What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in Arkansas

Before hiring employees in Arkansas, businesses must secure specific insurance coverage to comply with state regulations and protect both the company and its workforce.

Key Insurance Requirements

• Workers' Compensation Insurance: Arkansas law requires most employers with three or more employees to carry workers' compensation insurance. This coverage provides benefits for employees who suffer work-related injuries or illnesses, covering medical expenses and lost wages.
• Unemployment Insurance: Employers must register with the Arkansas Division of Workforce Services to pay state unemployment taxes. While not traditional insurance purchased from a carrier, this tax funds unemployment benefits for eligible former employees.
• Employer Liability Insurance: Often included with workers' compensation policies, this insurance protects the business from lawsuits related to workplace injuries or illnesses.

Additional Insurance Considerations

• General Liability Insurance: While not mandated by Arkansas law before hiring, it is advisable for businesses to carry this coverage to protect against third-party claims such as property damage or bodily injury on business premises.
• Commercial Auto Insurance: Required if employees will drive company vehicles as part of their job duties.
• Health Insurance: Depending on the size of the business, federal regulations like the Affordable Care Act may require offering health insurance to employees.

Operational Tips

• Confirm your business classification and employee count to determine exact insurance requirements.
• Maintain accurate employee records and payroll information to ensure proper reporting and tax payments.
• Work with a licensed insurance agent familiar with Arkansas regulations to obtain compliant coverage.
• Review insurance policies annually to adjust coverage as your workforce grows or changes.

As of 2026, staying current with Arkansas Department of Labor updates will help maintain compliance and avoid penalties related to employee insurance requirements.