Arkansas has a relatively high minimum wage compared to many of its neighboring states, positioning the state as a regional leader for wage standards. But what is the Arkansas minimum wage and how does it impact employers and employees?
In today’s post, we’ll break down Arkansas minimum wage rates, overtime rules, and exemptions to ensure you’re fully compliant with state labor laws. We’ll also share some essential best practices to help you build a positive work environment and avoid costly labor disputes.
- The U.S. Minimum Wage Framework
- What Is the Arkansas Minimum Wage?
- Are There Any Arkansas Minimum Wage Exemptions?
- Additional Arkansas State Wage Laws
- Arkansas Wage Law Enforcement
- Wage Law Compliance Best Practices
- How Factorial Can Help You Comply with Arkansas Wage Laws
- Manage HR with more resources and less management🚀
The U.S. Minimum Wage Framework
The minimum wage in the United States is a complex system with multiple tiers, each set by a different level of government: federal, state, and municipal. This progressive approach ensures that workers across the country receive a fair wage, especially in those areas where the cost of living is higher.
Federal Minimum Wage
As the baseline, the federal minimum wage is the lowest hourly rate that employers are legally allowed to pay their employees. It is set by the Fair Labor Standards Act (FLSA), which offers protections to ensure fair pay and working conditions for employees across the United States, regardless of their location or industry. However, the last increase to the federal minimum wage was in 2009, when it increased from $5.15 per hour. The federal minimum wage has not increased since then, and there are no plans to increase the federal standard any time soon.
State Minimum Wages
Recognizing regional variations in cost of living and economic factors, many states have enacted their own minimum wage laws that are higher than the federal rate. These state-level mandates ensure that workers in higher-cost areas receive a wage that reflects their cost of living.
Municipal Minimum Wages
A growing number of cities and counties have also implemented municipal minimum wage limits, often higher than both state and federal minimum wage rates. These local minimum wages reflect the unique economic circumstances of specific localities. For example, the minimum wage in New York City, Long Island & Westchester is $15.00 per hour, 80 cents per hour higher than the minimum wage for the remainder of New York State.
In addition to regional differences, the minimum wage can also be adjusted based on industry. For example, the minimum wage for tipped employees is often lower than the state minimum wage for non-tipped employees. This is because tipped employees are expected to receive a significant portion of their income from tips. Another example is the minimum wage for employees in the healthcare industry, where employees such as home health aides and nursing assistants often have different minimum wage standards.
What Is the Arkansas Minimum Wage?
According to the Arkansas Minimum Wage Act, the minimum wage in the state is $11.00 per hour (effective since 2011 when it was raised from $10.00 per hour). This is higher than the federal minimum wage of $7.25 per hour. It is also higher than the minimum wages in neighboring states, positioning Arkansas as a leader in the region for wage standards.
Also notable is that Arkansas is known to use ballot initiatives to drive changes in the minimum wage. For example, the 2018 ballot initiative led to the most recent increases, reflecting direct voter input in the wage-setting process. This makes Arkansas one of only a few states to regularly use voter-driven measures to determine wage laws, ensuring that the public has a significant role in shaping labor policies.
So, who is covered by the Arkansas minimum wage?
The Arkansas Minimum Wage Act covers employers with 4 or more employees. Employers covered by the federal Fair Labor Standards Act (FLSA) are also covered by this Arkansas law if they have 4 or more employees. An employer covered by both laws must pay the highest minimum wage.
But, what about tipped employees?
The rules are a little different here. Employers in Arkansas must pay tipped employees at least $2.63 per hour. They must also cover any tip losses to ensure employees’ total compensation equates to a minimum of $11.00 per hour.
Is anyone else exempt from the Arkansas minimum wage?
Yes, there are a few additional exemptions and special cases, as we will see in the next section.
Are There Any Arkansas Minimum Wage Exemptions?
While the Arkansas minimum wage applies to most adult workers in the state, there are certain exemptions that you need to be aware of.
Here’s an overview of these exemptions:
- Tipped employees. As we saw above, tipped employees must be paid at least $2.63 per hour. The tips they earn must be enough to bring them up to $11.00 per hour. If the tips do not bring them up to this threshold, the employer must make up the difference. Employers must keep accurate tip records.
- Professionals and salespeople. Employees working in executive, administrative or professional positions or as outside commission-paid salespeople who customarily perform services away from the employer’s premises are exempt from the Arkansas minimum wage.
- Full-time students. Students performing services for any school, college or university in which they are enrolled and are regularly attending classes don’t need to be paid the minimum wage in Arkansas.
