Employer of Record for Arkansas

Hiring in Arkansas requires compliance with both federal rules and state-specific obligations like unemployment contributions and new hire reporting. Employers should establish proper registrations before bringing on staff.

Do I Need an EIN or Payroll Tax Number to Employ in Arkansas?

Yes. Employers must obtain a Federal Employer Identification Number (EIN) from the IRS. They must also register with the Arkansas Department of Finance and Administration (DFA) for state withholding tax and with the Division of Workforce Services (ADWS) for unemployment insurance.

Working Hours in Arkansas

Arkansas follows the Fair Labor Standards Act (FLSA), which sets a 40-hour standard working hours in a week for non-exempt employees. Employers must pay overtime for any additional hours but are otherwise free to set scheduling policies.

What Is Considered Full-Time Employment in Arkansas?

Arkansas law does not define full-time employment. Under the Affordable Care Act (ACA), employees working 30 hours or more per week qualify as full-time for healthcare purposes. Many employers in Arkansas use 40 hours per week as their standard benchmark for benefits.

Probation Period in Arkansas

There is no legal requirement for probationary periods in Arkansas. However, many employers adopt a 60–90 day probationary period to assess new hires before confirming permanent employment.

Arkansas labor laws primarily follow federal standards but include additional provisions on unemployment insurance, state tax withholding, and workplace protections. Employers should stay current with both state and federal requirements.

Minimum Wage in Arkansas

As of 2025, Arkansas does not set its own minimum wage higher than the federal rate. Employers must comply with:

• $7.25 per hour for most employees.
• $2.13 per hour for tipped employees, provided tips bring earnings to at least $7.25/hour.
• $4.25 per hour training wage for employees under 20 during their first 90 days of work.

Read our Arkansas average salary guide for more.

Arkansas Anti-Discrimination Laws

Employees in Arkansas are protected from workplace discrimination on the basis of:

• Race, color, or national origin
• Religion
• Sex, including pregnancy and sexual orientation
• Age (40 and older)
• Disability (mental or physical)
• Genetic information

These protections are enforced under federal law by the EEOC and at the state level by the Arkansas Civil Rights Commission.

Overtime in Arkansas

Arkansas does not have its own overtime law and instead follows the FLSA. Employees must be paid 1.5 times their regular rate of pay for all hours worked over 40 in a workweek.

Employees may be exempt from overtime if they:

• Earn more than $43,888 annually in 2025.
• Perform executive, administrative, or professional duties.
• Work in licensed fields such as law, accounting, engineering, or architecture.

Payroll compliance in Arkansas requires timely registration, withholding, and reporting at both state and federal levels. Employers must maintain accurate records and remit taxes promptly to avoid penalties.

Payroll Cycle in Arkansas

Arkansas requires employers to establish regular paydays and pay wages at least semi-monthly unless exempt. Wages must be paid on time and in full according to the posted schedule.

Types of Payroll Taxes

Arkansas employers are required to manage both federal and state payroll taxes. These contributions support essential programs such as Social Security, Medicare, and unemployment insurance, and the rates vary based on wages and employer experience ratings.

Here’s a quick look at the key payroll taxes you’ll need to manage:

Arkansas State Income Tax

Withheld from employee wages at progressive rates ranging from 0.75% to 4.9% in 2025. The exact amount depends on income level and filing status, as reported on state withholding certificates.

Unemployment Insurance (SUTA)

Employers contribute between 0.1% and 5.0% on the first $7,000 of each employee’s wages. The assigned rate depends on the employer’s claims history and experience rating.

Federal Income Tax

This tax is withheld from employee wages based on the IRS Form W-4. Withholding amounts vary according to income, filing status, and allowances.

Social Security Tax

Employers and employees each pay 6.2% on wages up to $176,100 in 2025. These contributions fund federal retirement, disability, and survivor benefits.

Medicare Tax

Employers and employees each contribute 1.45% of all wages, with no cap. An additional 0.9% Medicare surtax applies to employee wages above $200,000, though employers do not match this extra contribution.

Federal Unemployment Tax (FUTA)

Employers pay 0.6% on the first $7,000 of employee wages after credits for state unemployment contributions. FUTA funds federal unemployment and workforce programs.

How to Comply with Arkansas Payroll Taxes

Complying with payroll tax laws in Arkansas requires accurate registration, timely filings, and consistent remittance to both state and federal agencies. Here’s what compliance looks like in practice:

• Register with State Agencies: Employers must set up accounts with the Arkansas Department of Finance and Administration for income tax withholding and the Division of Workforce Services for unemployment contributions.
• Withhold Income Taxes: Deduct federal income tax based on IRS tables and Arkansas income tax according to state withholding schedules.
• Pay Employer Contributions: Cover the employer share of Social Security (6.2%) and Medicare (1.45%), plus required SUTA contributions.
• File Quarterly Reports: Submit IRS Form 941 for federal payroll taxes and Arkansas quarterly wage reports for unemployment contributions.
• File Annual Reports: Report FUTA via IRS Form 940 and reconcile state income tax withholding with W-2 filings.
• Deposit on Schedule: Use EFTPS for federal deposits and Arkansas’s online filing system for state contributions, following assigned deposit schedules.
• Maintain Records: Keep payroll and tax records for at least four years to ensure compliance in the event of audits.
• Stay Current: Review annual updates to Arkansas SUTA rates, wage bases, and state tax tables.

By staying organized, or by outsourcing compliance to Playroll, employers can streamline payroll management and reduce the risk of costly penalties in Arkansas.

Employment taxes and statutory fees affect both your payroll and your employees’ paychecks in Arkansas. Understanding the tax obligations for both employers and employees is crucial when operating in Arkansas's business landscape.

