How to Hire a New Employee in Kentucky (2026)
Reviewed by DocDraft Legal Team · Kentucky · Last updated 2026-05-18
When a Kentucky employer adds a worker to payroll, the state's own wage and reporting rules kick in. In Kentucky, $7.25 per hour (Kentucky state rate matches federal FLSA floor under KRS 337.275); tipped cash $2.13 with tip credit. The statutory anchor is KRS 337.275. The federally-required new-hire report in Kentucky is filed with the report due krs 405.435(2) requires employers to report new hire information to the sdnh within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in kentucky. Below are the Kentucky-specific filings, deadlines, and the statutes that govern workers' comp, E-Verify, and at-will employment.
Key Considerations
Compensation in Kentucky starts at a statutory floor. $7.25 per hour (Kentucky state rate matches federal FLSA floor under KRS 337.275); tipped cash $2.13 with tip credit The controlling provision is KRS 337.275.
New-hire reporting is the federally-mandated first administrative step. Kentucky requires the report KRS 405.435(2) requires employers to report new hire information to the SDNH within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in Kentucky. On the unemployment side, the employer must also register for state UI tax
Three risk-side rules round out the Kentucky compliance picture. Workers' compensation coverage: 1 or more employees E-Verify posture: No state-level statute. Governed by federal law, which does not mandate E-Verify for all employers. Kentucky requires E-Verify only for public agencies and contractors. At-will employment posture: Kentucky's at-will employment status is defined by case law rather than statute. The controlling case established that an employer may ordinarily discharge an at-will employee for good cause, for no cause, or for a cause that some might view as morally indefensible.
Need These Documents?
DocDraft can help you draft them with AI, with licensed attorney review included. Plans from $39.99/mo.
Relevant Documents
A Kentucky employer handles a layered document stack at hire. Federal layer: Form I-9 and Form W-4. State layer: any Kentucky withholding addendum tied to the state revenue agency, the Kentucky new-hire report (KRS 405.435(2) requires employers to report new hire information to the SDNH within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in Kentucky.), and workers' compensation enrollment paperwork (1 or more employees). The state minimum-wage anchor is KRS 337.275.
Employee Handbook
A comprehensive document outlining company policies, procedures, work rules, benefits, and expectations. Provides important information to new employees and serves as a reference for all staff.
Employment Application Form
A standardized form for collecting information from job applicants including work history, education, skills, and references. This helps employers make informed hiring decisions and serves as documentation of the hiring process.
Employment Contract
A comprehensive legal agreement between employer and employee detailing all terms and conditions of employment including duties, compensation, benefits, termination procedures, and confidentiality requirements.
Employment Offer Letter
A formal document outlining the terms of employment including position, salary, benefits, start date, and other conditions. This establishes clear expectations and serves as evidence of the employment agreement.
Non-Compete Agreement
A contract that restricts an employee from working for competitors or starting a competing business for a specified period after employment ends. Enforceability varies significantly by state.
Non-Disclosure Agreement
Protects your confidential information, trade secrets, and intellectual property that you may need to share with the manufacturer during the course of your relationship. This should be signed before detailed discussions begin.
Relevant Laws
Kentucky Wage and Hour Laws (KRS Chapter 337)
Employers in Kentucky must comply with minimum wage requirements ($7.25/hour), overtime pay (1.5x regular rate for hours over 40 in a workweek), and maintain proper payroll records. These laws establish the foundation for fair compensation practices when hiring employees.
Kentucky Civil Rights Act (KRS Chapter 344)
When hiring in Kentucky, employers must avoid discrimination based on race, color, religion, national origin, sex, disability, age (40+), or smoking status. This law applies to employers with 8 or more employees and requires fair hiring practices.
Kentucky New Hire Reporting (KRS 405.435)
Kentucky employers must report all newly hired employees to the Kentucky New Hire Reporting Center within 20 days of hire. This information is used for child support enforcement and to prevent unemployment insurance fraud.
Kentucky Workers' Compensation Act (KRS Chapter 342)
Employers in Kentucky with one or more employees must carry workers' compensation insurance. This provides benefits to employees who suffer work-related injuries or illnesses and protects employers from certain liability claims.
Kentucky Unemployment Insurance (KRS Chapter 341)
Kentucky employers must register with the Office of Unemployment Insurance and pay unemployment insurance taxes. This system provides temporary financial assistance to eligible workers who lose their jobs through no fault of their own.
Federal I-9 Employment Eligibility Verification
Kentucky employers must verify the identity and employment authorization of each person hired by completing Form I-9. This federal requirement applies to all employers regardless of size and must be completed within 3 business days of the employee's first day of work.
Kentucky E-Verify Requirements
While Kentucky does not mandate E-Verify for private employers, public contractors and state agencies must use E-Verify to confirm employment eligibility. Private employers should be aware of this system as a best practice for verifying work authorization.
Regional Variances
Major Cities in Kentucky
Louisville has additional local ordinances that affect employers, including a higher minimum wage than the state requirement. The city also has broader anti-discrimination protections that include sexual orientation and gender identity as protected classes, which is not explicitly covered in state law. Louisville employers with 10+ employees must also comply with the city's Ban the Box ordinance, which restricts when criminal history inquiries can be made during the hiring process.
