If your business has employees in the state of Kentucky, you’ll need to make sure you adhere to Kentucky’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in Kentucky?

Kentucky requires all employers that employ one or more workers and are not solely engaged in agricultural work to obtain Workers’ Compensation Insurance. In Kentucky, an “employee” is generally defined as any individual who performs services for another and is not an independent contractor.

The Kentucky Workers’ Compensation Act (WCA) defines all of the requirements for Workers’ Comp in Kentucky, and the Kentucky Department of Workers’ Claims (DWC) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in Kentucky?

Almost all workers are covered under Workers’ Compensation in Kentucky. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance.

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Interns and apprentices
• Minors
• Undocumented immigrants
• Executive corporate officers
• Volunteers for ambulance services, police, fire departments, and state emergency management agencies
• Workers who would not otherwise be covered, if the employer elects to include them in coverage

The following are categories of employees that are generally excluded from Workers’ Comp coverage:

• Independent contractors
• Domestic servants working in private homes
• Agricultural workers
• Business owners and members of a partnership or LLC
• Workers covered under federal workers’ compensation laws
• Workers who elect to decline coverage
• Most volunteers

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in Kentucky, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Employers must pay for all necessary medical costs for employees who suffer an occupational injury or disease. 
• Employees may be reimbursed for reasonable travel expenses that are necessary to receive medical treatment. If employees must attend an official medical evaluation, employees must provide travel expenses in advance. 

Temporary Total Disability

• Employees who are unable to return to work due to a work-related injury are eligible for Temporary Total Disability (TTD) benefits. TTD benefits provide 66 and two-thirds percent of the employee’s average weekly wage before the injury, subject to a maximum of the state’s average weekly wage.
• The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum TTD benefit was $1,009.56 per week, and the minimum benefit amount was $183.56 per week.
• TTD benefits end when the employee is able to return to work or has reached maximum medical improvement as determined by a physician. If employees must stop work again to undergo surgery or other medical treatments, TTD can be restarted.

Permanent Total Disability

• When employees are permanently unable to perform any work as a result of a work-related injury, they are eligible for Permanent Total Disability (PTD) benefits. 
• Permanent disabilities include loss of eyesight in both eyes; loss of both feet or hands; loss of one foot and one hand; paralysis of both arms or legs or one arm and one leg; and total loss of hearing. 
• PTD benefits provide 66 and two-thirds percent of a worker’s average weekly wage pre-injury, payable as long as the employee remains permanently and totally disabled and is unable to earn wages.
• The DWC establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum PTD benefit was  $1,009.56 per week, and the minimum benefit amount was $183.56 per week. 
• PTD benefits are payable for as long as the disability continues. 

Permanent Partial Disability 

• Employees who recover from a covered injury but suffer a permanent partial impairment may be eligible for Permanent Partial Disability (PPD) benefits. 
• The number of benefit weeks available from PPD can vary based on the body part that was injured and the severity of the injury. The WCA’s schedule of injuries explains how long benefits will be paid and what benefits are available for different types of injuries.
• The WCA establishes minimum and maximum benefit amounts, which change yearly. For accidents that occurred in 2021, the maximum PPD benefit was  $1,009.56 per week, and there was no minimum. 
• PPD benefits are usually limited to 425 weeks. The benefits will pay up to 99 percent of 66 and two-thirds of the worker’s average weekly wage.

Death Benefits

• If employees die within four years of a work-related injury, and the death was related to the injury, the employee’s estate will receive a lump sum payment. The payment amount is updated each year. For 2021, the payment amount was $90,150.18.
• A worker’s surviving dependents may be eligible to receive up to 75 percent of the worker’s average weekly wage, up to the maximum amount allowed by the DWC. In 2021, the maximum was $688.34.

What are the penalties for breaking Kentucky Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the WCA can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the WCA or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

Failure to Comply With Coverage Requirements

• Employers that do not maintain Workers’ Compensation coverage for their employees may face fines of between $100 and $1,000 for each employee who did not have coverage and each day of non-compliance. 
• Employers may also face criminal charges punishable by imprisonment for 30 to 180 days and fines between $100 and $1,000.
• Employers that deduct any part of the cost of Workers’ Compensation coverage from employees’ wages may also be subject to these penalties. 
• The DWC may issue a stop-work order to employers that are not in compliance. 
• If employees sustain work-related conditions while the employer does not have proper coverage, they may sue their employer for damages. 
• If the Kentucky Uninsured Employer’s Fund must pay benefits to a company’s injured employees, the company may be required to reimburse the fund. 

Fraud

• Employers that provide false or misleading information may face fines of $5,000 per individual, $10,000 per corporation, or twice the amount of gain received as a result of the violation (whichever is greater). They may also face criminal charges punishable by fines between $200 and $2,000 and imprisonment for 30 to 180 days. 
• The DWC may require employers to repay any benefit received from WCA violations. 
• Employers that intentionally use an employee leasing arrangement in order to lower costs could face criminal charges punishable by fines between $500 and $5,000 and imprisonment for up to 180 days. 

Failure to Report

• Employees must report any work-related injuries or conditions within one week of the injury’s occurrence or the date the employer first learned of it.
• Employers that do not report an injury within 15 days of the due date could face fines between $100 and $1,000 per offense. 

Failure to Make Timely Benefit Payments

• Employers must pay medical expenses within 30 days of receiving an invoice and must pay income benefits within 15 days of being notified that they are due. 
• Employers that do not pay benefits in a timely manner may be fined between $100 and $1,000. Employers must also pay up to 18% interest on delayed payments. 

Claim Handling Violations

• Employers must report benefit payments, changes, and termination to the DWC. Employers that do not follow reporting regulations may face fines between $100 and $1,000 per violation. 

How much does Workers’ Compensation Insurance cost in Kentucky?

According to the National Academy of Social Insurance Workers’ Compensation Report (November 2020), the average employer cost for Workers’ Compensation in Kentucky was $1.00 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in Kentucky?

Employees should report any work-related conditions to their employer as soon as possible. Employers should report to the DWC any injuries that cause an employee to be absent from work for more than one day. Workers’ compensation claims can be filed online using the DWC’s litigation management system. Employees must file applications within specified time periods which can vary depending on the type of injury. The DWC will schedule benefit reviews. Employers must accept or deny claims within 45 days of a scheduling order. 

Employers and employees must attend benefit review conferences. If there are any areas of dispute, additional hearings will be held. An administrative law judge will issue a decision. If they believe there are errors in the decision, involved parties may ask for reconsideration within 14 days of the date of a written decision. Parties who object to the administrative law judge’s final decision may appeal to the Workers’ Compensation Board. 

Kentucky Workers’ Compensation Insurance Resources

• Kentucky Department of Workers’ Claims (DWC)
• Kentucky DWC Claims Proces
• Kentucky PPD Benefits Calculator