The Kentucky employee separation process has different employer obligations than other states. Understanding employee rights and employee termination laws is the key to ensuring your company is protected. This employee separation checklist and guide will help you understand key components of the process, including final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
Kentucky Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Kentucky
Kentucky law mandates that employees who separate from their employer must receive their final pay on the next scheduled payday or within 14 days, whichever comes later. This final payment must include all earned wages or salary. However, employers are not obligated to pay out accrued and unused vacation time unless their policy or the employee’s contract stipulates it.
While the law does not specify where the final paycheck should be issued, it’s best practice to provide it through regular pay channels. Employers who fail to comply with these payment requirements may face penalties, including paying the unpaid wages, and civil fines of up to $1,000 per offense.
2. Firing Employees in Kentucky
If you’re firing employees in Kentucky, the process is simple. Kentucky is an at-will employment state, which means that employers and employees can terminate the relationship at any time, for any reason, as long as it is not illegal. The state does not require employers to provide a separation notice.
3. Severance Agreements in Kentucky
If you have a severance agreement, you must explicitly list any claims the employee is releasing under federal and state law. Be sure that any claims release waives only claims that arose prior to the effective date of the agreement, rather than those that may occur later.
In Kentucky, your employee may release claims under the Kentucky Civil Rights Act, Kentucky Equal Opportunities Act, Kentucky’s equal pay law (K.R.S. § 337.423), Kentucky’s leave laws, and Kentucky’s minimum wage and overtime law.
Finally, review the relevant federal laws governing claims releases. For example, guidance from the NLRB’s General Counsel and their decision restricts the use of non-disparagement and confidentiality provisions.
4. Reporting Employee Termination in Kentucky
If your employee has an Income Withholding for Support Order (“IWO”), promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. You may register for online reporting with the Federal Office of Child Support Enforcement here.
Employers may choose to report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO, then fax or mail it to the child support agency that issued it. Have the following information ready:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Kentucky
When your organization ceases to do business in Kentucky—such as when you separate from your last Kentucky employee—you may formally withdraw your business registration from the state. For-Profit Corporations, Non-Profit Corporations, and Limited Liability Companies (LLCs) should file a Certificate of Withdrawal with the Kentucky Secretary of State.
Stay Compliant with Kentucky Employee Separation Requirements
Staying on top of the requirements for a Kentucky Employee Separation Agreement is the best way to ensure that you’re complying with all local, state, and federal laws—but it can be complicated to keep up.
Looking for instant access to a reliable database of federal, state, and local laws? Check out SixFifty’s employment law platform. With SixFifty, you can research state-specific laws, and generate multi-state handbooks, policies, addenda, agreements, and more in a matter of minutes. Want to see how it works? Schedule a free demo today!
Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
