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Payroll and Benefits Guide United States – Kentucky

Last updated: Mar 29, 2023

Currency
United States Dollar (USD)
Employer Taxes
11.175% – 25.275%
Payroll Frequency
Monthly/Semi-monthly
Employee Costs
8.55%
Capital
Frankfort
Date Format
mm/dd/yyyy
Fiscal Year
1 January - 31 December
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Contribution

Employer Employer Payroll Contributions
0.225% – 8.925% (Maximum taxable wages is 11,100.00 USD) Unemployment (State)
2.70% Unemployment- New Employer (State)
6.20% (Maximum taxable wages is 160,200.00 USD) FICA Social Security (Federal)
1.45% (Maximum taxable wages is 160,200.00 USD) FICA Medicare (Federal)
0.60% – 6.00% (Maximum taxable wages is 7,000 USD) FUTA (Federal Unemployment Tax Act)  The FUTA tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law then the FUTA tax is reduced (credit) by 5.4% to 0.6%.
11.175% – 25.275% Total Employment Cost
Employee Employee Payroll Contributions
6.20% (Maximum taxable wages is 160,200.00 USD) FICA Social Security (Federal)
1.45% (Maximum taxable wages is 160,200.00 USD) FICA Medicare (Federal)
0.90% Additional tax on earnings over 200,000 USD (High-income earners also pay an additional 0.9 percent in Medicare taxes)
7.65%-8.55% Total Employee Cost
State Employee Income Tax
4.50% Flat rate for single/married couples filing jointly
Standard Deduction and Personal Exemption
Single 2,980.00 USD
couple /Married Filing Jointly 5,980.00 USD
Federal Employee Income Tax
Federal Tax – Singles
10.00% Up to 11,000 USD
12.00% 11,001 USD to 44,725 USD
22.00% 44,726 USD to 95,375 USD
24.00% 95,376 USD to 182,100 USD
32.00% 182,101 USD to 231.250 USD
35.00% 231,251 USD to 578,125 USD
37.00% 578,126 USD or more
Federal Tax – Married, filing jointly
10.00% Up to 22,000 USD
12.00% 22,001 USD to 89,450 USD
22.00% 89,451 USD to 190,750 USD
24.00% 190,751 USD to 364,200 USD
32.00% 364,201 USD to 462,500 USD
35.00% 462,501 USD to 693,750 USD
37.00% 693,751 USD or more
Federal Tax – Heads of Households
10.00% Up to 15,700 USD
12.00% 15,701 USD to 59,850 USD
22.00% 59,851 USD to 95,350 USD
24.00% 95,351 USD to 182,100 USD
32.00% 182,101 USD to 231,250 USD
35.00% 231,251 USD to 578,100 USD
37.00% 578,101 USD or more
Standard Deduction and Personal Exemption
13,850.00 USD Single
27,700.00 USD Married Filing Jointly
20,800.00 USD Head of Household

Minimum Wage

General

The minimum wage in Kentucky is 7.25 USD per hour, the same as the federal minimum wage.

 

Payroll

Payroll Cycle

Employees are paid semi-monthly and monthly. When payments are made semi-monthly, the employer must make the payment within 10 days of the end date of the pay period.

13th Salary

There are no provisions in the law regarding 13th salaries.

Working Hours

General

The workweek is a maximum of 40 hours per week or 8 hours per day.

Overtime

Kentucky adheres to the Fair Labor Standards Act (FLSA), and work in excess of 40 hours per week is considered overtime and paid at the rate of 150% of the regular pay. If employees are scheduled to work on weekends or rest days, no additional payment is required. However, should an employer request an employee to work in exceptional circumstances on these days, then overtime is paid at the rate of 150% of the regular pay.

Leave

Annual Leave (vacation)

Kentucky does not have any state laws that govern the amount and payment of vacation time. However, it is common for employers to decide whether to offer paid or unpaid vacation leave. This must comply with employment law and must be stipulated in collective bargaining agreements.

Public Holidays

Public holidays are not mandatory paid days off, but employers commonly allow workers to take federal holidays as paid days off.

Some companies might also agree to allow workers to take off state holidays; workers can find specific state holiday dates from their local government.

Usually when an agreed public holiday falls on a weekend, a day off in lieu is given on the Friday before or the Monday after the holiday.

Date Day Holiday Note
1 Jan 2024 Monday New Year’s Day
15 Jan 2024 Monday Martin Luther King Jr. Day
19 Feb 2024 Monday Presidents Day
27 May 2024 Monday Memorial Day
19 Jun 2024 Wednesday Juneteenth Independence Day
4 Jul 2024 Thursday Independence Day July
2 Sep 2024 Monday Labor Day
14 Oct 2024 Monday Columbus Day
11 Nov 2024 Monday Veterans Day
28 Nov 2024 Thursday Thanksgiving Day
25 Dec 2024 Wednesday Christmas Day

 

Sick Days

It is common for an employer to follow the Family and Medical Leave Act (FMLA) which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child).

