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In almost every U.S. state, employers are required to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Arkansas, you’ll need to purchase workers’ comp insurance if you have three or more employees that don’t meet the state’s exemptions criteria. For certain industries, you must provide coverage even if you have fewer than three employees.
In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.
How does workers’ compensation insurance in Arkansas work?
In Arkansas, all things related to workers’ compensation are handled by the Arkansas Workers Compensation Commission (AWCC). As an employer, it’s your responsibility to purchase coverage for your employees and display a Certificate of Insurance on the premises in plain view of both employees and customers.
You can purchase coverage on the commercial market from an approved insurer. If you’re unable to obtain a policy from a commercial carrier, you can apply for coverage through the State Insurance Fund.
Certain employers aren’t required to purchase workers’ compensation insurance if they can qualify to become self-insured employers. To qualify as a self-insurer, an employer must satisfy a list of criteria and submit an application. A detailed list of requirements and the application process can be found in AWCC Rule 099.05.
Who needs workers’ compensation insurance in Arkansas?
If you have three or more employees, they must all be covered by your workers’ compensation policy in the state of Arkansas. The “three or more” rule applies to most businesses, but there are some industries where employers are required to carry insurance even if they have less than three employees:
- If your business involves building or building repair work, you must obtain coverage if you have two or more employees.
- If you are a subcontractor, or a contractor who subcontracts any part of your contract, you must obtain coverage if you have one or more employees.
As is the case with most states, there are certain categories of workers that don’t have to be covered under state law:
- Sole proprietors
- Agricultural laborers
- Domestic workers
- Real estate agents
- Non-profit employees
- Religious, charitable or relief organization employees
As a sole proprietor, you aren’t legally required to purchase workers’ compensation coverage for yourself, but you still have the option if you feel it’s in your best interest. Work-related injuries and illnesses can still happen if you’re self-employed.
For more information about Arkansas’ workers’ comp requirements, visit the Arkansas Workers’ Compensation Commission website.
What are the penalties for not having workers’ comp in Arkansas?
Failing to provide workers’ compensation insurance for your employees when you’re required to do so exposes your business to multiple risks. As an employer, you’re responsible to provide financial benefits to employees who get injured or ill on the job regardless of whether or not you carry insurance. If you don’t have coverage, those expenses will end up coming out of your pocket. Additionally, not having the required coverage could lead to fines of up to $10,000 or a conviction of a Class D felony.1
What does workers’ comp cover?
If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.
For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.
Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.
If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.
Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who must receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.
If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.