- Agricultural workers. According to the Arkansas Code, agricultural workers who are exempt from the FLSA minimum wage provisions are generally exempt from the Arkansas minimum wage law.
- Microbusinesses. The Arkansas minimum wage applies to businesses with 4 or more employees. Organizations with 3 employees or fewer are exempt from the minimum rate.
Additional Arkansas State Wage Laws
In addition to the Arkansas minimum wage, The Natural State has several supplementary wage laws that employers need to understand and apply.
Let’s explore these additional Arkansas state wage laws in a bit more detail so you can make sure your employee handbook meets all requirements.
Overtime
Arkansas follows federal standards for overtime pay in line with the provisions of the Fair Labor Standards Act. This means that non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular rate of pay for all hours worked over 40 in a workweek (time and a half).
To determine if an employee is eligible for overtime, you first need to determine what their FLSA status is.
Consider the following:
- Salary level. Are you paying the employee more than $43,888 per year?
- Salary basis. Do you offer them a guaranteed minimum compensation amount, regardless of the hours they work?
- Duties: Have you contracted them to perform an exempt job duty? (Professional duties that require specialized education; executive duties such as supervising a team; or administrative duties that require the use of discretion and judgment)
If your employees are categorized as exempt, then you have no obligation to pay them overtime if they work over their contracted hours in a given week. However, if your employees are non-exempt then you must pay following these FLSA overtime rules.
Arkansas Wage Payment Act
Aside from establishing a state minimum wage, the Arkansas Wage Payment Act also establishes clear guidelines for the payment of wages to ensure fair treatment of employees.
Wage payment requirements include:
- Payment of wages. You must pay your employees at least twice a month (semimonthly or biweekly pay). Additionally, employees must receive their wages within seven days following the end of the pay period in which wages were earned.
- Payday requirements. You must establish regular paydays and notify employees of the specific pay schedule, ensuring transparency and consistency in wage payments.
- Deductions from wages. You can only make deductions from an employee’s wages if mandated by law, such as for tax withholdings, or if the employee provides written consent for deductions like insurance premiums, retirement contributions, or charitable donations.
- Final paychecks. Finally, if a worker’s employment is terminated, voluntary or involuntary, you must pay them all due wages by the next regular payday.
Recordkeeping
In addition, according to the Arkansas Wage Payment Act, you must maintain accurate records of each employee’s name, address, occupation, and dates of employment. You must also maintain detailed records of wages paid to each employee, including the amounts and dates of all payments. This includes maintaining records of regular hourly rates, total daily and weekly earnings, overtime pay, and any deductions made from wages. You must retain these payroll records for a minimum of three years. They must also be readily accessible for inspection by the Arkansas Department of Labor and Licensing or other authorized agencies.
Finally, while not explicitly required by Arkansas law, it is considered good practice to provide employees with pay stubs that detail hours worked, gross pay, deductions, and net pay. This promotes transparency and allows employees to verify the accuracy of their pay.
Youth Employment
Youth employment laws in Arkansas are designed to ensure the safety, welfare, and educational opportunities of minors in the workforce.
Here are the key provisions and regulations for youth workers in the state:
- Hazardous occupations. Arkansas prohibits minors under 18 from working in certain hazardous occupations. This includes activities that involve the handling or production of explosives; mining operations; using power-driven machines; roofing work; operating motor vehicles; working with power-driven hoisting apparatus; exposure to radioactive substances; manufacturing brick, tile, or similar products; slaughtering and meatpacking; excavation operations; and handling certain hazardous chemicals.
- Children under 16. Minors under 16 can work only if they are enrolled in a regular school work-training program. They must also have a work-training certificate issued for their employment. Specific limitations on hours and types of work also apply to this age group. This ensures that employment does not interfere with their education and well-being.
- Children under 14. Children under 14 cannot be employed, permitted, or suffered to work in connection with any gainful occupation, except for certain jobs. These exceptions include agricultural employment; newspaper delivery; acting or performing; casual babysitting; household chores; and working in non-hazardous family businesses.
- Work permits. In Arkansas, all 14 and 15-year-old workers are required to obtain an Employment Certificate (Work Permit) before they can start working. This certificate ensures that the minor has permission to work and that the work will not interfere with their education.
Meal and Rest Breaks
Arkansas law does not require employers to provide meal or rest breaks. However, if breaks are provided, they must comply with federal standards (i.e., breaks of less than 20 minutes must be paid).
Discrimination and Equal Pay
Arkansas prohibits discrimination based on sex and mandates that employees must receive equal pay for equal work regardless of gender (also known as pay parity). This aligns with the federal Equal Pay Act.
