Employer of record in Arkansas: PEO rules, payroll registration and what the client still owns (2026)

As of October 2026, Arkansas requires a professional employer organization (PEO) to be licensed by the Arkansas Insurance Department under Ark. Code Ann. § 23-92-401 et seq., with $1,000 application and biennial renewal fees and $100,000 in net worth or security, and a licensed PEO is deemed an employer of the workers it co-employs. Arkansas law does not use the term "employer of record"; what matters is whether the provider is a PEO, which must co-employ a majority of the client's employees on an ongoing basis, or a temporary help service, which is excluded. For unemployment insurance, a leasing firm that has not posted a $100,000 bond with the Division of Reemployment reports wages under each client's own account.

This page is for a company outside Arkansas, or a staffing firm, deciding whether to employ an Arkansas worker through an EOR or PEO or to register itself. The general difference between an EOR, a PEO and payrolling is in what is an employer of record and payrolling services explained; the full state checklist is in hiring employees in Arkansas, and the 2025 repeal of employment agency licensing is in staffing agency license in Arkansas.

Arkansas employer of record and PEO rules at a glance

Does Arkansas license PEOs or employer of record companies?

It licenses PEOs. The Insurance Department's PEO page says Ark. Code Ann. § 23-92-401 et seq. and 23 CAR pt. 32, the Employer Service Assurance Organizations Rule, "establish licensing requirements" for PEOs. It describes a PEO as one that shares employer responsibilities, "including the right to direct and control employees," in a relationship that "must involve a majority of the client's employees" and "must be intended to be ongoing rather than temporary." Temporary employees, independent contractors and temporary help services are outside it.

• Fees. Form PEO-P, revised August 11, 2026, lists a nonrefundable $1,000 application fee, and Form PEO-PR lists $1,000 for each biennial renewal, matching § 23-92-407 of Act 1750 of 2003. Fees are paid and applications uploaded through the department's online portal.
• Financial assurance. Under § 23-92-408 and item 16 of Form PEO-P, an audited net worth of at least $100,000, or a surety bond, deposited securities or irrevocable letter of credit of at least $100,000, securing "all taxes, wages, benefits, or other entitlement" due to covered employees.
• Accredited PEOs. The department says PEOs accredited by an Employer Service Assurance Organization licensed in Arkansas are exempt from the $100,000 bond and the standard forms and get "a 50% reduction" in application and renewal fees (§ 23-92-414).
• Out-of-state exemption. Section 23-92-404(f) exempts a PEO domiciled outside Arkansas that is licensed or registered in a state with "the same or greater requirements," keeps no Arkansas office, does not solicit Arkansas clients and has 100 or fewer covered employees in Arkansas. It applies on Form PEO-E, which lists a $100 fee, and renews every two years.

To check a provider, use the department's Company Search database, linked from its PEO page, or its complete listing of licensed PEOs. If a provider says it is an "employer of record" but is neither licensed nor exempt, ask whether it claims to be a temporary help service, and why that fits a worker you chose and will direct indefinitely.

Who pays Arkansas unemployment tax on an EOR or PEO worker?

Act 1750 says a licensed PEO "shall be deemed an employer of the covered employees" and must "pay unemployment taxes as required by the Arkansas Employment Security Law" (§ 23-92-409(j)). How it reports is set by the Division of Reemployment, formerly the Division of Workforce Services. Its employer handbook, citing Ark. Code § 11-10-717(e), calls a leasing firm a "lessor employing unit," a term that also covers any entity "engaged in the business of 'outsourcing,'" and sets two tracks:

• No bond: a lessor that has not posted a $100,000 surety bond (or equivalent securities) with the Division "must submit separate quarterly contribution and wage reports for each of its client entities," and "Non-bonded lessor employers must always report wages under its clients accounts." A client's existing account is replaced by a successor account that keeps its experience rating, and a new employer gets a new number.
• Bonded: a bonded lessor reports new clients on separate client accounts for three years, then under its own account and rate. After three years of timely payments the bond can drop to $35,000.

Until the lessor meets the bond rules, clients keep reporting and paying on their own employees, and the handbook bars moving a client's wages to another lessor account with a lower rate. Temporary help firms that hire their own workers are liable as the employer of their temps. The liability test for an Arkansas employer is low: one or more workers on some part of ten days in a year, per the Division's Tax21 registration page.

