Arkansas Workers' Compensation Insurance

Workers' compensation is a critical coverage for Arkansas employers, providing no-fault benefits to employees injured on the job while protecting employers from lawsuits.

Arkansas Workers' Compensation Requirements

Mandatory Coverage Threshold

Who Must Carry Coverage:

• Employers with 3 or more employees must have workers' compensation insurance
• Includes full-time, part-time, and seasonal workers
• Agricultural employers with 3+ employees included
• Corporate officers count as employees unless they opt out

Exempt from Requirement:

• Employers with fewer than 3 employees (may elect coverage voluntarily)
• Sole proprietors and partners (but can elect coverage)
• Domestic workers in private homes
• Real estate agents paid solely by commission
• Certain agricultural workers (family members on family farms)

Exam Tip: Arkansas's threshold is 3 or more employees—different from some states that require coverage for just 1 employee. Remember "3+" for Arkansas workers' comp.

Arkansas Workers' Compensation Commission (AWCC)

Role and Authority:

• Administers Arkansas workers' compensation law
• Adjudicates disputed claims
• Approves self-insurance applications
• Sets medical fee schedules
• Licenses self-insured employers
• Enforces compliance

AWCC Divisions:

1. Claims Division: Processes and monitors claims
2. Legal Division: Handles hearings and disputes
3. Self-Insurance Division: Regulates self-insured employers
4. Compliance Division: Enforces coverage requirements

Coverage Options for Arkansas Employers

1. Private Insurance

Most Common Method:

• Purchase from licensed workers' compensation insurers
• Competitive market pricing
• Premiums based on payroll and job classifications
• Experience modification factor affects premium

Advantages:

• Insurer handles claims administration
• Legal defense provided
• Predictable costs (premium)
• No reserve requirements

2. Arkansas Assigned Risk Pool

For Employers Who Cannot Obtain Private Coverage:

• Employers rejected by standard market
• High-risk industries or poor loss history
• Higher premiums than voluntary market
• Coverage guaranteed for compliant employers

Administered By:

• National Council on Compensation Insurance (NCCI) services the pool
• Policies issued through servicing carriers
• Premium rates set by AWCC

3. Self-Insurance

Requirements for Approval:

• Demonstrate financial ability to pay claims
• Security deposit (surety bond or securities)
• Minimum premium volume required
• Third-party administrator for claims
• Approval by AWCC Self-Insurance Division

Advantages:

• Cash flow benefits (pay claims as they occur)
• Greater control over claims management
• Potential cost savings for large employers

Disadvantages:

• Unlimited liability for claims
• Administrative burden
• Must meet financial requirements annually
• Not practical for small employers

Exam Tip: Arkansas employers have three options for workers' comp coverage: private insurance (most common), the assigned risk pool (for hard-to-place risks), or self-insurance (with AWCC approval for qualified employers).

Workers' Compensation Benefits

Medical Benefits

Full Medical Coverage:

• All reasonable and necessary medical treatment
• No deductibles or co-pays for employees
• Choice of physician (initial selection by employer, then employee can change)
• Includes surgery, hospitalization, medication, physical therapy
• Mileage reimbursement for medical appointments

Medical Fee Schedule:

• AWCC establishes maximum fees
• Providers cannot bill employee for covered services
• Treatment must be related to workplace injury
• Disputes resolved through AWCC

Temporary Total Disability (TTD)

When Employee Cannot Work:

• Paid when employee is temporarily unable to work
• Rate: 66 2/3% of average weekly wage
• Subject to maximum weekly benefit ($712/week in 2026)
• Minimum weekly benefit also applies
• Waiting period: 7 days before benefits begin
• If disability exceeds 14 days, first 7 days paid retroactively

Duration:

• Continues until employee reaches maximum medical improvement (MMI)
• Or returns to work
• Or converts to PPD/PTD

Permanent Partial Disability (PPD)

When Employee Has Lasting Impairment:

• Paid after reaching maximum medical improvement (MMI)
• Based on impairment rating (percentage of whole body)
• Scheduled injuries: Specific amounts for loss of limbs, digits, vision, hearing
• Unscheduled injuries: Based on wage-loss or impairment rating

Arkansas PPD Calculation:

• Impairment rating × 450 weeks × 66 2/3% of average weekly wage
• Example: 10% impairment = 45 weeks of benefits
• Subject to weekly maximum

Permanent Total Disability (PTD)

When Employee Is Permanently Unable to Work:

• Rare but significant benefit
• Paid for life (or until death or return to work)
• Rate: 66 2/3% of average weekly wage (subject to max)
• Includes loss of both hands, arms, legs, feet, eyes, or combination

Death Benefits

Survivor Benefits:

• Payable to dependents of deceased worker
• Spouse receives benefits until death or remarriage
• Children receive benefits until age 18 (or 23 if in school)
• Rate: 66 2/3% of average weekly wage
• Burial expenses: Up to $7,500

Exam Tip: Arkansas TTD benefits are 66 2/3% of the employee's average weekly wage, subject to maximum and minimum limits. The 7-day waiting period is waived if disability exceeds 14 days.

Exclusive Remedy Doctrine in Arkansas

What It Means

Employer Protection:

• Workers' compensation is the employee's EXCLUSIVE remedy
• Employee cannot sue employer for work-related injuries
• Applies even if employer was negligent
• Trade-off: Employee gets guaranteed benefits; employer gets lawsuit protection

Employee Benefits:

• No need to prove employer fault
• Guaranteed benefits regardless of negligence
• Faster payment than litigation
• Medical coverage with no out-of-pocket costs

Exceptions to Exclusive Remedy

When Employees CAN Sue Employer:

1. Intentional tort: Employer deliberately injured employee
2. Third-party liability: Can sue non-employer third parties
3. Defective products: Manufacturer liability separate from workers' comp
4. Dual capacity: Employer also served as product manufacturer

Third-Party Claims:

• Employee injured by third party at work can sue that party
• Workers' comp insurer has subrogation rights
• Recovery shared between employee and insurer

Compliance and Penalties

Employer Obligations

Requirements:

• Obtain coverage before hiring 3rd employee
• Post workplace notice of coverage
• Report injuries to insurer promptly (within 10 days)
• Maintain payroll records for premium calculation
• Pay premiums timely

Penalties for Non-Compliance

Failure to Carry Coverage:

• Fine up to $10,000
• Misdemeanor criminal charges possible
• Personal liability for all benefits
• Stop-work orders
• Cannot defend using exclusive remedy

Fraudulent Claims:

• Employee fraud: Criminal prosecution, benefit forfeiture
• Employer fraud: Fines, criminal charges
• Premium fraud: Restitution plus penalties