Employer Tax Contributions

Employers in Arkansas are responsible for several tax contributions, including State Unemployment Insurance (SUI) and matching portions of Social Security and Medicare taxes.

Employer payroll contributions are generally estimated at an additional 7.65% on top of the employee salary in Arkansas.

Employee Tax Contributions

Employee tax contributions are generally estimated at 7.65% of employee salary in Arkansas.

Tax Due Dates in Arkansas (2025)

• Quarterly Filings: April 30, July 31, October 31, January 31.
• Annual FUTA Filing (Form 940): January 31.
• State Reconciliations: Due quarterly and annually with the Arkansas Department of Finance and Administration.

Pension in Arkansas

Arkansas does not require private employers to offer retirement savings plans. However, many companies provide a 401(k) or similar program to remain competitive, often including employer matching contributions.

Public sector employees are typically covered under the Arkansas Teacher Retirement System (ATRS) or the Arkansas Public Employees Retirement System (APERS). Private employers who voluntarily offer retirement benefits can improve recruitment, retention, and employee satisfaction.

Employers in Arkansas are required to adhere to both federal and state regulations concerning employee benefits. While the state does not mandate extensive benefits beyond federal requirements, offering competitive employee benefits can enhance recruitment and retention efforts.

Employee Benefits For Arkansas

Competitive benefits are essential for attracting and retaining top talent in Arkansas. Offering the right package helps employees feel valued and motivated. Our benefits experts understand the local labor market's trends, requirements, and expectations, ensuring your employees feel valued and supported. Common benefits in our Arkansas packages include:

• Pension or 401(K)
• Vision Insurance
• Life Insurance
• Medical Insurance
• Dental Insurance
• Health Savings Plan (HSA)
• Flexible Spending Account (FSA)

Are Employers Required to Provide Health Insurance in Arkansas?

Yes. Employers with 50 or more full-time equivalent employees must provide health insurance under the ACA. Smaller employers are not legally required but often choose to offer coverage.

Do Part-Time Employees Get Benefits in Arkansas?

Part-time employees in Arkansas are not automatically entitled to the same benefits as full-time employees. Employers may decide whether to extend benefits such as health insurance, paid leave, or retirement contributions to part-time staff.

Are Employers Required to Offer 401(k) in Arkansas?

No. Arkansas does not mandate retirement savings plans. However, many employers provide 401(k) options or similar programs to remain competitive.

Arkansas does not require paid vacation or sick leave, but employers must honor their policies if they provide such benefits. Federal protections like FMLA also apply, ensuring job-protected leave for eligible employees.

Is Vacation Leave Mandatory in Arkansas?

No. Vacation leave is not required by law in Arkansas. Employers offering vacation benefits must follow their written policies.

Mandatory Leave Policies in Arkansas

Arkansas employers must comply with:

Paid Time Off (PTO)

Arkansas does not mandate PTO, but many employers offer policies that combine vacation, sick leave, and personal time to remain competitive.

Maternity Leave

Arkansas does not require paid maternity leave. Eligible employees may take up to 12 weeks of unpaid FMLA leave for childbirth, recovery, and bonding.

Paternity Leave

Paid paternity leave is not required under Arkansas law. Eligible employees may use unpaid FMLA leave or any employer-provided PTO.

Paid Sick Leave

Arkansas law does not require private employers to provide paid sick leave. However, many employers voluntarily offer sick leave as a standalone benefit or as part of a broader PTO policy to remain competitive.

If offered, the policy must be applied consistently, clearly documented in the employee handbook, and honored at termination if the employer’s policy provides for payout.

Military Leave

Employees called to military service are entitled to unpaid leave under USERRA, with reinstatement rights upon return.

Jury Duty

Employers must provide unpaid leave for jury duty and employees cannot be penalized for serving. While Arkansas law does not require employers to continue wages during this time, many choose to allow employees to use PTO or vacation days to ease the financial impact.

Parental Leave

Arkansas does not provide separate parental leave beyond FMLA. Eligible employees may take up to 12 weeks of unpaid leave for birth, adoption, or foster care.

Bereavement leave

Arkansas law does not require employers to provide bereavement leave. However, many companies voluntarily grant paid or unpaid time off for employees following the death of a family member. If offered, bereavement policies should clearly define eligibility, length of leave (commonly 3–5 days), and whether the time is paid or unpaid. Consistency in applying the policy is essential to avoid discrimination claims.

Voting leave

Arkansas law requires employers to provide employees with up to one hour of paid time off to vote if their work schedules do not allow sufficient time outside of working hours. Employees must typically notify their employer in advance of needing time off to vote. Employers may not discipline or penalize employees for exercising this right.

School Leave

Arkansas does not have a statewide law requiring employers to provide leave for school-related activities. However, many employers voluntarily allow parents time off to attend parent-teacher conferences or participate in school events as part of their benefits package. If offered, such policies should be outlined clearly in employee handbooks and applied consistently across the workforce.

When it comes to terminating employment in Arkansas, understanding the legal obligations regarding severance pay and contributions is essential. Below is a detailed overview of the key considerations for both employers and employees.

Termination Process in Arkansas

In Arkansas, employment is generally "at-will," meaning either the employer or employee can end the employment relationship at any time, with or without notice. However, employers must follow key requirements:

• Final Pay: All wages must be paid by the next regular payday.
• Unused Vacation: If vacation or PTO is provided by policy, unused balances must be paid out at termination.
• Health Coverage: Employers with 20 or more employees must offer continuation of health coverage through COBRA.

Notice Period in Arkansas

Arkansas does not require a notice period for termination. If notice is specified in an employment contract or company policy, however, it must be honored.

Severance in Arkansas

Severance pay is not required by Arkansas law. Employers may provide severance voluntarily, often as part of policy, contract, or workforce reduction plans.