The 2019 session was a busy one for the Arkansas General Assembly, as the state enacted at least nine labor and employment-related measures in its recently concluded legislative session. These laws range from codifying the definition for independent contractor to banning microchipping as a condition of employment. The following provides an overview of these new laws, most of which will take effect in July 2019.

Independent Contractor Definition

On April 17, 2019, the governor signed Act 1055 (HB 1850), which adopts the Internal Revenue Service’s statutory test for determining a worker’s employment status for purposes of wage and hour, equal pay, taxes, unemployment, and worker’s compensation eligibility. The law, also known as the Empower Independent Contractors Act of 2019, codifies the IRS’s 20-factor test. The test focuses on whether the business has the right to control the means by which the worker performs his or her services as well as the end results. Some of these factors indicating employee status include: whether the business gives instructions about the work; provides training or tools; hires, supervises, or pays assistants; sets hours and work location at company premises; pays the worker by the hour or week, instead of by the job or service; and whether the worker is required to submit reports regarding the time worked or services rendered. In addition, the test considers whether the worker provides services directly to the public or is primarily engaged with the person receiving the service. 

State Wage and Hour Amendments

Last November, Arkansas voters overwhelmingly approved increasing the state’s minimum wage to $11 an hour by 2021. For 2019, the minimum wage is $9.25 an hour, two dollars higher than the federal minimum wage.

On April 4, 2019, Arkansas enacted Act 853 (HB 1751), which makes several amendments to the Arkansas Minimum Wage Act. Among other changes, the new law allows employers to take a credit against minimum wages owed by the amount of any furnished board, lodging, apparel or other items provided to benefit employees. The amount of the credit is to be based on the reasonable value of items provided as determined by federal law on January 1, 2019.

Previously, the Minimum Wage Act did not contain its own statute of limitations. In 2011, the Arkansas Supreme Court ruled that a three-year limitations period applies to private causes of action under the Act, making Arkansas’s limitations period more generous than that in the federal Fair Labor Standards Act. With HB 1751, the General Assembly reduced Arkansas’s limitations period to two years. In addition, to be entitled to an award of liquidated damages for violations of the wage and hour provisions, an employee must prove the violation was willful.

Act 853 also made changes to other wage and hour provisions in Arkansas law. It authorizes employers to pay employees via preloaded debit cards, which was previously not expressly permitted. Employees must be permitted at least one free withdrawal from the debit card. The law also updates the timely pay requirement upon discharge, changing the timeframe from within seven days to the next regular payday. If the employer does not make payment within seven days of the next payday, it must pay double the wages due.

Health Insurance Purchasing Pools

Arkansas enacted Act 919 (HB 1837) on April 11 to amend the state’s licensure requirements for self-insured employer plans to provide more health insurance purchasing options for small businesses. The law permits multiple employers to join together to offer employee benefit plans to the employees of two or more employers or their families. These multiple employer welfare arrangements must register with the state before soliciting or enrolling members or conducting any other business in Arkansas.

The amended law permits a fully insured or self-insured multiple employer welfare arrangement to include employers in a common trade or industry, employers in two or more trades or industries, sole proprietors, or working owners. This cooperative effort will allow more small businesses to access association health plans to purchase insurance.

Unemployment Eligibility Amendments and Added Reporting Penalties

A trio of new laws update various provisions in Arkansas’s Department of Workforce Services regulations pertaining to unemployment insurance. The first, Act 512 (SB 298), amends the taxable wage base under the unemployment insurance law to tie it to the employment rate and the amount of disbursements from, and balance of, the state unemployment insurance trust fund.

The next law, SB 299, creates a light-duty work requirement for those claiming unemployment due to the lack of light-duty work available at a previous employer. The amendment clarifies that light-duty work will be considered suitable work for an individual on approved medical leave from his or her last employer due to the unavailability of light-duty work, unless the majority of weeks of work within the period used to determine monetary eligibility were weeks spent performing work that the worker is currently unable to perform for medical reasons. SB 299 does not become effective until October 1, 2019.

Privacy and Technology

Under Act 516 (HB 1177), enacted March 19, employers are prohibited from microchipping their employees as a condition of employment. The law gives detailed prohibitions about microchipping employees, bans employers from asking for consent to microchip employees on applications or during interviews, and precludes employers from coercing or retaliating against employees who do not wish to have tracking technology inserted into their bodies. The Act To Protect Employees From Forced Human Microchip Implantation also requires that employers provide alternative reasonable accommodations for employees who do not consent to implantation of a microchip. If an employee consents to have a microchip implanted, however, all costs and medical upkeep of the implantation and the device will be the employer’s responsibility. Employers are also responsible for informing employees about what data is to be collected and how such data would be used. The statute clarifies that employers may use other non-invasive technology to track the movements of their employees.

Along similar lines, amendments to the Personal Information Protection Act, Act 1030 (HB 1943), were enacted on April 15 to add “biometric data” to the data breach notification statute’s definition of “personal information.” In Arkansas, a business that experiences a security breach much notify any affected residents of the compromised data. The amendments in HB 1943 expand the definition of personal information to include an individual’s biological characteristics, including: fingerprints, faceprints, retinal or iris scans, hand geometry, voiceprint analysis, DNA, or any other unique biological characteristics of an individual used by the owner or licensee to authenticate the individual’s identity. Furthermore, if a business has more than 1,000 individuals affected by a security breach, it must notify the state attorney general. The notice must occur concurrently with the notification of the individuals affected or within 45 days of the breach, whichever is sooner. There is also a recordkeeping aspect of HB 1943 by which businesses must retain a copy of the written documentation of the breach and any supporting documents for five years. If the attorney general requests a written determination of the breach of security, the business has 30 days to comply. Both the documentation and the determination of the breach are considered confidential and not for public release.

The last of the new Arkansas bills is Act 738 (SB 534), updating the ban on cell phone use while driving. The measure clarifies the definition of “operating a motor vehicle” as operating a vehicle on a public road, street, or highway, but excludes a motor vehicle that has pulled over and stopped. The law, as enacted on April 8, also added the definition of “texting” as SMS texting, emailing, instant messaging, or engaging in any other form of electronic data retrieval or communication. SB 534 repeals the cell phone ban exemptions for texting between a transit or for-hire dispatcher and for navigating with a GPS system. Employers with employees required to drive as part of their job duties should promptly update drivers and supervisors on these changes.

With many of these measures becoming effective in only a few months, employers should review these new laws now to ensure they will be in compliance.