Lexington-Fayette Urban County Government has its own Human Rights Commission and ordinances that provide additional protections beyond state law. Like Louisville, Lexington prohibits discrimination based on sexual orientation and gender identity. Employers should also be aware of Lexington's local tax requirements, including the 2.25% occupational license fee (local income tax) that must be withheld from employee paychecks.
Northern Kentucky Region
Covington has enacted a Fairness Ordinance that prohibits employment discrimination based on sexual orientation and gender identity. The city also has specific business licensing requirements that differ from other parts of the state. Employers in Covington must register with the city and may be subject to local payroll taxes in addition to state requirements.
Boone County, which includes Florence and the Cincinnati/Northern Kentucky International Airport, has specific economic development incentives that may benefit employers. The county has different occupational tax rates than other counties in Kentucky, currently at 0.8%, which must be properly withheld from employee wages.
Western Kentucky
Paducah has enacted a Fairness Ordinance providing LGBTQ protections in employment. The city also has specific business licensing requirements and local taxes that employers must comply with when hiring. Employers in designated areas of Paducah may qualify for special incentives through the city's downtown and riverfront development programs.
Bowling Green has not adopted expanded anti-discrimination protections beyond state law. The city has a 1.85% occupational license fee that employers must withhold from employee wages. Bowling Green also has specific zoning regulations that may affect home-based businesses and certain industries, which could impact hiring decisions.
Suggested Compliance Checklist
File the federally-required new-hire report
On hire days after startingThe Kentucky portal is KRS 405.435(2) requires employers to report new hire information to the SDNH within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in Kentucky.
Open the unemployment-insurance employer account
Before first payroll days after startingThe Kentucky portal is
Confirm workers' compensation coverage status
Before first hire days after startingIn Kentucky, 1 or more employees
File Form I-9 for the new hire on day one of work (employee section) and within 3 business days for the employer section
On hire days after startingRetention rule: 3 years after hire or 1 year after termination, whichever is later.
Collect federal Form W-4 and any Kentucky state-tax withholding addendum required by the state revenue agency
On hire days after startingThe federal Form W-4 is the floor; the state addendum (where the state has its own withholding regime) drives state income-tax deductions.
Set the work-authorization verification process
Before hire days after startingIn Kentucky: No state-level statute. Governed by federal law, which does not mandate E-Verify for all employers. Kentucky requires E-Verify only for public agencies and contractors.
Display the Kentucky mandatory employment posters at the worksite
Before first hire days after startingSafety and Health on the Job; Wage and Hour Laws; Wage Discrimination; Child Labor Law; Kentucky Equal Employment Opportunity poster; Unemployment Insurance Benefits poster
Memorialize the at-will status in Kentucky employment documents
Before hire days after startingKentucky's at-will employment status is defined by case law rather than statute. The controlling case established that an employer may ordinarily discharge an at-will employee for good cause, for no cause, or for a cause that some might view as morally indefensible.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| File the federally-required new-hire report | The Kentucky portal is KRS 405.435(2) requires employers to report new hire information to the SDNH within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in Kentucky. | - | On hire |
| Open the unemployment-insurance employer account | The Kentucky portal is | - | Before first payroll |
| Confirm workers' compensation coverage status | In Kentucky, 1 or more employees | - | Before first hire |
| File Form I-9 for the new hire on day one of work (employee section) and within 3 business days for the employer section | Retention rule: 3 years after hire or 1 year after termination, whichever is later. | - | On hire |
| Collect federal Form W-4 and any Kentucky state-tax withholding addendum required by the state revenue agency | The federal Form W-4 is the floor; the state addendum (where the state has its own withholding regime) drives state income-tax deductions. | - | On hire |
| Set the work-authorization verification process | In Kentucky: No state-level statute. Governed by federal law, which does not mandate E-Verify for all employers. Kentucky requires E-Verify only for public agencies and contractors. | - | Before hire |
| Display the Kentucky mandatory employment posters at the worksite | Safety and Health on the Job; Wage and Hour Laws; Wage Discrimination; Child Labor Law; Kentucky Equal Employment Opportunity poster; Unemployment Insurance Benefits poster | - | Before first hire |
| Memorialize the at-will status in Kentucky employment documents | Kentucky's at-will employment status is defined by case law rather than statute. The controlling case established that an employer may ordinarily discharge an at-will employee for good cause, for no cause, or for a cause that some might view as morally indefensible. | employment-offer-letter | Before hire |
Frequently Asked Questions
In Kentucky, the E-Verify posture for private employers is: No state-level statute. Governed by federal law, which does not mandate E-Verify for all employers. Kentucky requires E-Verify only for public agencies and contractors. Federal contractors with a FAR E-Verify clause must still use E-Verify regardless of state law.
Kentucky requires the new-hire report to be filed KRS 405.435(2) requires employers to report new hire information to the SDNH within 20 calendar days of hiring and/or re-hiring an individual who resides and/or works in Kentucky. The federal anchor for the report itself is the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996.
$7.25 per hour (Kentucky state rate matches federal FLSA floor under KRS 337.275); tipped cash $2.13 with tip credit The statutory anchor is KRS 337.275.
Ready to Draft Your Document?
Get AI-powered legal documents with attorney review included. Plans start at $39.99/mo.