Kentucky Unemployment Tax Registration and Unemployment Benefits Award

General Information

All “subject employers” in Kentucky must pay taxes on the wages paid for “covered employment” to fund their share of the unemployment insurance system. When a worker is discharged due to lack of work or for any non-disqualifying reason, the taxes paid into the employer’s “reserve account” are used to cover the former employee’s unemployment benefits. Usually, the former employee may collect unemployment benefits for at least a year, assuming he/she was not discharged for misconduct or dishonesty connected to the employment or left such employment without good cause.

Purpose/Necessity

“Subject employers” are required to register and pay unemployment insurance tax. Subject employers include:

  1. For-Profit Business: if the business pays at least $1,500 in wages in a single calendar quarter OR has at least 1 worker performing service in each of 20 weeks out of a calendar year (need not be the same worker each week and weeks need not be consecutive)
    • Successor/Acquiring Business: a business that succeeds to or acquires another business or substantially all its assets which was a subject employer
    • Existing Business Beginning Operation in Kentucky: if already liable for federal or another state’s unemployment tax
  2. Non-Profit Organization: if the religious/charitable/educational/etc. organization employs at least 4 workers in each of 20 weeks out of a calendar year (need not be the same worker each week and weeks need not be consecutive
  3. Agricultural Employer: if the employer pays at least $20,000 in wages in a single calendar quarter OR has at least 10 workers performing service in each of 20 weeks out of a calendar year (need not be the same worker each week and weeks need not be consecutive)
  4. Domestic Employer: if the private home/local college club/college fraternity or sorority/etc. employer pays at least $1,000 in wages in a single calendar quarter
  5. State Employer: Kentucky state employers or any political subdivision or municipality thereof

Subject employers must pay the tax for all “covered” employees but not for any “noncovered” employees. Subject employers need not pay the tax for independent contractors, but it is critical that the employer has accurately classified such a worker because the employer-independent contractor determination is made based on Kentucky unemployment law without regard to how the employer terms the relationship.

Like other taxes, the unemployment tax is a legal obligation that cannot be reduced. The Kentucky Office of Employment and Training (OET) employs auditors to ensure the proper tax amount is paid on time. If it is not, interest is assessed at 1.5% per month or fraction thereof. KRS 341.300(1). Legal action may be taken to collect the amounts owed. KRS 341.300(2).

Frequently Asked Questions

  • By when must the employer’s tax registration be completed?
    • “No later than the last day of the calendar quarter in which the coverage requirements is first met.” 787 KAR 1:010 § 1. If there was a change in business ownership, within 15 days of such change. 787 KAR 1:020 § 1.
  • What is the unemployment insurance tax rate?
    • It is determined by a complicated formula which takes into account a rate schedule for all employers set by the Secretary of the Unemployment Insurance Commission, the amount of contribution by the federal government to Kentucky’s unemployment fund, how much unemployment tax the individual employer has already paid, how much unemployment benefits former employers of the individual employer have taken out, and other factors.When a business first hires employees and registers, its beginning tax rate is 2.7% of wages paid. KRS 341.270(1). Later contribution rates can be anywhere between 0.0-10.0%. KRS 341.270(4). The Division of Unemployment Insurance will send a “Notice of Contribution Rate” to the individual employer at the beginning of each year (usually mid-February) informing the employer of the particular rate applicable to that employer’s account for the year. 787 KAR 1:210.
  • Is the tax paid on all employee wages?
    • No, the tax is levied on gross wages (including commissions, bonuses, and the cash value of compensation received other than in cash) reportable prior to any deductions or withholdings for other taxes or employee benefits. But, only the first $8,000 of gross wages earned by each employee in a calendar year are subject to the tax. The employer must report the employee’s entire gross wages but need not pay unemployment tax on any wages paid over $8,000 during that calendar year. However, beginning January 1, 2012, the limit will be raised to $9,000. KRS 341.030(9).
  • Does the business need a separate account for each business location?
    • No, only one unemployment insurance tax account is required if the legal ownership of the various business locations is the same. KRS 341.060(2).
  • How is the tax collected on a business that acquired another business which had already been paying Kentucky unemployment tax?
    • A business that acquires a business which already was a “subject employer” assumes the unemployment insurance tax rate, reserve account balance, and any delinquencies of the acquired business. The acquiring business (known as a “successor”) is required to continue the payment of all taxes due. KRS 341.540(3).
  • How is an employer informed that a former employee has applied for unemployment benefits?
    • The same day the employee files a claim, the Division will mail a copy of the claim to the employer. The employer should receive Form UI-412A, “Employer’s Notice of Initial Claim,” which will indicate that the employer may protest the claim for benefits within 10 days from the date the form was mailed. The employer’s notice of protest may be made directly on Form UI-412A. 787 KAR 1:060 § 2(1).The Division will consider the facts put forward and will make its decision as to whether unemployment benefits will be awarded on Form UI-492, “Notice of Adjusted Determination.”
  • May a decision to award benefits be appealed?
    • Yes, a benefit determination may be appealed first to an Appeals Branch Referee. That decision may then be appealed to the Unemployment Insurance Commission. That decision may then be appealed to Circuit Court. And that decision may finally be appealed to the Court of Appeals. There are strict time limits within which each appeal must be filed and requirements as to the contents of each written appeal. The first potential appeal of the benefit determination must be filed within 15 days of the date the determination was mailed. KRS 341.420(2). Therefore, it is critical to move quickly if the decision is to be challenged.

Legal Services Offered and Cost

Register for Kentucky Unemployment Taxation
Legal fees: $100 flat fee
Filing fees and other costs: none
This includes:

  1. Review of client’s information to ensure legal requirements are fulfilled
  2. Confirm obligation to pay unemployment tax (e.g., employer is a “subject employer”, work performed is “covered employment”, etc.)
  3. Completion of Kentucky employer unemployment tax registration
  4. Email confirmation of registration for employer’s reserve account

If you are ready to get started, please CLICK HERE to enter basic information using our secure online form.

 

Employer’s Appeal of an Employee’s Benefits Award
Please note that the employer should be able to protest the initial claim for benefits without the assistance of an attorney. The protest may be made on Form UI-412A. If benefits are to be awarded, the employer will be informed on Form UI-492. At this point, the decision of the Division may be appealed, and an attorney may be necessary to handle the appeal. The employer has only 15 days from the day Form UI-492 was mailed to file an appeal.

Legal fees: hourly rate
Filing fees and other costs: none

This includes:

  1. Review of client’s information, determine arguments to make, and prepare client for unemployment benefits decision hearing
  2. Appeal decision to award benefits to Appeals Branch Referee
  3. Correspondence with the Division of Unemployment Insurance
  4. Attend unemployment benefits decision hearing with client and argue against awarding benefits
  5. Potential further appeal to Unemployment Insurance Commission or courts, if necessary and agreed upon

If you are ready to get started, please CLICK HERE to enter basic information using our secure online form.