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Kentucky PEO Laws: Registration, Bonding and Payroll Requirements

Kentucky employee leasing companies must register annually with the Office of Workers' Claims (EL-1/EL-2; September 1-August 31 year) and post no bond. The 2026 SUI wage base is $12,000 with a 2.7% new-employer rate (9% construction). Minimum wage is $7.25; there is no comp state fund or paid-leave mandate.

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Kentucky: PEO regulatory and payroll facts. Each populated field links to the statute, agency page or filing it came from.
PEO registration or licensing requiredYes - every person or entity acting as an employee leasing company in Kentucky must register with the Office of Workers' Claims under KRS 342.610 and KRS 342.615; initial registration uses Form EL-1 and annual renewal uses Form EL-2 source (opens in new window)
Regulating agencyKentucky Labor Cabinet - Office of Workers' Claims (Department of Workers' Claims) administers employee leasing company registration source (opens in new window)
Bond or security requirementNone required - registrants are not required to post a bond or other security (803 KAR 25:230) source (opens in new window)
Registration renewal cycleAnnual - the registration period runs September 1 through August 31; renewal is filed annually on Form EL-2 source (opens in new window)
SUI taxable wage base$12,000 per employee per calendar year for 2026 (KRS 341.030) source (opens in new window)
New-employer SUI rate2.7% for new non-construction employers; 9.0% for new construction employers; experience-rated employers range from 0% to 9% (standard rate 2.7%) source (opens in new window)
State workers' comp fundNo - no state-operated fund; workers' compensation is written by private licensed carriers alongside KEMI (Kentucky Employers' Mutual Insurance Authority), a competitive state-created mutual company source (opens in new window)
State paid leave mandateNo - Kentucky has no state paid sick leave or paid family leave mandate source (opens in new window)
State minimum wage$7.25 per hour (the federal FLSA rate; Kentucky has no state minimum above the federal level) source (opens in new window)
PEO SUI reporting basisEmployee-leasing-company level - wages of individuals leased to clients by an employee leasing company are reported under the employee leasing company's UI account (unless the leasing company is not an employer under KRS 341.070) source (opens in new window)

Sources

What we know about Kentucky

Kentucky is the only state in this batch that hangs its PEO registration on the workers' compensation statutes. KRS 342.610 and KRS 342.615 require every person or entity acting as an employee leasing company in Kentucky to register with the Office of Workers' Claims within the Kentucky Labor Cabinet. The Worker Claims agency's employee leasing page spells out the paperwork: initial registration on Form EL-1, annual renewal on Form EL-2, and a registration period that runs September 1 through August 31, so a PEO's Kentucky compliance calendar has a fixed anniversary even though the registration sits in the comp chapter rather than a dedicated PEO act. The same guidance confirms that registrants are not required to post a bond or other security - the only state in this batch without any financial security attached to registration. The no-bond statement is codified in the implementing regulation, 803 KAR 25:230, which is keyed directly to KRS 342.615; Kentucky's registration is therefore a pure filing obligation rather than a financial-security regime.

Kentucky's unemployment insurance numbers for 2026 are set by the Education and Workforce Development Cabinet's contribution rates page: the taxable wage base is $12,000 per employee for 2026, the standard rate is 2.7 percent, new non-construction employers pay 2.7 percent, new construction employers pay 9.0 percent, and experience-rated employers range from 0 to 9 percent. The construction differential is the widest in this batch - 9 percent against a 2.7 percent general rate - which matters for PEOs carrying construction clients who have not yet built Kentucky experience.

For UI reporting, Kentucky follows the leasing-company-level model. The cabinet's reporting requirements page explains that wages of individuals leased to clients by an employee leasing company are reported under the employee leasing company's own UI account, subject to the caveat that the leasing company must itself be an employer under KRS 341.070. That places the leased workforce on the leasing company's account and experience rating, so the PEO's rate - not each client's - governs the leased payroll.

Workers' compensation in Kentucky is a private market with a distinctive player: KEMI, the Kentucky Employers' Mutual Insurance Authority, is a competitive state-created mutual company rather than a state fund, competing with private licensed carriers, and the state operates no comp fund at all. The floor numbers are otherwise familiar: the minimum wage is the federal $7.25, and Kentucky imposes no paid sick leave or paid family leave mandate. The practical Kentucky checklist for a PEO is short and unusual: register with the Office of Workers' Claims by August 31 using EL-1/EL-2, post no bond, decide whether leased employees ride on the leasing company's KEWES account, and price Kentucky comp through the private market, KEMI included.

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