Kentucky Payroll, Unique Aspects of Kentucky Payroll Law and Practice

The Kentucky State Agency that oversees the collection and reporting of state income taxes deducted from payroll checks is:

Revenue Cabinet

200 Fair Oaks Lane

Frankfurt, KY 40601-1134

(502) 564-7287

Kentucky requires that you use the federal form “K-4 Employee Withholding Certificate of Exemption” to calculate state income tax withholding.

Not all states allow wage reductions made under Section 125 or 401(k) cafeteria plans to be treated in the same manner as the IRS code allows. In Kentucky, cafeteria plans are not taxed for income tax purposes; taxable for unemployment insurance purposes. 401(k) deferrals are not subject to income tax; taxable for unemployment purposes.

In Kentucky, supplemental wages are required to be added for the calculation of state income tax withholding.

You must file your Kentucky state W-2s by magnetic media if you have at least 250 employees and you must file your federal W-2s by magnetic media.

The Kentucky State Unemployment Insurance Agency is:

Department of Employment Services

275 E. Main St., second floor E.

Frankfurt, KY 40621

(502) 564-2900

The state of Kentucky taxable wage base for unemployment purposes is wages up to $8000.00.

Kentucky requires quarterly wage report magnetic media to be reported if the employer has at least 250 employees reporting that quarter.

Unemployment records must be kept in Kentucky for a minimum period of six years. This information generally includes: name; Social Security number; hire, retirement and termination dates; salaries per period; payroll periods and pay dates; date and circumstances of termination.

The Kentucky State Agency charged with enforcing state wage and hour laws is:

Labor Cabinet

Employment Standards Division,

Learning and Training

1047 US 127 South, Ste. 4

Frankfurt, KY 40601-4381

(502) 564-3070

The minimum wage in Kentucky is $5.15 per hour.

The general provision in Kentucky regarding overtime pay at an employer not covered by the FLSA is one and one-half times the regular rate after a 40-hour week.

The state of Kentucky’s new hire reporting requirements are that every employer must report every new hire and rehire and job rejections. The employer must report the elements required by the federal government of:

  • Name of the employee
  • employee address
  • Employee Social Security Number
  • Name of the employee
  • employee address
  • Federal Employer Identification Number (EIN) of the employer

This information must be reported within 20 days of hiring or rehiring.

Information can be submitted as a W4 or equivalent by mail, fax, or electronically.

There is a $250.00 penalty for third and subsequent offenses for a late report in Kentucky.

You can contact the Kentucky New Hire Reporting Agency by calling 800-817-2262 or 804-771-9602 or on the web at

Kentucky does not allow mandatory direct deposit

Kentucky requires the following information on an employee’s pay stub:

  • gross and net profit
  • purpose of deductions
  • Kentucky requires that employees be paid no less frequently than twice a month, less frequently for FLSA-exempt employees. Kentucky requires that the lapse of time between the end of the pay period and the payment of wages to the employee shall not exceed eighteen days. Kentucky payroll law requires that involuntarily terminated employees be paid their final pay no later than the next regular payday or 14 days and that voluntarily terminated employees must be paid their final pay no later than the next regular payday or 14 days. The deceased employee’s wages must be paid when normally owed to the surviving spouse or custodian of minor children if there is no will and the estate does not exceed $15,000. Rollback laws in Kentucky require that unclaimed wages be paid to the state after seven years. Additionally, in Kentucky the employer is required to keep a record of wages abandoned and turned over to the state for a period of 5 years. Kentucky payroll law requires that no more than $3.02 may be used as a tip credit. In Kentucky, payroll laws covering mandatory breaks or meal breaks state that employees must have a reasonable window to eat within 3-5 hours of the start of the shift; 10 minute break every 4 hours; Minors: 30 minute meal period after 5 hours. Kentucky statute requires wage and hour records to be maintained for a period of not less than one year. These records will normally consist of at least the information required under the FLSA.

    The Kentucky agency charged with enforcing child support laws and orders is:

    Child Support Enforcement Commission Office of the Attorney General 700 Capitol Ave., Ste. 118 Frankfort, KY 40601 (800) 248-1163 Kentucky has the following provisions for child support deductions:

    • When to start retention? The order specifies the start date.
    • When to send the payment? Date noted in order.
    • When to send Notice of Termination? “Promptly.”
    • Maximum administrative fee? $1 per payment.
    • Withholding limits? 50% of disposable income.

    Please note that this article is not updated for changes that can and will occur from time to time.

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