Q. When is workers' compensation insurance required?
A. Employers with one or more workers are required to maintain coverage. There are no exceptions for family member employees, temporary, or part time employees. Out-of-state employers performing any work in this state are required to have Kentucky coverage. (Ohio employers refer to next question.)
Q. Is Ohio BWC coverage sufficient for work done in Kentucky?
A. No. An Ohio employer performing work (even temporary) in Kentucky must have a separate insurance policy. Coverage must be afforded by an approved carrier providing benefits in accordance with the Kentucky Workers’ Compensation Act. Kentucky does not accept the Form C-110s filed by Ohio employees as these are not enforceable by Kentucky courts. Any worker injured in this state has the right to file a claim for benefits under terms of our law.
Q. What can happen if I do not have workers' compensation insurance for employees?
A. Non-compliant employers are subject to a fine of $100 to $1,000 per employee. Each employee and each day of violation shall constitute a separate offense. Additionally, an employer may be held liable to an injured employee (or employee of an uninsured contractor or subcontractor) for income benefits including lost wages and medical expenses.
Q. What is the difference between employees and independent contractors?
A. Independent contractors generally are skilled individuals who work in a distinct occupation or business. Courts have determined certain criteria for classification as an independent contractor. The major factors are:
The nature of the work performed as it relates to the possible employer. An independent contractor’s work is not a regular and recurring part of the possible employer’s business. It is usually for a specific project with a beginning and ending date. An independent contractor provides the same services for other customers.
The extent of control of the details of the work. An independent contractor provides materials and equipment to perform the job and has potential for profit or risk of loss on the project. An independent contractor does not receive instructions or training from the employer, has the right to hire or fire helpers without permission from other, and has final control of the job.
Professional skill of the worker. Independent contractors have a specialized skill, trade, or license. They usually maintain a separate place of business, advertise, and have a business telephone.
Intentions of the parties. A written contract should describe the obligations and responsibilities of each party, a specific project described, dates of project and prices agreed upon in advance. The method of payment is not a primary factor.
Q. What if I use “contract labor?”
A. This term is often misunderstood by business owners. Refer to the previous question for factors used in determining a worker's classification. Call the Compliance Branch with any questions concerning worker classification.
Q. Do members of a Limited Liability Company (LLC) or a partnership have to maintain workers' compensation insurance if there are no employees?
A. These two business types are exempt under certain circumstances. In both cases, the LLC members or partners must be “qualified.” A “qualified” member or partner substantially participates in profit or loss as well as the decision-making process of the business. For exemption, a copy of the articles of organization or partnership agreement, along with the FEIN, must be filed with this agency. The LLC or partnership must file a copy of its tax return on or before April 15 of each year with our Commissioner. KRS 342.012 provides additional information.
Q. Is workers' compensation insurance required for officers of a corporation?
A. Yes. KRS 342.640(2) designates officers of corporations as employees. Corporate officers may exempt themselves from coverage by filing an Employee’s Written Notice of Rejection (Form 4). Obtain the form from the Compliance Branch or Administrative Services at 502-564-5550. The notice is not effective unless the original notarized form is filed with this agency.
Q. How do I obtain a copy of a previously filed Form 4?
A. Make a written request on an OPEN RECORDS REQUEST FORM. Download the form from the FORMS link on this Web site. Provide the employee's name (social security number if available), and business name and address. Include the approximate filing date if known. The request should include a self-addressed stamped envelope and 75 cents per copy (check or money order payable to Commonwealth of Kentucky Office of State Treasurer). Mail request to:
Department of Workers Claims
Attention: Compliance Branch
657 Chamberlin Ave.
Frankfort, Ky. 40601
Q. Is an employer required to show proof of coverage?
A. Kentucky statute requires every employer to display a Workers' Compensation Posting Notice conspicuously at its principal office and other locations, where employees report for payroll and personnel matters. [KRS 342.610(6)] Contact your insurance agent or workers' compensation carrier for a current notice if you did not receive one with your latest policy.
Q. What is the purpose of an Affidavit of Exemption by Building Contractor?
A. Every local building permit official shall require proof of workers’ compensation insurance prior to issuing any building permit. An applicant with no employees must certify exemption to the building permit official. We provide two forms for this purpose. One is an affidavit of exemption for corporation or partnership and the other is an affidavit of exemption for individual. These forms are available for download from the FORMS link on this Web site. (Do not confuse these affidavits with the Form 4.)
Q. Do employees pay any part of the workers' compensation insurance premium?
A. Kentucky Revised Statute 342.420 specifically prohibits the employer from deducting premium from wages or salary of any employee entitled to benefits.
Q. How do I obtain workers' compensation insurance coverage?
A. By purchasing a policy from an insurance agent that represents approved insurance companies.