Arkansas Workers’ Compensation Requirements for Employers
Arkansas requires workers’ compensation at three employees, two in building work, one for a subcontractor. Coverage, exemptions, deadlines, penalties.
Arkansas Workers’ Compensation
Three employees in most businesses, two in building work, one for a subcontractor, and the paperwork that has to follow an injury
The call I remember came from a two-person remodeling outfit outside Rogers. The owner had read that Arkansas requires workers' compensation at three employees, counted himself and his one helper, and stopped there. Building work has its own trigger, and it sits at two.
He was uninsured on a roof for most of a year. Nothing happened, which is the only reason the story is boring instead of expensive. The exposure was there all along: an Arkansas employer without required coverage faces a penalty of up to ten thousand dollars, and it loses the protection that keeps an injury inside the compensation system instead of in circuit court.
Arkansas has four different coverage triggers, not one, and the rule for counting employees sweeps in people most owners never think of. This guide gives you the state-specific rules in the order you will need them: who has to carry coverage, who is left out, where the policy comes from, the deadlines and penalties, and what to do when someone gets hurt.
Who Must Carry Coverage
Most Arkansas employers with three or more employees must carry workers' compensation insurance. The Commission states that plainly on its basic facts page, and it adds a warning worth reading twice: there are exceptions to the three-or-more requirement, so employers with fewer than three should check with authorities before assuming they do not fall under the law.
Those exceptions are printed on the Commission's own application for a certificate of non-coverage, which cites Arkansas Code sections 11-9-102(9)(D) and 11-9-402.
The application spells out four situations in which Arkansas law generally requires coverage: three or more employees working for the same employer, two or more employees engaged in building or building repair work, a contractor who subcontracts any part of a contract and has one or more employees, and a subcontractor with one or more employees.
Read the last two again if you hire trades. Subletting any part of a job moves the line to a single employee, and a subcontractor with one employee is required to carry coverage in its own right. That is why general contractors in Arkansas ask for certificates before anyone sets foot on site.
Counting to Three
The number is bigger than payroll. The Commission's application states that in order to arrive at the number, employee is defined to include, but is not limited to, an owner, a sole proprietor, a partner or partners who devote full time to the partnership, a full-time employee, a part-time employee, and a volunteer.
So a working owner counts. Two full-time partners count as two. A Saturday-only part-timer counts the same as someone at forty hours. An unpaid volunteer counts. An owner with one full-time employee and one weekend helper is at three, and is required to carry coverage even though the payroll register shows two names.
Nothing in that definition turns on hours, wages or tax treatment, which is exactly why the count catches people. If you are within one person of the threshold, do the arithmetic with the Commission's definition in front of you rather than with your payroll report.
Who Is Left Out
Arkansas excludes several categories of work from the compensation act entirely. The Commission's questions and answers brochure lists them: the law does not apply to employment of agricultural farm labor, domestic help, or employment by non-profit religious, charitable or relief organizations, and personnel covered exclusively by federal law are exempt. Railroad and maritime workers fall under federal statutes instead.
| Category | How Arkansas treats it | Source |
|---|---|---|
| Sole proprietor or owner | Counts toward the employee number. Whether the owner is covered by the policy is arranged with the agent or carrier | AWCC Form A; AWCC certificates of non-coverage page |
| Partners | Partners who devote full time to the partnership count toward the number | AWCC Form A |
| Corporate officers | Exclusion from a policy is handled directly by the agent or carrier, not through Form A | AWCC certificates of non-coverage page |
| Part-time employees | Count toward the number on the same footing as full-time staff | AWCC Form A |
| Volunteers | Count toward the number even though no wages are paid | AWCC Form A |
| Agricultural farm labor | The Arkansas act does not apply | AWCC questions and answers brochure |
| Domestic help | The Arkansas act does not apply | AWCC questions and answers brochure |
| Non-profit religious, charitable or relief organizations | The Arkansas act does not apply to employment by these organizations | AWCC questions and answers brochure |
| Railroad and maritime workers | Covered by federal law rather than the state act | AWCC questions and answers brochure |
| Casual labor outside the employer’s trade or business | Excluded from the statutory definition of employee | Ark. Code Ann. § 11-9-102(9) |
| Licensed real estate agents paid on commission | Excluded from the statutory definition of employee where the agent is a qualified real estate agent under federal tax law | Ark. Code Ann. § 11-9-102(9) |
| Independent contractors | Status is decided on the twenty-factor test carried by the Empower Independent Contractors Act | Ark. Code Ann. § 11-1-201 et seq.; AWCC opinions |
The independent contractor line is where enforcement actually lands. In a 2023 decision, the Commission's Operations and Compliance Division pursued a personal care business whose aides were treated as contractors, and both sides litigated the twenty-factor test. Calling someone a contractor does not remove them from the count.
