50,000 to a company that sued over the state’s Alaska Hire law, according to an agreement signed by the state earlier this month.

Following a review of the law prompted by the lawsuit, Attorney General Kevin Clarkson issued an opinion on Oct. 3 saying the law was unconstitutional.

The suit was filed in July by construction firm Colaska, the state subsidiary of Colas UAS, and was being represented by former Alaska Attorney General Michael Geraghty.

Alaska Hire had said companies must give preferential treatment to Alaska residents under certain circumstances when hiring for state projects.

“There was no way for the statute to survive a constitutional challenge,” Clarkson said at a press conference in October. Gov. Mike Dunleavy had decided not to spend limited state resources fighting a losing battle, Clarkson said at the time.

The $50,000 is a repayment of the fines Colaska incurred for violating the Alaska Hire statute, and each side will pay its own legal fees resulting from the litigation, the court documents say. The agreement was signed on Nov. 8.

Colas USA’s parent company, SECON, will cease all litigation against the state in return for the state repaying the fines and ceasing enforcement of the law, according to the settlement agreement and mutual release contract made public.

State Democrats and labor groups criticized the opinion at the time, saying the governor had shown a pattern of attacking workers rights.

“I’m just blown away that a law that has received such broad support for so long is just being abandoned by this governor,” Rep. Zack Fields, D-Anchorage, said at the time.

Alaska Hire only applied in certain circumstances and was narrowly tailored in such a way as to not violate the U.S. or state constitutions.

“They found a way in the Cooper administration to pass constitutional muster and every administration has done so for 33 years,” Joelle Hall, director of operations of the Alaska AFL-CIO, previously told the Empire.

Fields cited a case out of New Jersey where the U.S. Supreme Court had upheld preferential hiring laws.

The law only applied in previously identified “zones of underemployment” identified by the commissioner of labor and workforce development. Additionally, according the law, areas subject to Alaska Hire must fulfill a number of requirements, including having unemployment higher than the national average.

Clarkson and Dunleavy maintained they supported the goals of Alaska Hire, but said the law itself was, “clearly unconstitutional.” Clarkson said he was not the first attorney general to question the constitutionality of Alaska Hire.

According to the Bureau of Labor Statistics, Alaska has the highest rate of unemployment of all 50 states at 6.2%. The next highest state is Mississippi at 5.5%.

• Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.