Payroll Arkansas, Unique Aspects of Arkansas Payroll Law and Practice
You've been employed in Arkansas for a little over a year now. You're aware that the state's payroll laws and practices are different from those of the other states, but you're still not quite sure what all those differences are. Catching up on these unique aspects of Arkansas' payroll law and practice is an excellent way to expand your knowledge and make yourself more valuable as a professional employee. Get started today with this informative article!
Payroll Arkansas, Unique Aspects of Arkansas Payroll Law and Practice
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The Environment
If there is one thing that Arkansas' payroll laws and practices have in common with the rest of the country, it's that employers must pay their employees in accordance with federal law. The Fair Labor Standards Act (FLSA) sets minimum wage and overtime requirements for the entire country. All states across the U.S., except for Arkansas, comply with these federal requirements. That means that employers working in Arkansas must pay their employees at least $7.25 per hour on a regular basis and 1 1/2 times their regular rate of pay for overtime hours worked.
However, the employer does not have to pay for all hours of work. An employer must pay employees for their hours worked according to the "usual or regular rate" of pay they receive on a regular basis. The usual or regular rate is based upon an employee's experience and skill level. For example, someone who does not know how to use computers would not be paid at a higher rate. The earning of overtime pay is also governed by the "usual or regular rate" of pay.
The federal FLSA does not make exceptions for occupations that are considered seasonal. Although Arkansas' laws do allow employers to pay employees for certain "as needed" jobs during the off-season, they do not allow employers to pay employees for all hours worked in these jobs on a regular basis.
Time Off Work
Under Arkansas' payroll laws, employers must provide their employees with at least ten days of paid vacation after a year's employment is completed. All employer-provided paid vacations must be taken in full and are not reduced in any way by hours worked at other times of the year during which an employee may have earned wages.
Arkansas' laws also require employers to provide their employees with one day of paid sick leave for every 30 hours worked. One day of sick leave does not have to be paid, if the employee is absent due to a call-in and will return to work in the next available work period. If the absence is due to an illness, Arkansas' payroll laws require that an employer provide at least seven consecutive days of paid sick leave.
If an employee takes more than thirty days of vacation or more than one day of sick leave in any year, he or she may be entitled to additional earned compensatory time off without having to pay for it. The amount of earned compensatory time off is calculated in hours equal to the number of days taken.
Even though Arkansas' payroll laws require employers to provide employees with leave, they do not mandate how much leave must be paid. All earned sick and vacation time must be paid out on termination, if an employer decides not to pay out accrued leave at the end of an employee's employment. Because Arkansas law is so flexible in this area, it might be a good idea for employers to look into a policy that will allow them to pay out earned compensatory time off upon termination if they so choose.
Payday Laws
Arkansas' payroll laws do not require that employees be paid immediately at the end of their work week or month. Employees must be paid no later than their next regularly scheduled payday. They can be paid on the work day before or the work day after. Employees must also be provided with a pay stub listing their rate of pay, the hours that they worked, and any deductions that were made from their paycheck.
An employee may demand his or her paycheck as soon as it is available without having to give an advance notice of intent to collect wages. If an employer refuses to pay an employee on payday, the employer may be subject to prosecution for a misdemeanor and forced to pay penalties.
Tax Withholding
Arkansas' payroll laws are similar to those in other states when it comes to federal income tax withholding from an employee's paycheck. Arkansas requires employers to withhold federal income taxes on any wages that are earned by their employees, as long as the employee is working within Arkansas at the time. The employer must make weekly deposits into the state tax fund for each employee's social security and Medicare withholding. The amount of each deposit is based on Federal Tax Withholding Tables.
Arkansas has no state income tax, and the IRS will not require its employees to pay state taxes on their Arkansas-earned wages. Employers must withhold federal income taxes from each paycheck if an employee earns more than $1,500 in a calendar quarter. Employers must also begin withholding federal income taxes on wages earned by each new employee who works in Arkansas.
Payroll taxes are not set by statute but by the IRS with a few exceptions including: employer-provided benefits, retirement plan contributions, certain fringe benefits and unemployment compensation. If an employer fails to pay the required amount of payroll tax, there is a penalty imposed.
Employers must withhold tax at the rate listed in federal legislation and send any amounts necessary for state tax which is different from federal law.
The statute also provides that employers must withhold payroll taxes on all fringe benefits. These benefits can include vacation, paid or unpaid sick leave, bonuses, matching contributions to employee pensions and profit-sharing plans, life and health insurance premiums paid by employees and any other type of remuneration to an employee that is not otherwise taxable.
An employer does have the option of choosing whether or not it will pay for its employees' federal income taxes. An employer can elect not to withhold the federal income tax from the wages that are earned by an employee through the Form W-4 that forms a part of an employee's personnel file.
Conclusion
Arkansas' payroll laws provide for a slew of deductions that can be made from an employee's paycheck. Arkansas allows employers to make all of the deductions that are provided for in federal law. With the exception of certain deductions, if the employer does not deduct from the employee's pay, and then pays that amount to a third party or government agency, the employer will be held liable for all payments due.
Arkansas' laws also allow employers to make certain additional deductions, including payments for dental insurance premiums and health benefits insurance premiums. These types of deductions must be approved by employees prior to their being made.