Who carries workers' compensation in Arkansas?

The Workers' Compensation Commission says "Most employers in Arkansas with three or more employees" must carry coverage. Under Act 1750, the PEO agreement must allocate the duty to obtain coverage to the client or the PEO (§ 23-92-409(c)(4)); a licensed PEO must "ensure that all covered employees are covered," with the policy maintained by either party; and the PEO and client together get the Workers' Compensation Act's exclusive remedy (§ 23-92-409(j)). Form PEO-P adds that certificates of insurance for each client "must be submitted to the Department within 30 days" of the coverage's effective date, and that the PEO is responsible for seeing they are. Clients can ask for wage and loss records by class code, which the PEO must send within 15 days (§ 23-92-409(e)).

Which Arkansas registrations, reports and notices still apply?

• Withholding. A withholding account with the Department of Finance and Administration's Withholding Tax Branch through ATAP, and Form AR4EC from each employee.
• New-hire reporting. Through Tax21 "within twenty days of hiring," per the employer handbook.
• Co-employment notice. The PEO gives each covered employee written notice of "the general nature of the coemployment relationship" (§ 23-92-409(d)).
• Posters. The workers' compensation Form P and the unemployment poster; see the Arkansas hiring checklist. Ask how a remote worker receives them.
• E-Verify. Required of state government employers since January 1, 2026, not private employers; see E-Verify requirements in Arkansas.
• Paid leave programs. We found no Arkansas paid leave or disability insurance program that needs a separate employer registration.

What does the client company still own in Arkansas?

Except as the act or the agreement provides, the client "is entitled to exercise all rights, and is obligated to perform all duties and responsibilities otherwise applicable to an employer" (§ 23-92-409(b)), and the act does not change either party's duties under the Arkansas Civil Rights Act or the state's wage laws (§ 23-92-403). In practice:

• Hiring rules. We found no Arkansas pay transparency, salary history, private ban-the-box or credit check statute, per the Arkansas hiring checklist; the federal FCRA background check process applies, and remote postings can pick up other states' rules (see pay transparency laws by state).
• Interviews and testing. Arkansas is one-party consent for recording (see Arkansas recording consent law for interviews), and its Drug-Free Workplace Program is voluntary.
• Non-competes. A non-compete the worker signed with you, or with a former employer, is a contract question between those parties, not the PEO's; see Arkansas non-compete law.
• Safety and conduct. The client directs the work, and a PEO is not liable for acts of covered employees acting under the client's direction unless the agreement says otherwise (§ 23-92-409(g)). Both can still face joint employer claims; see joint employer liability for staffing agencies.
• Federal payroll taxes. The IRS says the client "generally remains responsible" for employment taxes unless the PEO is certified; see the IRS's CPEO public listings.

When is registering your own company in Arkansas the better route?

With an unbonded PEO, wages are reported under an unemployment account in your name anyway. Registering yourself adds an ATAP withholding account, Form AR4EC, a Tax21 new-hire report and, at three employees, workers' compensation. That route tends to win when you expect several Arkansas hires, already run multi-state payroll, or will keep some Arkansas staff off the PEO, since the PEO model requires a majority of the client's employees. A licensed PEO fits a small team whose payroll, benefits and comp you want handled together; a temporary help firm fits a short assignment.

Questions to ask an employer of record or PEO before signing for Arkansas

1. Are you licensed by the Arkansas Insurance Department, exempt under § 23-92-404(f), or operating as a temporary help service? Give us the license or exemption number.
2. Have you posted the $100,000 bond with the Division of Reemployment, and under whose account will our wages be reported?
3. Will a majority of our Arkansas employees be covered, as the PEO definition requires?
4. Who carries workers' compensation, and has the certificate for our account been filed with the Insurance Department within 30 days?
5. Who opens the ATAP withholding account, collects Form AR4EC and reports the hire in Tax21 within 20 days?
6. Are you an IRS-certified PEO, and who is liable for federal employment taxes if you miss a payment?
7. Who handles terminations, final pay and unemployment claims, and what records do we get if we leave?
8. Can we move the worker to our own payroll later, and is there a fee?

Employer of record rules in other states: California, Florida, Hawaii, Mississippi, Nebraska, New York, Rhode Island, South Carolina and Texas.