Specifically, all employees have a right to pay equity and protection against sex-based compensation discrimination. This means that if multiple individuals are performing substantially equal jobs that require similar levels of skill, effort, and responsibility, and under similar working conditions, then you must pay them the same wage or salary, regardless of gender. This law covers all forms of compensation.
So, what does this mean? Essentially, you can only offer differences in pay for similar work if based on a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a differential based on any factor other than sex.
Arkansas Wage Law Enforcement
Arkansas wage laws, including the Arkansas Minimum Wage Act, are enforced by the Arkansas Department of Labor and Licensing. Specifically, the Labor Standards Division within this department is responsible for investigating wage complaints and ensuring compliance with Arkansas state wage laws.
Additionally, the federal Fair Labor Standards Act (FLSA) is enforced by the U.S. Department of Labor’s Wage and Hour Division (WHD), which oversees federal minimum wage, overtime pay, and child labor provisions.
So, what happens in the event of non-compliance with these laws?
Specifically, if your business doesn’t offer the Arkansas minimum wage as a minimum, or it fails to meet the requirements of any of the state’s other wage laws, then it may face legal action and penalties. Employers found in violation can be required to pay back wages, and they may also be subject to fines and other sanctions.
Wage Law Compliance Best Practices
And there you have it! By now, you should understand everything you need to know about the Arkansas minimum wage and the state’s additional wage laws. All you need to do now is make sure that your business meets these requirements.
The best way to guarantee that your business complies with these state laws is by implementing the following best practices in your HR processes. Plus, aside from legal compliance, implementing these practices will help you foster a positive work environment for your employees, so you can attract and retain top talent, boost employee morale, and enhance overall productivity and workplace harmony!
Implement Accurate Payroll Practices
Maintain accurate and up-to-date payroll records to ensure proper compensation calculations. Regularly review payroll records to identify any inconsistencies or errors. You should also create a payroll checklist to make sure that you complete all necessary steps for each payroll cycle, including verifying employee hours, ensuring correct pay rates and calculating payroll tax deductions accurately.
Classify Employees Correctly
Properly classify employees as either exempt or non-exempt under the Arkansas minimum wage regulations. This classification determines whether you must offer an employer overtime pay when they exceed their contracted hours. Carefully review the duties and responsibilities of each employee to determine their exempt or non-exempt status.
Track Overtime Hours
Accurately track overtime hours worked by non-exempt employees. Implement a system for employees to report overtime hours, such as using timesheets or electronic timekeeping systems. Make sure that you calculate and pay overtime at the correct rate.
Maintain Accurate Records
It’s important to maintain accurate and up-to-date records of all employee work hours and wages in order to comply with federal recordkeeping requirements. In addition, regular internal and external audits can help you identify and fix mistakes so that everything runs smoothly and compliantly.
Using employee record management software can make this easier. These systems help you maintain accurate and reliable records so that you can focus on other important parts of your business while staying compliant with Arkansas wage law.
Use the Right Payroll Software
Finally, choosing the right payroll software is essential for managing employee wages. The right software helps you stay compliant by automatically adjusting for changes in minimum wage rates and managing tax withholdings. It also helps you track employee work hours, calculate overtime and holiday pay, and produce accurate pay stubs at the end of each pay period. This reduces the risk of errors, streamlines administrative tasks, and ensures that employees are paid correctly and on time, helping your business comply with all wage laws and time-tracking legal requirements.
How Factorial Can Help You Comply with Arkansas Wage Laws
Ensuring compliance with Arkansas wage laws is crucial for employers to avoid potential penalties and legal disputes. Factorial can help you navigate the complexities of Arkansas’s wage laws and streamline your payroll processes to maintain compliance.
- Automated payroll calculations. Firstly, Factorial’s automated payroll system eliminates manual calculations, reducing the risk of errors and ensuring accurate compensation for all employees. It automatically factors in Arkansas minimum wage requirements, overtime pay, holiday pay, and other relevant regulations to ensure compliance.
- Real-time working hours tracking. Secondly, Factorial’s time tracking feature enables real-time monitoring of working hours, including overtime. This allows you to maintain and generate accurate records and reports to identify and address any overtime issues promptly, ensuring compliance with Arkansas’s overtime pay regulations.
- Secure payroll processing. In addition, Factorial employs robust payroll security measures to safeguard sensitive employee data.
- Comprehensive payroll reporting. Finally, Factorial generates detailed payroll reports, providing valuable insights into employee compensation, overtime trends, and overall payroll expenses.
By leveraging Factorial’s comprehensive payroll solution, employers can effectively manage payroll and ensure that their employees are compensated in line with Arkansas minimum wage rates, fostering a positive and compliant work environment for all.
