AR HB1325

Creates the Employee Classification Act (Subchapter 5 of Arkansas Code Title 11, Chapter 3) to address misclassification of employees as independent contractors in workers' compensation cases.

Establishes three-part test for independent contractor status in commercial or residential building construction: written contract, freedom from control, and customarily engaged in independently established trade with six additional criteria including possessing essential tools, maintaining separate business location, and carrying $50,000 liability insurance.

Authorizes Department of Labor Director to investigate violations, issue orders to show cause, and assess civil penalties of up to $1,000 for first violation and $2,500 for subsequent violations.

Provides criminal penalties of Class C misdemeanor for first purposeful violation and Class B misdemeanor for subsequent violations; Class C felony for negligent violations subject to $1,000 fine.

Enables Director to petition courts for stop-work orders requiring cessation of work within 24 hours and imposes $1,000 per day penalty for violations; prohibits retaliation against workers exercising protected rights and requires annual reporting to General Assembly.