.svg)
.svg)
.svg)
.svg)
Capital City
Little Rock
Timezone
CST
(
GMT-6
)
Paid Leave
Voting Leave
Income Tax
2% - 4.4%
Employer Tax
0.1% - 5.0%
Capital City
Little Rock
Timezone
CST
(
GMT-6
)
Paid Leave
Voting Leave
Income Tax
2% - 4.4%
Employer Tax
0.1% - 5.0%
Arkansas has a diverse population of approximately 3 million people, providing a substantial labor pool for employers.
The state's economy is bolstered by key industries such as agriculture, manufacturing, and retail trade, offering varied opportunities for business growth.
Sectors like healthcare, transportation, and information technology are experiencing significant growth, making them attractive for investment and employment.
Arkansas adheres to the "at-will" employment doctrine, allowing either party to terminate employment at any time without cause, provided it doesn't violate contractual agreements or discrimination laws.
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.
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.
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.
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.
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.
As of 2025, Arkansas does not set its own minimum wage higher than the federal rate. Employers must comply with:
Employees in Arkansas are protected from workplace discrimination on the basis of:
These protections are enforced under federal law by the EEOC and at the state level by the Arkansas Civil Rights Commission.
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:
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.
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.
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:
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.
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.
This tax is withheld from employee wages based on the IRS Form W-4. Withholding amounts vary according to income, filing status, and allowances.
Employers and employees each pay 6.2% on wages up to $176,100 in 2025. These contributions fund federal retirement, disability, and survivor benefits.
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.
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.
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:
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.
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 are generally estimated at 7.65% of employee salary 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.
.webp)
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.
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:
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.
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.
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.
No. Vacation leave is not required by law in Arkansas. Employers offering vacation benefits must follow their written policies.
Arkansas employers must comply with:
Arkansas does not mandate PTO, but many employers offer policies that combine vacation, sick leave, and personal time to remain competitive.
Arkansas does not require paid maternity leave. Eligible employees may take up to 12 weeks of unpaid FMLA leave for childbirth, recovery, and bonding.
Paid paternity leave is not required under Arkansas law. Eligible employees may use unpaid FMLA leave or any employer-provided PTO.
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.
Employees called to military service are entitled to unpaid leave under USERRA, with reinstatement rights upon return.
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.
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.
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.
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.
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.
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:
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 pay is not required by Arkansas law. Employers may provide severance voluntarily, often as part of policy, contract, or workforce reduction plans.
Back to Top
.svg)
Copied to Clipboard
.webp)
Take your business to new places
Hire employees without entity setup.
.svg)
Full compliance, we assume 100% liability.
.svg)
Handle local payroll and benefits seamlessly.
.svg)
24/5 responsive real-human support.
.svg)
Transparent pricing, no hidden fees.
.png)
Employers can remit state income tax contributions through the Arkansas Department of Finance and Administration's online portal. State Unemployment Tax (SUTA) payments are made via the Arkansas Division of Workforce Services' Tax 21 system. Both platforms provide instructions for account setup and payment processing.
As of 2025, Arkansas does not set its own minimum wage higher than the federal rate. Employers must comply with:
No, employers in Arkansas are not legally required to offer 401(k) plans. However, providing retirement benefits can be advantageous for attracting and retaining employees.
An Employer of Record like Playroll becomes the legal employer, managing contracts, payroll, benefits, and compliance. This allows you to hire employees quickly without forming a local entity, reducing costs and risk.
Where to next?
Your “everything you ever needed to know” guides to compliant employment around the United States.
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
.svg){kind=small}
.svg)
.svg)