Employees are eligible for FMLA if they have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.

FMLA eligible employees are entitled to:

  • 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
  • Leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
  • Care for the employee’s spouse, child, or parent who has a severe health condition.
  • Leave in the event of a serious health condition that makes the employee unable to perform the essential functions of their job.
  • Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”

Or

  • Twenty-six working weeks of leave during a single one-year period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

Maternity Leave

Maternity leave falls under FMLA (see Sick Leave).

In addition to the FMLA and the Pregnancy Discrimination Act, the Kentucky Civil Rights Act (KCRA) has the following laws regarding Maternity and Adoptive Parental Leave:

  • Employers with 15 employees or more are to provide pregnant employees with modified work environments, including longer breaks, light-duty, job restructuring, modification of equipment (including seating), etc.
  • Employers are to provide up to 6 weeks of personal leave due to the adoption of a child under the age of 7.

Paternity Leave

Paternity leave falls under the FMLA (see Sick Leave).

Parental Leave

Parental leave falls under the FMLA (see Sick Leave).

Other Leave

  • Jury Duty: Full-time employees are entitled to job-protected, unpaid leave for jury duty, as a witness in a case, responding to a subpoena, or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of requirement.
  • Voting Leave: Employees that are registered to vote are entitled to unpaid leave to vote in a general or special election.
  • In addition to the federal law USERRA, Kentucky law provides protection against discrimination for members of U.S. armed forces, reserves, National Guard, commissioned corps of the public health service, and any other category of persons designated by the president in a time of war or emergency.

Termination

Termination Process

Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal notice period when terminating an individual employment relationship, and employment is considered “at will.” This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, notable discrimination on the grounds of a category protected by law, etc., and as per the Federal Worker Adjustment and Retraining Notification Act (WARN).

The employment contracts of executives and other highly skilled individuals often incorporate a “just cause termination” clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds. In such cases, the parties negotiate the foundations for a “just cause” termination.

Notice Period

In Kentucky, most employees are employed “at-will,” and either party can terminate the employment relationship without notice. Payout of unused vacation time is not required by law. Still, it is common for employers to pay out unused vacation days, provided the employee gave some advanced notice of resignation. There is no official notice period, however, general practice is 2 weeks.

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.

Severance Pay

There is no requirement for severance pay and it is a matter of agreement between an employer and an employee. Employers who choose to offer severance would need to have such provisions within the employee’s contract and agreed to by both parties.  Some employers choose to offer severance based on their employee’s length of service as an example.

Probation Period

Except when outlined in an employment contract or collective bargaining agreement, employers are not required to pay severance. However, many employers choose to offer severance pay based on the length of employment.

VISA

VISA

Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security/United States Citizenship and Immigration Services (USCIS) for an employment visa on behalf of the prospective employee. If the petition is approved, the prospective employee must obtain a “visa stamp” from a United States embassy or consulate (Canadian citizens are exempt from this requirement). To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request. The types of visas include:

  • H-1B – for applicants with a college degree hired to do specialized work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
  • H-1B1 – for applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
  • H-2A – for temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
  • H-2B – for temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
  • L – for intercompany transfers (people transferred from a foreign company to a US branch of the company.) The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialized knowledge.
  • 0 – for people with extraordinary ability in science, arts, education, business, or athletics.

The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.

For those seeking employment-based immigrant visas:

  • E-1 – highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics.
  • E-2 – for those with advanced degrees or exceptional ability.
  • E-3 – for skilled workers and professionals, as well as unskilled workers.
  • E-4 – members of certain immigrant groups.
  • E-5 – immigrant investors in US companies (substantial investment).

Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card,” if the employee can establish that the potential employee is a multinational executive/manager transferee, has unique skills, or has been offered a job in the United States. The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.
All employers are obligated to verify that all individuals they employ are authorized to work in the United States.

VAT

General

Kentucky has a flat rate state sales tax rate of 6%.

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Version History

February 16, 2022
Payroll contributions and personal income tax rates have been updated.
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Payroll and Benefits Guide in United States – Kentucky

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Payroll and Benefits Guide
in United States – Kentucky

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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Public Holidays Calendar

United States – Kentucky
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ICS
Date Day Holiday Note
1 Jan 2024 Monday New Year’s Day
15 Jan 2024 Monday Martin Luther King Jr. Day
19 Feb 2024 Monday Presidents Day
27 May 2024 Monday Memorial Day
19 Jun 2024 Wednesday Juneteenth Independence Day
4 Jul 2024 Thursday Independence Day July
2 Sep 2024 Monday Labor Day
14 Oct 2024 Monday Columbus Day
11 Nov 2024 Monday Veterans Day
28 Nov 2024 Thursday Thanksgiving Day
25 Dec 2024 Wednesday Christmas Day