Does Kentucky require workers’ compensation insurance?
Yes. Kentucky requires workers' compensation from the first employee: under KRS 342.630 any business with one or more employees in the state is covered, and the Department of Workers' Claims counts family members, part-time, and temporary workers. Businesses engaged solely in agriculture are outside the requirement. Sole proprietors and qualified partners or LLC members are not covered unless they elect it, and a corporate officer opts out only by filing Form 4.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
How many employees before Kentucky requires workers' comp?
Kentucky requires coverage as soon as a business has one employee in the state (KRS 342.630). The Department of Workers' Claims makes no exception for family members, part-time, or temporary workers. KRS 342.650 exempts farm workers, a household's domestic workers when it has fewer than two full-time domestic employees, and a person hired for up to 20 consecutive work days to repair or remodel a private home.
An out-of-state employer doing any work in Kentucky needs a policy that provides Kentucky coverage. The Department of Workers' Claims says an all-states endorsement does not qualify, and an Ohio employer needs a separate policy even for temporary work in Kentucky.
Source: Kentucky Department of Workers' Claims, Security and Compliance, checked .
Which owners, officers, and family members are exempt in Kentucky?
A sole proprietor, a qualified partner, or a qualified LLC member is not an employee unless the business elects coverage for them by endorsement to its policy (KRS 342.012). Qualified means the partnership agreement or operating agreement shows the person shares in profits and losses and in decisions. Corporate officers are employees under KRS 342.640, and each one who wants out files Form 4 with the Department of Workers' Claims.
A partner or member who is paid regular wages and has no share of profits or say in decisions is nonqualified and must be covered. Keep the operating agreement on hand, since the Commissioner can ask for it.
Source: Kentucky Department of Workers' Claims, Security and Compliance, checked .
What happens to a Kentucky employer with no workers' comp?
Under KRS 342.990 the Commissioner cites an uninsured employer $100 to $1,000 per employee for every day without coverage. Going without coverage can also be charged as a crime, with the same fine range or 30 to 180 days in jail, and an owner or officer who knowingly allowed it is personally liable. The Commissioner can ask the Franklin Circuit Court to shut the business down (KRS 342.402), and an injured worker can sue the employer in court.
Source: Kentucky Department of Workers' Claims, Employer FAQ, checked .
Who enforces workers' comp in Kentucky?
The Kentucky Department of Workers' Claims enforces the requirement. Its Enforcement Section has investigators in field offices covering all 120 counties. They follow up on public tips and referrals from the Uninsured Employers' Fund, run random on-site inspections, and mail citations with a civil penalty to employers they find uninsured.
Source: Kentucky Department of Workers' Claims, Enforcement and Citations, checked .
Where do Kentucky employers buy coverage?
Kentucky has a competitive state fund. Employers can buy from any carrier licensed to write workers' comp in Kentucky or from Kentucky Employers' Mutual Insurance (KEMI), which the legislature created in 1994 (KRS 342.803). KEMI competes with private carriers and is also the market of last resort, so an employer no other carrier will write can still get a policy. Large employers can also apply to self-insure.
Source: Kentucky Department of Insurance, Markets of last resort, checked .
Who sets the class codes and rates in Kentucky?
Kentucky is an NCCI state. Class codes and experience modifiers come from the National Council on Compensation Insurance, which collects payroll and claims by class from carriers and files the advisory loss costs. Each carrier, KEMI included, adds its own expense multiplier on top of those loss costs to get its rates.
Source: KEMI, The Underwriting Process, checked .
Is there an exemption or waiver form in Kentucky?
Kentucky does not have a general waiver or certificate of exemption for owners. The Department of Workers' Claims accepts two filings instead. A corporate officer who rejects coverage files Form 4, the Employee's Written Notice of Rejection, and only the original notarized form counts. A builder with no employees gives the local building permit office an Affidavit of Exemption instead of a certificate, and that office sends it to the Department.
Filing Form 4 gives up the officer's right to workers' comp benefits, and the Department of Workers' Claims recommends talking to an attorney first. An employer cannot make signing Form 4 a condition of getting or keeping a job (KRS 342.395).
Source: Kentucky Department of Workers' Claims, Security and Compliance, checked .
Sorting out Kentucky workers' comp for your business
Tell Redoubt what the business does, who works in it, and what the Kentucky requirement in front of you says. We will say whether a policy, a waiver, or an exclusion fits.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
- Alabama
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- Kentucky
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The hub, and the Kentucky pages that go deeper
Kentucky workers’ comp FAQ
Do I need workers' comp in Kentucky with only one employee?+
Yes. KRS 342.630 covers any business with one or more employees in Kentucky, and the Department of Workers' Claims counts part-time, temporary, and family workers. The only exception is a narrow list of exempt jobs, such as farm work and some domestic work.
Does a Kentucky LLC owner with no employees need workers' comp?+
Usually not. A qualified LLC member, meaning one who shares in profits, losses, and decisions under the operating agreement, is covered only if the LLC elects it by endorsement to its policy (KRS 342.012). A member who just draws regular pay with no share of profits or decisions has to be covered.
Can a Kentucky corporate officer opt out of workers' comp?+
Yes. The officer signs Form 4, the Employee's Written Notice of Rejection, and the original notarized form has to be on file with the Department of Workers' Claims before it counts. The officer gives up any right to benefits, and each other employee still has to be covered.
Am I liable for my subcontractor's workers in Kentucky?+
Yes, if the subcontractor is uninsured. Under KRS 342.610 a contractor and its carrier pay benefits to an uninsured subcontractor's employees for work that is a regular part of the contractor's business. The contractor can then try to recover the cost from the sub. Collect a current certificate from every sub before the job starts.