Arkansas: Legislative Updates
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APPLIES TO Employers with Employees in AR |
EFFECTIVE August 4, 2025 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
The Arkansas Legislature enacted several laws impacting employee rights and protections. Key aspects of laws are summarized below.
SB 598 | Changes to Independent Contractor Test. The Empower Independent Contractors Act is amended to require employers and enforcement agencies to use federal regulation 26 C.F.R. § 31.3121(D)-1, as it existed on January 1, 2025, as the test to use when determining whether a worker is an employee or an independent contractor under Arkansas’s wage and hour law, equal pay law, wage payment law, workers’ compensation law, and unemployment insurance law. Previously, Arkansas used the federal Internal Revenue Service’s 20-Factor Test.
26 C.F.R. § 31.3121(D)-1, as it existed on January 1, 2025, specifies that individuals are “employees” if they perform services for remuneration under certain prescribed circumstances in the following occupational groups:
- As an agent-driver or commission-driver engaged in distributing meat products, vegetable products, fruit products, bakery products, beverages (other than milk), or laundry or dry-cleaning services for their principal;
- As a full-time life insurance salesperson;
- As a home worker performing work, according to specifications furnished by the person for whom the services are performed, on materials or goods furnished by such person which are required to be returned to such person or a person designated by them; or
- As a traveling or city salesperson, other than as an agent-driver or commission-driver, engaged upon a full-time basis in the solicitation on behalf of, and the transmission to, their principal (except for side-line sales activities on behalf of some other person) of orders from wholesalers, retailers, contractors, or operators of hotels, restaurants or other similar establishments for merchandise for resale or supplies for use in their business operations.
SB 3 | Elimination of Affirmative Action Requirements for State Contractors. Arkansas has eliminated its affirmative action requirements for state contractors. State entities are directed to neither discriminate against nor grant preferential treatment to an individual or group on the basis of race, sex, color, ethnicity or national origin in matters of state procurement. Notwithstanding, state agencies are no longer directed to include language encouraging minority participation in requests for proposals or take minority inclusion into consideration when evaluating proposals for state contracts. Notably, veterans preference programs are unaffected by the amendments.
HB 1643 | Disclosure of Sexual Harassment Allegations. HB 1643 adds to the types of information that an employer may disclose to a current or former employee’s prospective employer with the employee’s written consent. The amended law now authorizes employers to disclose substantiated allegations of sexual abuse or sexual harassment by the employee and the individual’s resignation during a pending investigation of sexual abuse or sexual harassment allegations against the employee.
SB 497 | Veterans’ Benefits and Services Poster. Arkansas employers with 50 or more full-time equivalent employees are required to post a Veterans’ Benefits and Services Poster in the workplace and provide electronic access for remote workers. A model poster has been jointly published by the Arkansas Department of Labor and Licensing and Department of Veterans Affairs.
SB 279 | Collection of Unpaid Wages. SB 279 provides that the Arkansas Department of Labor has one year from the entry of the final order in an unpaid wage claim to initiate legal action to recover the unpaid wages, and that the assessment period is two years preceding the filing of the complaint.
Action Items
- Review worker classifications.
- Update reference and background check protocols to reflect expanded employer disclosures.
- Obtain and display the required Veterans’ Benefits poster.
- Revise wage record retention policies and procedures.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase