Arkansas Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Arkansas home — is a W-2 employee. Arkansas is one of the simpler household-payroll states: employer-paid UI filings, optional Arkansas income-tax withholding by agreement, no statewide paid leave, no local income tax, and workers' comp generally not required for household employers.
Start Payroll Free →When the rules apply
Arkansas household employers mainly need to watch the federal payroll thresholds and the $1,000 quarterly Arkansas unemployment threshold:
How Nest Payroll handles this
Each pay period, you pay your employee the net amount directly — through Venmo, Cash App, Zelle, your banking app, or by check. Nest generates the pay stub, calculates payroll taxes, and registers you with the Arkansas Division of Workforce Services once the $1,000 quarterly threshold applies.
Federal taxes — quarterly EFTPS payments
At the end of each federal quarter, Nest debits your bank account for federal taxes owed and remits them to the IRS via EFTPS. At year-end, Schedule H on your Form 1040 reconciles those household payroll taxes.
Arkansas state taxes — quarterly UI filings
Each quarter, Nest files the DWS-ARK-209B wage report with the Arkansas Division of Workforce Services. Arkansas UI is employer-paid and is not withheld from your employee.
Set up payroll in 5 minutes.
Nest handles Arkansas payroll calculations, paystubs, quarterly DWS filings, and year-end Schedule H — all for $42/mo.
Setup checklist (before they start)
Arkansas Workers' Compensation Insurance — voluntary for households
Arkansas generally exempts employers with fewer than three employees from mandatory workers' compensation, and domestic workers in private homes are also specifically excluded. Most household employers are not required to carry workers' comp for a household employee.
Voluntary coverage is still worth considering. Workers' comp can protect you if your employee is injured on the job and gives the employee a predictable benefits path without a lawsuit.
Form I-9 (Employment Eligibility)
Have your employee complete the Form I-9 at hire to verify they're authorized to work in the United States. You don't submit this anywhere — keep it filed in case of audit.
Federal W-4 + Form AR4EC (Arkansas withholding certificate)
The federal W-4 determines federal income tax withholding if you and your employee agree to withhold it. Arkansas uses Form AR4EC for state withholding.
Arkansas New Hire Reporting
Report new hires to the Arkansas New Hire Reporting Center within 20 days of the start date. You can file online at the link above. Federal law requires this; AR penalty for failure is up to $25 per missed report.
Required Employment Posters
Even with a single household employee, the following workplace posters are required (or equivalent notification, since your home isn't a typical workplace):
- Federal posters: FLSA, FMLA, EEO, USERRA, Polygraph Protection
- Arkansas Minimum Wage poster (Arkansas Department of Labor and Licensing — required posters)
- Arkansas Unemployment Insurance poster
For a household setting, a single binder kept in a common area satisfies the posting obligation in most cases.
Written Work Agreement
Arkansas does not require a written employment agreement, but it's strongly recommended. A clear written agreement reduces misunderstandings and protects both parties when situations come up that you didn't anticipate.
Use our free nanny contract template as a starting point — it covers compensation, hours, duties, vacation, sick time, confidentiality, and at-will employment language.
Pay & compensation
Minimum Wage — federal floor of $7.25/hr
Arkansas's state minimum wage applies only to employers with 4 or more employees. Most households are below that threshold, so the federal $7.25/hr floor applies to FLSA-covered household employees. In practice, nanny and caregiver market rates are usually well above the legal floor.
Overtime — 1.5× regular pay over 40hr/week
Federal Fair Labor Standards Act (FLSA) overtime rules apply: live-out household employees get 1.5× their regular hourly rate for any hours over 40 in a workweek. Live-in household employees are exempt from federal OT (FLSA exemption for live-in domestic workers), and Arkansas has no state OT requirement for households (state OT applies to employers with 4+ employees) that overrides this.
| Worker type | OT trigger | Rate |
|---|---|---|
| Live-out (most nannies, housekeepers, caregivers) | Over 40 hr/week | 1.5× regular |
| Live-in | FLSA-exempt — no OT required | 1.0× regular |
"No Tax on Overtime" Deduction (2025–2028)
The federal overtime deduction may let household employees deduct the premium portion of qualifying overtime pay on their personal tax return. This is a federal income-tax rule; it does not change how you calculate overtime, FICA, Arkansas withholding, or payroll records.
Pay Frequency
Household employees are usually treated as non-exempt hourly workers under FLSA rules — even when you've agreed to pay a "salary," federal FLSA treats it as a wage covering a fixed number of hours per week, with overtime owed on hours past 40.
Under Ark. Code § 11-4-401, employers must pay wages semi-monthly on regular paydays designated in advance. Most household payroll arrangements pay weekly or biweekly to keep cash flow predictable for both sides.
Mileage Reimbursement
Arkansas does not have a state-mandated mileage reimbursement rate for private employers. If your employee uses their own car for work-related driving (errands, school pickup, doctor's appointments for the children), reimburse at the federal IRS standard mileage rate — $0.70/mile for 2026. Reimbursements at or below the federal rate are not taxable wages.
Paystub Requirements
Arkansas does not have a specific statute requiring itemized paystubs, but you should provide them anyway for clear recordkeeping. Each paystub should show: gross wages, hours worked, deductions such as FICA, federal income tax if withheld, and Arkansas income tax if withheld, net pay, and pay period dates.
Time off & leave
Paid Sick Leave — none required statewide
Arkansas does not have a statewide paid sick leave law, and no city in Arkansas has enacted a local paid sick leave ordinance. Sick time is offered at the employer's discretion.
If you choose to offer sick leave, common household-employer practice is 5–10 days/year, usable for the employee's own illness or to care for an immediate family member.
Vacation & PTO
Arkansas does not require paid vacation. If you offer it, document the policy in writing — under Arkansas law, vacation pay is enforceable to the extent your written policy states it will be paid out at separation. A clear policy with a written cap (or "no payout at separation" provision) protects you.
Upon departure
When the working relationship ends — whether the employee resigns or you terminate — Arkansas's final pay rule (Ark. Code § 11-4-405) requires final wages to be paid by the next regular payday following separation.
At separation, give your employee a final paystub and a copy of any timekeeping records you've maintained. If you've offered vacation as part of your written policy, pay out the earned-but-unused portion (pro-rated through the last day worked, at the final rate of pay) per your policy.
Year-end forms
Your responsibilities
- Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it
- Attach Schedule H to your Form 1040 by April 15 — Nest produces a signature-ready version
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Quarterly DWS-ARK-209B filings with the Arkansas Division of Workforce Services once registration applies
- Form AR3MAR annual reconciliation when Arkansas withholding applies
Tax breaks for household employers
Two federal tax breaks may help offset your nanny payroll costs:
For nannies caring for school-aged kids, families often use the DCFSA first (better tax savings for most), then claim the credit on any expenses above the FSA limit. Note: you cannot claim the same expenses under both — but you can split them.
Resources & free tools
The information on this page is general in nature and not tax, legal, or financial advice. Arkansas rules change. Verify current rates and rules at Arkansas Department of Finance and Administration and Arkansas Division of Workforce Services, or consult a tax advisor.