Payroll Kentucky, Unique Aspects of Kentucky Payroll Law and Practice

Payroll Kentucky, 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

Frankfort, KY 40601-1134

(502) 564-7287

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

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

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

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

The Kentucky State Unemployment Insurance Agency is:

Department for Employment Services

275 E. Main St., 2nd Fl. E.

Frankfort, KY 40621

(502) 564-2900

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

Kentucky requires Magnetic media reporting of quarterly wage reporting if the employer has at least 250 employees that they are reporting that quarter.

Unemployment records must be retained in Kentucky for a minimum period of six years. This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.

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

Labor Cabinet

Division of Employment Standards,

Apprenticeship and Training

1047 U.S. 127 South, Ste. 4

Frankfort, KY 40601-4381

(502) 564-3070

The minimum wage in Kentucky is $5.15 per hour.

The general provision in Kentucky concerning paying overtime in a non-FLSA covered employer is one and one half times regular rate after 40-hour week.

Kentucky State new hire reporting requirements are that every employer must report every new hire and rehire and job refusals. The employer must report the federally required elements of:

  • Employee’s name
  • Employee’s address
  • Employee’s social security number
  • Employer’s name
  • Employers address
  • Employer’s Federal Employer Identification Number (EIN)

This information must be reported within 20 days of the hiring or rehiring.
The information can be sent as a W4 or equivalent by mail, fax or electronically.
There is a $250.00 penalty for 3rd and later offenses for a late report in Kentucky.

The Kentucky new hire-reporting agency can be reached at 800-817-2262 or 804-771-9602 or on the web at

Kentucky does not allow compulsory direct deposit

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

  • Gross and Net Earnings
  • purpose of deductions
  • Kentucky requires that employee be paid no less often than semimonthly, less frequently for FLSA-exempt employees. Kentucky requires that the lag time between the end of the pay period and the payment of wages to the employee not exceed eighteen days. Kentucky payroll law requires that involuntarily terminated employees must be paid their final pay with in later of next regular payday or 14 days and that voluntarily terminated employees must be paid their final pay later of next regular payday or 14 days. Deceased employee’s wages must be paid when normally due to the surviving spouse or custodian of minor children if there is no will and estate is not over $15,000. Escheat laws in Kentucky require that unclaimed wages be paid over to the state after seven years. The employer is further required in Kentucky to keep a record of the wages abandoned and turned over to the state for a period of 5 years. Kentucky payroll law mandates no more than $3.02 may be used as a tip credit. In Kentucky the payroll laws covering mandatory rest or meal breaks are that employees must have a reasonable meal period within 3-5 hours after shift starts; 10-minute rest each 4 hours; minors: 30-minute meal period after 5 hours. Kentucky statute requires that wage and hour records be kept for a period of not less than one year. These records will normally consist of at least the information required under FLSA. The Kentucky agency charged with enforcing Child Support Orders and laws 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 Withholding? Order specifies date to begin.
    • When to send Payment? Date noted in order.
    • When to send Termination Notice? “Promptly.”
    • Maximum Administrative Fee? $1 per payment.
    • Withholding Limits? 50% of disposable earnings.

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