The certificate of non-coverage is the other piece of this: it is the Commission's written confirmation that an individual subcontractor carries no coverage. The subcontractor applies on Form A with a notarized affidavit and a $50 fee, and the Commission processes it within ten working days.
Form A also prints two warnings on its face. It is a felony for any employer or contractor to compel an employee or subcontractor to pay for or contribute to workers' compensation coverage, and it is a felony to compel any employee or subcontractor to obtain a certificate of non-coverage.
Where the Policy Comes From
Arkansas is not a monopolistic state. The Commission describes coverage as being provided through a workers' compensation insurance policy or by the employer receiving state approval to be self-insured, and for a small business the first of those is the only realistic option. Policies come from private carriers licensed in Arkansas.
If no carrier in the voluntary market will insure you, the fallback is the Arkansas Workers' Compensation Insurance Plan, the residual market set up under Arkansas Code section 23-67-301 and run under Arkansas Insurance Department Rule 54.
In plain terms, the plan is the market of last resort. It serves employers entitled to coverage in good faith who cannot get it through ordinary methods, and a third party designated by the Insurance Commissioner administers it and assigns each employer to a participating insurer.
Public employers are on a separate track. The Form P poster names the Public Employee Claims Division of the Arkansas Insurance Department as the mechanism for them, not for private business.
Self-insurance is real but heavy. Under Commission Rule 099.05, an approved self-insurer deposits acceptable securities, a surety bond or an irrevocable standby letter of credit, and funded securities go to the Treasurer of the State of Arkansas under custody receipt with no other depository accepted. Group self-insurers post at least $200,000.
Approved self-insurers also report on a fixed calendar. Annual certified financial statements and the payroll audit are due by April 1, summary loss data by February 1, and late filings carry a civil penalty of up to $100 per infraction per day plus grounds to revoke the privilege.
Two cost points matter more than which carrier you pick. The first is that the premium is the employer's to pay: the Commission states the insurance is purchased by the employer and no part of it should be paid by employees or deducted from their pay.
The second is a discount. Arkansas gives back five percent of premium to employers that qualify under the Commission's voluntary drug-free workplace program, which runs on Rule 099.36 and Form HS-36-A and requires a real written policy.
Premiums get trued up after the fact, meaning the carrier checks the estimate against your actual payroll, and the classification codes on that payroll are what drive the bill.
The Poster and What a New Hire Gets
Every Arkansas employer with current coverage must display Form P, the posting notice, in a conspicuous place. It carries the statutory citations to Arkansas Code sections 11-9-403 and 11-9-407 and Commission Rule 7, and the Commission states flatly that Form P satisfies all posting requirements.
Form P is not a generic sheet. A label goes on it with the insurer's name, the claims office address and phone number, and the expiration date of the policy, so it has to be refreshed when the policy renews or the carrier changes.
The poster also tells employers what to do when someone is injured, instructs employees to notify the employer immediately or no later than the close of the next business day, and lists Commission legal advisor phone numbers for either party. If your business uses a certified managed care organization, a health notice on Form H is posted alongside it.
Supply is the part employers get wrong. The Commission furnishes samples, not supplies: carriers are expected to send their insureds an adequate number of Form P notices, and self-insureds arrange their own printing. Employers may enlarge the form for posting.
Form P sits alongside the federal and state sheets an Arkansas employer already has on the wall.
