Payroll and Benefits Guide - United States - Kentucky

United States - Kentucky
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Currency

United States Dollar
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Capital

Frankfort
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Employer Taxes

11.175% – 25.275%
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Date Format

mm/dd/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Kentucky is known for its vibrant bluegrass music scene and hosts various festivals and events celebrating this unique genre of music.

Kentucky is home to the famous Kentucky Derby, one of the most prestigious horse racing events in the world.

The state is known for its bourbon production and is often referred to as the “Bourbon Capital of the World.”

It is the birthplace of Abraham Lincoln, the 16th President of the United States.

Kentucky is home to the world’s longest cave system.

Kentucky is dotted with beautiful horse farms.

United States - Kentucky

Contributions

Employee Payroll Tax

Contribution TypeRate
FICA Social Security6.20%
FICA Medicare1.45%
Additional tax0.90%

Employer Payroll Tax

Contribution TypeRate
Unemployment Insurance0.225% – 8.925%
Unemployment- New Employer2.70%
FICA Social Security6.20%
FICA Medicare1.45%
The FUTA0.60% – 6.00%

Payroll

Payroll Cycle

Employees receive their pay twice a month or once a month. If they are paid semi-monthly, the employer is required to make the payment within ten days after the pay period ends.

13th Salary

There are no laws requiring 13th salary.

Work Hours and Week

The average workweek consists of 40 hours, or 8 hours per day from Mondays to Fridays.

Overtime

In Kentucky, the Fair Labour Standards Act (FLSA) is followed, and any work exceeding 40 hours per week is considered overtime, compensated at 150% of the usual pay rate. When employees are already scheduled to work on weekends or rest days, no extra payment is necessary.

Nevertheless, if an employer asks an employee to work on these days due to exceptional circumstances, then overtime will be paid at the rate of 150% of their regular pay.

United States - Kentucky

Leave

Paid Time Off

There are no specific state laws dictating the amount or payment of vacation time. Instead, it is typically left to the discretion of employers to determine whether to provide paid or unpaid vacation leave. However, employers must ensure that their policies comply with employment regulations and any relevant provisions outlined in collective bargaining agreements.

Public Holidays

There are 11 official holidays in Kentucky.

Sick Days

Employers in Kentucky commonly adhere to the guidelines set forth by the Family and Medical Leave Act (FMLA). This federal legislation grants eligible employees the entitlement to take up to 12 weeks of unpaid but protected leave per year for specific family and medical reasons. These include maternity leave, serious illnesses affecting the employee, or the need to care for a spouse or child.

Employees become eligible for FMLA (Family and Medical Leave Act) if they meet the following criteria: they have been employed by their current employer for a minimum of one year, have worked at least 1,250 hours within the last year, and are employed at a company location where there are 50 or more employees within a 75-mile radius.

Maternity & Paternity Leave

Under the provisions of the Kentucky Civil Rights Act (KCRA), maternity and adoptive parental leave entail the following regulations:

  1. Companies employing 15 or more individuals must offer pregnant employees a modified work environment that may include extended breaks, light-duty tasks, job restructuring, equipment adjustments (including seating), and other necessary accommodations.
  2. Employers are required to grant up to 6 weeks of personal leave to employees who adopt a child under the age of 7.

Other Leave

Jury Duty: Full-time employees have the right to take job-protected, unpaid leave for jury duty, whether they are serving as a juror, acting as a witness in a case, responding to a subpoena, or participating as a plaintiff or defendant in court. To avail this leave, employees need to provide their employer with a copy of the jury summons as evidence of their obligation.

Voting Leave: Employees who are registered voters are entitled to unpaid leave in order to cast their votes in a general or special election.

Furthermore, besides the federal law USERRA, Kentucky state law also safeguards members of the U.S. armed forces, reserves, National Guard, commissioned corps of the public health service, and any other group of individuals designated by the president during times of war or emergency against

Termination

Termination Process

There is typically no formal “notice period” required by law to terminate an individual employment contract, unless specified in an employment agreement or collective bargaining agreement. The employment relationship is generally considered “at-will,” meaning either the employer or the employee can end the employment without providing notice or a specific reason, as long as it is not unlawful, such as discrimination based on protected categories outlined by law. The Federal Worker Adjustment and Retraining Notification Act (WARN) sets forth requirements for notice in cases of mass dismissals.

However, for executives and highly skilled individuals, their employment contracts often include a “just cause termination” clause. This clause stipulates that the employer can only terminate the employee based on specific grounds listed in the contract, and the parties negotiate the criteria for a “just cause” termination on a case-by-case basis.

Notice Period

In Kentucky, the majority of employees are considered “at-will,” which means that either the employer or the employee can end the employment relationship without prior notice. It is not mandatory by law in Oregon for employers to provide payment for unused vacation time upon termination.

Severance Pay

Severance pay is not obligatory and depends on the mutual agreement between employers and employees. If an employer decides to provide severance pay, it should be specified in the employee’s contract and mutually agreed upon. Certain employers may opt to offer severance packages based on the duration of an employee’s service, as an illustration.

Probation Period

Probation Period

There is no specific legal requirement for a formal “trial/probation period” in Kentucky. However, it is a common practice among employers to conduct a performance evaluation after an initially agreed-upon period of employment, typically lasting 90 days.

Immigration

Foreign nationals who do not possess permanent resident status or a work visa are not permitted to work in the United States. To hire a foreign national, an employer can submit a petition to the United States Department of Homeland Security/United States Citizenship and Immigration Services (USCIS) to obtain an employment visa on behalf of the prospective employee.

Once the petition is approved, the prospective employee must obtain a “visa stamp” from a U.S. embassy or consulate, except for Canadian citizens who are exempt from this requirement. In order to secure a temporary U.S. work visa, the employer must file a petition with USCIS, and an approved petition is a necessary component of the visa application process.

VAT

In Kentucky, the state sales tax rate is a fixed 6%.