Small businesses are often considered the backbone of American society. In many ways, the American economy depends on small businesses, their employees and the services they provide to their communities. According to the U.S. Small Business Administration (SBA), small businesses make up the overwhelming majority of businesses in Arkansas, and nearly half of those employed in the state are small business employees.
Arkansas small business owners are required to have unemployment insurance. State government agencies have attempted to provide as much information as possible for both small business owners and employees. As attorneys, we hope to provide a basic overview of the process involved so that you can make an informed decision based on your situation.
If you would like to speak to one of our small business attorneys regarding unemployment insurance claims or any small business legal needs, contact Linville Johnson today at (501) 777-7777 or through this website.
We offer free, confidential, no obligation consultations. We can help answer your questions, and if you choose to pursue a claim, we can connect you with an affiliated attorney who can assist you throughout the legal process.
What is Unemployment Insurance?
Unemployment insurance (UI) benefits are set up through the Federal-State Unemployment Insurance Program and provide temporary financial assistance to unemployed workers who have become unemployed through no fault of their own. Each state administers its own unemployment insurance program within the guidelines established by Federal law
Arkansas Small Business Unemployment Tax
In Arkansas, employers – including small business owners – are required to establish a state unemployment account.
According to the Arkansas Division of Workforce Services:
[t]he definition of an employer includes, but is not limited to, a sole proprietorship, partnership, corporation, associations, trust, estate, and receiver or trustee in bankruptcy. The entity must have in employment one (1) or more individuals for some portion of ten (10) or more days in a calendar year, whether or not the days are consecutive.
New businesses must register and apply for an account number with the Arkansas Division of Workforce Services. If a business owner acquires a business and continues its operation, the unemployment tax rate from the previous owner is assigned to the new one.
Who’s Exempt from Unemployment Benefits in Arkansas?
According to the Arkansas Division of Workforce Services, the following types of employees are exempt from receiving UI benefits:
- Any service performed by someone under twenty-one years of age, the spouse, or the parents of a business operating as a sole proprietorship.
- Any service performed as an insurance or real estate agent, if payment is made solely by commission.
- Any service performed in the employ of a church or an association of churches.
- Any service performed in the area of domestic services (household help or in-home caregivers) are exempt from payment of unemployment insurance if the payments for all services of all domestic help total under one thousand dollars each calendar quarter.
- Any service performed in agricultural employment is exempt if the total of all wages paid for agricultural services is less than $20,000 in a calendar quarter and if the employer does not employ ten or more workers in twenty calendar weeks of the year.
Unless specifically labeled “exempt” under Arkansas Division of Workforce Services Law, the service is covered by state unemployment benefits and business owners must contribute to an unemployment account with the state.
What Happens When an Employee Files and Unemployment Claim?
Before an ex-employee can begin receiving UI benefits, they must file a claim with the Arkansas Division of Workforce Services in person or online. Once a claim is made, the employer is immediately notified by mail.
In order to receive UI benefits, the claimant must be unemployed, physically and mentally able to perform suitable work, available for suitable work, making a reasonable effort to find work, free of participation or direct interest in a labor dispute, and free of disqualification.
If the claimant is deemed eligible, the employer’s state unemployment tax account is charged a percentage share of the total wages paid to the worker during the first four of the last five completed calendar quarters prior to the filing of the unemployment insurance claim.
How Can An Attorney Help Arkansas Small Business Owners?
An attorney can help with a variety of small business legal matters, including any questions you may have about unemployment insurance benefits. In addition to being a law firm, Linville Johnson is a small business as well, and we understand how important it is to accommodate the goals and objectives of small business owners who need legal help.