Injury Reporting Deadlines
Arkansas runs two clocks: a fast one for the employee telling the employer, and a ten-day one for the employer filing with the Commission. The Commission states on its forms page that Arkansas Code section 11-9-529 allows employers ten days to report injuries, and that the ten days begin on the date of disability or the date the employer was notified, whichever is later.
| Step | Who acts | Deadline |
|---|---|---|
| Report the injury to the employer | Employee | Immediately, or no later than the close of the next business day, on Form N |
| Emergency treatment outside business hours | Employee | Report on the employer’s next regular business day |
| First report of injury on Form 1 | Employer | 10 days from the date of disability or the date the employer was notified, whichever is later |
| Which injuries require Form 1 | Employer | More than 7 days of lost time, any indemnity payment, and all controversions including medical-only |
| Waiting period before disability benefits | Carrier or self-insurer | No benefits for the first 7 days; payable from the day after the injury if disability lasts 14 calendar days |
| First installment of compensation | Employer or carrier | Due on the 15th day after the employer has notice of the injury or death, unless liability is denied |
| First check in practice | Carrier | Within 14 days of a promptly reported injury, then every two weeks while disability continues |
| Filing a claim with the Commission | Employee | Within 2 years of the injury or death, or 1 year from the last payment of compensation |
| Contesting a proposed penalty order | Employer | 20 days from receipt of the order to request a hearing |
The notice rule has teeth in both directions. Form P states that the employer is not responsible for disability, medical or other benefits before it receives the employee's notice of injury.
Form P then lists three situations where a failure to give notice does not bar the claim: the employer already had knowledge of the injury or death, the employee did not know the condition arose out of employment, or the Commission excuses the failure for a satisfactory reason.
Reporting procedures the employer sets have to be reasonable and have to give each employee reasonable notice of what they are. A rule nobody was told about is not a defense, and any objection to a failure to give notice must be made at or before the first hearing on the claim.
Penalties for Going Without Coverage
An Arkansas employer that fails to secure the payment of compensation faces a civil penalty of up to ten thousand dollars, payable to the Death and Permanent Total Disability Trust Fund, or a Class D felony under Arkansas Code section 11-9-406. That is the headline number, and the Commission does assess the maximum.
In a February 2023 decision, an administrative law judge imposed the full ten thousand dollars that the Commission's Operations and Compliance Division sought against a personal care business. The business had been in violation long enough to warrant it and had already been fined once for failing to cover its aides. The full Commission affirmed the penalty in December 2023.
The process starts with an investigation by the Operations and Compliance Division, followed by a proposed order declaring the employer in violation and stating the penalty. The employer has twenty days from receipt to request a hearing.
An employer that still fails to secure coverage or to pay the assessed penalty after the order is final can end up in circuit court. Section 11-9-406 lets the Commission ask the court for an injunction barring the employer from engaging in further employment until it secures coverage or pays the penalties in full. That injunction is the Arkansas equivalent of the stop-work order other states issue.
Fraud is prosecuted separately. Form P prints Arkansas Code section 11-9-106(a) on its face: anyone who willfully and knowingly makes a material false statement, conceals material information, or employs a scheme for the purpose of obtaining or avoiding workers' compensation coverage or avoiding payment of the proper insurance premium is guilty of a Class D felony.
Underreporting payroll to shave a premium falls squarely under that provision. Half of any criminal fine collected goes to the Death and Permanent Total Disability Trust Fund.
Coverage is also a matter of public record. The Commission runs online searches for coverage verification, certificates of non-coverage and claims, so a general contractor can check a subcontractor before a job starts. Working uninsured in Arkansas is not a quiet decision.
What to Do When Someone Is Hurt
When someone is hurt, get them treated, take their report on Form N, steer the initial treatment and call your carrier the same day; the filings and follow-up come after that. Run the eight steps below in order. The first three decide whether the claim is handled cleanly, and the rest keep the paperwork inside the deadlines in the table above.
Arkansas is an at-will employment state, but the Commission's own brochure says the workers' compensation law bars an employer from discharging or discriminating against an employee for exercising rights under it. Timing a separation close to an injury is how an ordinary claim turns into a retaliation case.
FirstHR is an onboarding and HR platform, not an insurer or a broker, and it does not sell coverage. What FirstHR holds is the record the process above runs on: who started when, which safety training they completed, who acknowledged the injury reporting procedure, and where the signed paperwork lives.
If you are anywhere near one of the four triggers, do three things now: count everyone the Commission counts, get a policy in place before the next hire starts, and put Form P on the wall with the carrier label attached.
Frequently Asked Questions
Does a business with two employees need workers’ compensation in Arkansas?
