Short answer: Yes. Kentucky requires workers' compensation coverage once you have one employee, and family members, temporary workers and part-time workers all count. A short list of classes, such as agricultural workers and certain domestic workers, is exempt by statute. Uninsured employers face daily fines for each employee and lose their protection from lawsuits.
The basic rule
According to the Kentucky Education and Labor Cabinet's employer FAQ, employers with one or more employees must obtain and maintain workers' compensation insurance unless the Commissioner has authorized them to pay compensation directly, which is self-insurance. There's no small-business threshold.
The cabinet adds a point that trips up out-of-state companies: a policy must pay the employer's entire Kentucky liability. An "all states" endorsement doesn't qualify, so out-of-state employers working in Kentucky need a policy that provides Kentucky coverage.
Who counts as an employee
- full-time workers;
- part-time workers;
- temporary workers;
- family members; and
- under KRS 342.640, every executive officer of a corporation.
Who is exempt
KRS 342.650 exempts specific classes of workers, including:
- Domestic servants in a private home when the employer has fewer than two employees each regularly working 40 or more hours a week in domestic service.
- Short home projects: people hired for no more than 20 consecutive work days for maintenance, repair or remodeling at the employer's private home.
- Agricultural workers.
- People who elect out under the commissioner's regulations.
- Carpool and vanpool riders commuting to work.
- Ministers and church caretakers in narrow situations, such as working no more than 10 hours a week.
- Direct sellers as defined in the Internal Revenue Code.
- Members of certain religious sects opposed to insurance benefits.
KRS 342.660 lets employers of exempt workers choose to come under the law voluntarily.
Contractors and subcontractors
Under KRS 342.610(2), a contractor who subcontracts work is liable for compensation to the subcontractor's employees if the subcontractor hasn't secured it. That's a reason to collect subs' certificates of insurance before work starts. The same section also requires local building officials to get proof of a builder's coverage, or a written exemption certification, before issuing a building permit.
Penalties for going without
The cabinet's FAQ lists the consequences:
- Fines of $100 to $1,000 for each employee, for every day without coverage.
- Reimbursement. If the Uninsured Employers' Fund pays an injured worker's benefits, the employer must repay it and can be sued to collect.
- Lost exclusive remedy. The injured employee can sue the employer for pain and suffering, punitive damages and other relief.
Ongoing employer duties
- Post the notice. Every employer must display a Workers' Compensation Posting Notice at its primary office and where employees report for payroll and personnel matters (KRS 342.610(6)).
- Don't deduct premium from pay. KRS 342.420 forbids it, with a $100 to $1,000 fine for each violation.
- Report injuries fast. Employers must report an alleged injury to their carrier within three days of being notified, whether or not anyone witnessed it.
Self-insurance
Only employers authorized by the Commissioner can pay benefits directly. The cabinet says one requirement is that assets exceed liabilities by $10,000,000, and approved self-insurers must post a bond or letter of credit.
Scenarios
A Bowling Green bakery hires its first part-time cashier. Coverage is required from day one.
An Indiana roofing contractor takes a job in Covington. It needs a policy that provides Kentucky coverage, not just an all-states endorsement.
A homeowner hires a painter for a two-week project. The 20-consecutive-day exemption for home maintenance and repair work may apply. Longer projects need a closer look.
A horse farm near Lexington with seasonal hands. Agricultural employment is exempt, though the farm can elect coverage.
What coverage provides
Workers' comp pays medical care and wage-loss benefits for work injuries and occupational disease, and in exchange it's generally the employee's exclusive remedy against a covered employer. See our workers' compensation insurance guide and workers' comp for 1099 contractors.
Bottom line
Kentucky's rule is simple: one employee means coverage, with narrow statutory exemptions. Get the policy in place before the first hire, post the notice, and report injuries within three days.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Kentucky.
Frequently asked questions
Does Kentucky require workers' comp for one employee?
Yes. Employers with one or more employees must carry coverage unless approved to self-insure.
Do part-time and family workers count in Kentucky?
Yes. The Education and Labor Cabinet says family, temporary and part-time workers are employees.
What is the fine for no workers' comp in Kentucky?
$100 to $1,000 for each employee for every day without coverage, plus other liabilities.
Are farm workers exempt from Kentucky workers' comp?
Yes. KRS 342.650 exempts persons employed in agriculture, though employers can elect coverage.
Can a Kentucky employer deduct workers' comp from wages?
No. KRS 342.420 prohibits it, with fines of $100 to $1,000 per violation.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.