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How to Hire Employees In Arkansas

Hiring in Arkansas for the first time can be challenging, especially with the state's complex employment laws. Whether you're hiring independent contractors, setting up a legal entity, partnering with a PEO, or using an Employer of Record (EOR), it's essential to understand the local employment landscape. Playroll's comprehensive guide is here to help, whether you're onboarding local talent or relocating team members.

Here are four primary ways companies can hire employees in Arkansas:

Establishing a local entity: Creating a legal entity in Arkansas allows for direct hiring, but it can be costly and time-consuming. However, it gives you full control over employment and reduces risk exposure.
Partnering with an Employer of Record (EOR): An EOR, like Playroll, takes on the legal responsibilities of employment, acting as the employer on your behalf. This option streamlines hiring, payroll, and compliance with Arkansas’s labor laws, helping you hire in Arkansas without navigating the complex legal landscape yourself.
Working with a Professional Employer Organization (PEO): A PEO, such as Playroll, co-employs your team, managing essential HR functions like payroll, benefits, and compliance. Partnering with a PEO ensures you meet Arkansas’s labor regulations while offering competitive employee benefits.
Hiring independent contractors: Hiring independent contractors can be more cost-effective, but Arkansas has strict contractor classification rules. Proper classification is essential to avoid penalties for misclassification when hiring in Arkansas.

Complying with Arkansas specific employment regulations and federal laws is critical to avoiding legal risks and costly fines. Our guide focuses on hiring in Arkansas, employment compliance, and how Playroll’s services can support your business as you navigate the complexities of hiring in the state.

Good To Know

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.

Key Things to Know About Hiring in Arkansas

Labor Laws in Arkansas

Working Hours in Arkansas

Arkansas has specific employment and labor laws governing working hours, designed to protect employees’ rights and ensure fair compensation. Whether you’re hiring local employees or working with an Employer of Record (EOR), it's essential to understand the state's regulations around working hours to ensure compliance.

1. Standard Workweek and Overtime

Standard Workweek: 40 hours per week.
Overtime Pay: Non-exempt employees are entitled to overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek.

2. Meal and Rest Breaks

Arkansas law does not mandate meal or rest breaks for employees aged 16 and over.
If employers provide short rest breaks (typically 20 minutes or less), these must be counted as hours worked and compensated accordingly.

Minimum Wage in Arkansas

As of 2024, the minimum wage in Arkansas is $11.00 per hour.

There are no regional variations; the $11.00 per hour rate applies statewide.

Overtime in Arkansas

Arkansas mandates that non-exempt employees receive overtime pay at 1.5 times their regular rate for hours worked beyond 40 in a workweek. Certain employees are exempt from overtime provisions, including those in executive, administrative, or professional roles, as well as specific industries like agriculture.

Onboarding New Hires in Arkansas

We can help you get your new employee started in Arkansas fast, with a minimum onboarding time from just 1-2 working days. Note that the timeline is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Playroll platform.

For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.

Please note that payroll cut-off dates can impact the actual first day of employment. Playroll’s payroll cut-off date is the 10th of the month, unless otherwise specified.

Payroll Taxes For Arkansas

Payroll taxes in Arkansas are deductions employers must take from employees’ wages and remit to the state. These taxes fund various state programs and services, including unemployment benefits and disability insurance. Examples of payroll taxes include:

State Income Tax: Ranges from 2% to 4.4%, depending on income levels.
State Unemployment Tax (SUTA): Employers contribute to SUTA with rates ranging from 0.1% to 5.0% on the first $10,000 of each employee's earnings.

Payroll Cycle in Arkansas

Employers in Arkansas are generally required to pay employees at least twice a month. However, larger corporations with annual gross incomes of $500,000 or more can pay certain higher-level exempt employees earning over $25,000 yearly at least once a month.

Looking to grow your team in Arkansas?

Stay Compliant: Navigate Arkansas’s complex labor laws with ease.

Affordable Solution: Reduce costs with a budget-friendly EOR option.

Top-Tier Benefits: Access competitive Arkansas and federal employee benefits for a stronger team.

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Arkansas Employment Taxes

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.

Employment Tax Type	Tax Rate
Social Security	6.2%
Medicare	1.45%
State Unemployment Insurance (SUI)	0.1% - 5.0%

Employee Tax Contributions

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

Employee Payroll Tax Contribution	Tax Rate
State Income Tax	2% - 4.4%
Social Security	6.2%
Medicare	1.45%

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Arkansas tailored to your needs.

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Benefit Requirements for Employers in Arkansas

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)

Paid and Unpaid Leave Policies in Arkansas

Family and Medical Leave

Under the federal FMLA, eligible employees are entitled to up to 12 weeks of unpaid leave for specified family and medical reasons, with continuation of group health insurance coverage.

Military Leave

Employees are entitled to unpaid leave for military service, with job reinstatement rights upon return, as per the Uniformed Services Employment and Reemployment Rights Act (USERRA).

Jury Duty Leave

Employers must allow employees to take unpaid leave for jury duty service. Retaliation for serving is prohibited.

Voting Leave

Employers are required to schedule work hours to allow employees sufficient time to vote, typically unpaid unless company policy states otherwise.

Sick Leave

Arkansas does not mandate paid sick leave; however, many employers offer it as part of their benefits package.

It’s Easy To Manage Benefits For Employees In Arkansas With Playroll

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Employment Termination Protocols in Arkansas

Hiring Employees in Arkansas with an employer of record

Discuss how an EOR handles onboarding, including setting up compliant employment contracts, registering for taxes, and managing benefits like Arkansas's superannuation system (if applicable).

The employer of record is responsible for:

Employment Compliance: Ensure all employment contracts comply with Arkansas's labor laws and regulations, including proper classification of employees.
Payroll Management: Calculate, process, and distribute employee salaries in accordance with Arkansas's payroll laws, including deductions for taxes and social security contributions.
Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Arkansas's legal requirements.
Benefits Administration: Provide mandatory employee benefits as required by Arkansas's labor laws, such as health insurance, pension contributions, and statutory leave.

Employer of Record for Arkansas

Guide to Hiring Employees in Arkansas