"Do I even need workers' comp?" is one of the most common questions small Arkansas businesses ask, and guessing wrong gets expensive either way. Here's the plain-English version. (General information, not legal advice. The details of your business matter, so ask.)
Arkansas generally requires workers' compensation coverage once an employer has three or more employees, and full-time, part-time and seasonal staff all count toward that number. How you count owners, family members, and part-timers isn't always obvious. The three-employee line is the rule of thumb, not the whole rulebook.
Construction is treated more strictly than general business. Contractor requirements are tighter, and many contractors need coverage from their first employee. If you're in the trades, assume the stricter standard applies to you until someone confirms otherwise. Ask before you skip it; this is the wrong thing to guess about. Our contractor insurance page covers what we quote for the trades.
Here's the part that actually governs most contractors: a contract can require workers' comp no matter what state law says. General contractors, project owners, and licensing bodies routinely want proof of coverage before you set foot on the job, whatever your headcount. Plenty of one-person operations carry a policy purely to win work. With no employees you generally owe nothing by law, but you may still need a policy to get hired.
If you also operate in Minnesota, the rule is stricter: Minnesota requires workers' comp for most employers with any employees at all, with narrow exceptions. Working in both states means meeting the stricter standard.
Here's what catches contractors at audit time: if you use subcontractors who don't carry their own coverage, the carrier can treat their pay as your payroll and bill you for it after the policy year ends. The fix is boring and effective: collect a certificate of insurance from every sub, every job, and keep them on file. No certificate, assume you're paying for their coverage.
Owners can often exclude themselves from coverage. Sometimes that's sensible; sometimes it just means the person most essential to the business is the only one with zero wage protection after an injury. And many general contractors and commercial jobs require proof of workers' comp regardless of what state law says, so the contract sets the requirement.
Workers' comp is rated on payroll and job classification. Office staff cost pennies per hundred dollars of payroll, and roofers cost far more. Classifying employees correctly matters: misclassification means overpaying now or a costly audit later.
Tell us how your crew is set up (employees, subs and owners) and we'll tell you what Arkansas or Minnesota requires and what it costs.
Start my application