Usually no, but the exceptions catch a lot of small businesses. Three employees is the general Arkansas line for most employers, and the Arkansas Workers’ Compensation Commission cautions that the line has exceptions, so an employer below it should check before treating itself as exempt. The exceptions turn on the kind of work and on contracting. A business needs coverage once two or more of its employees are engaged in building or building repair work. A contractor that subcontracts any part of a contract needs coverage with even one employee, and a subcontractor with a single employee needs it too. The Commission lists every one of these on its application for a certificate of non-coverage. A two-person roofing crew is covered. A two-person accounting office is not.
Do owners, partners and volunteers count toward the three employee threshold?
Yes. For the three-employee count, Arkansas defines an employee far more broadly than a payroll report does. The Commission’s application form names who is included and says the list is not exhaustive: an owner, a sole proprietor, partners who devote full time to the partnership, full-time staff, part-time staff, and volunteers. It is the single most misread line in Arkansas workers’ compensation. Picture a shop with one working owner and two part-time staff: it is already at three. An operation that relies on unpaid help can reach the number without adding a single name to payroll. Counting only the people who receive a W-2 is how employers end up uninsured without realizing it.
Does Arkansas have a state workers’ compensation fund?
No. Arkansas is not a monopolistic state, and no state fund sells workers’ compensation policies to private employers. The Commission recognizes two ways to be covered: an insurance policy, or state approval to self-insure. In practice the policy comes from a private carrier licensed in Arkansas. If the voluntary market turns an employer down, the next stop is the Arkansas Workers’ Compensation Insurance Plan. That plan is the state’s residual market for employers who cannot get coverage through ordinary channels. It operates under Arkansas Insurance Department Rule 54 and places each employer with a participating insurer. Public employers go through the Public Employee Claims Division of the Arkansas Insurance Department, which does not serve private businesses.
How fast does an Arkansas employer have to report an injury?
The employer has ten days to file the first report, and the employee is expected to speak up at once. Arkansas Code section 11-9-529 gives the employer ten days to report an injury, counted from whichever comes later: the day the disability began or the day the employer received notice. The employee’s window is far shorter. Form P, the notice every covered Arkansas employer has to post, tells workers to report an injury right away, and in any case by the close of the next business day. Not every injury needs Form 1, the first report of injury: it is due when the injury causes more than seven days of lost time, when indemnity benefits (cash compensation rather than medical bills) are paid, and whenever a claim is controverted (disputed), medical-only claims included.
What happens to an Arkansas employer that has no coverage?
Two things, and the second one is worse than the fine. First, Arkansas Code section 11-9-406 exposes an employer that fails to secure the payment of compensation to a civil penalty of up to ten thousand dollars, paid into the Death and Permanent Total Disability Trust Fund, or to a Class D felony. The Commission’s Operations and Compliance Division investigates and serves a proposed order, and the employer then has twenty days to ask for a hearing. Second, the employer loses the exclusive remedy, the rule that normally keeps a workplace injury inside the compensation system. Where a required policy was missing, the Commission tells injured workers they can still bring a claim before the Commission or sue the employer in circuit court.
Are farm workers and household help covered in Arkansas?
No. According to the Commission, the Arkansas workers’ compensation law does not reach agricultural farm labor or domestic help, and it does not reach work for non-profit religious, charitable or relief organizations either. Anyone covered exclusively by federal law also sits outside the state system, so railroad and maritime workers bring their claims under federal statutes. An exclusion means only that the state act does not apply to the job; it is not permission to leave an injured worker without care. An employer in an excluded category can still waive the exemption and buy a policy, which Form P recognizes. That option matters because an uninsured injury in an exempt operation still becomes a liability question rather than a workers’ compensation claim.
Can I keep corporate officers off the workers’ compensation policy in Arkansas?
Sometimes, but not through the Commission’s Form A. The Commission is explicit that Form A, the application for a certificate of non-coverage, is not used for exclusion from a workers’ compensation policy by corporations or corporate officers, sole proprietors, partners of a partnership, members of a limited liability company, members of a professional association, or a self-employed employer who is not a subcontractor. Those exclusions are handled directly by the agent or carrier when the policy is written. Form A serves a different purpose: it documents that an individual working as a subcontractor carries no coverage. It costs $50, requires a notarized affidavit, and is processed within ten working days.