A Kentucky workers comp exemption lets certain business owners legally go without workers’ compensation coverage on themselves — Sole proprietors, partners and LLC members are not covered unless they choose to be. Under KRS 342.012 they may elect into coverage through an endorsement on their workers’ comp policy. That only applies to “qualified” partners and members, meaning those with a meaningful partnership agreement, articles of organization or operating agreement.
Partners and LLC members who are not qualified must be covered. Corporate officers count as employees under KRS 342.640(2), but each officer may reject coverage individually by filing a Form 4. The sources checked give no ownership-percentage limit and no limit on how many officers may reject.
Any owner who has employees must still cover those employees. — while the law still requires coverage for employees once a business has 1 or more. This guide explains who qualifies for the Kentucky workers comp exemption, the exact form, where to file it, what it costs, and what an exempt owner gives up. Verified against Kentucky sources as of October 2026.
Kentucky at a Glance
| Coverage required at | 1 employee(s) |
| Who may elect out | Sole proprietors, partners and LLC members are not covered unless they choose to be. Under KRS 342.012 they may elect into coverage through an endorsement on their workers’ comp policy. That only applies to “qualified” partners and members, meaning those with a meaningful partnership agreement, articles of organization or operating agreement. Partners and LLC members who are not qualified must be covered. Corporate officers count as employees under KRS 342.640(2), but each officer may reject coverage individually by filing a Form 4. The sources checked give no ownership-percentage limit and no limit on how many officers may reject. Any owner who has employees must still cover those employees. |
| Exemption form | Form No. 4, Employee’s Notice of Rejection of Workers’ Compensation Act (corporate officers and other employees). It is withdrawn with Form No. 5, Written Notice of Withdrawal of Form No. 4 Rejection Notice. Sole proprietors and contractors with no employees use the Affidavit of Exemption from KRS Chapter 342 (Individual) to show exemption for building permits. Partners and LLC members file no form: they are simply not covered unless they add a policy endorsement. |
| Filed with | Form 4 is given to the employer, and the employer must file the original notarized form with the Kentucky Department of Workers’ Claims right away. Copies of the form come from the Compliance Branch (502-564-5550, [email protected]). The Affidavit of Exemption (Individual) goes to the local building official, who files the original with the Department of Workers’ Claims. Information page: https://elc.ky.gov/Workers-Compensation/Pages/Security-Compliance.aspx |
| Renewal | Form 4 has no stated expiration. It stays in effect until the employee withdraws it by filing Form No. 5 (803 KAR 25:130). The form lists a specific employer and insurer, so a new employer generally means a new Form 4. Confirm the details with the Department of Workers’ Claims. |
| Penalty for being uninsured | KRS 342.990: a fine of 100 to 1000 per offense. For an employer that fails to carry coverage, each employee and each day of violation is a separate offense. |
In This Kentucky Guide:
Who Qualifies for A Kentucky Workers Comp Exemption
Sole proprietors, partners and LLC members are not covered unless they choose to be. Under KRS 342.012 they may elect into coverage through an endorsement on their workers’ comp policy. That only applies to “qualified” partners and members, meaning those with a meaningful partnership agreement, articles of organization or operating agreement. Partners and LLC members who are not qualified must be covered.
Corporate officers count as employees under KRS 342.640(2), but each officer may reject coverage individually by filing a Form 4. The sources checked give no ownership-percentage limit and no limit on how many officers may reject. Any owner who has employees must still cover those employees.
KRS 342.640(2) makes corporate officers employees. An officer may exempt themselves by filing Form No. 4, the Employee’s Notice of Rejection of Workers’ Compensation Act (KRS 342.395; 803 KAR 25:130). It must be the original form obtained from the Department of Workers’ Claims, with the officer’s notarized signature and the employer’s acknowledgment. The notice does not take effect until the original notarized form is filed with the Department.
KRS 342.012: sole proprietors, partners and LLC members are not covered unless they elect in by a policy endorsement. Only “qualified” partners and members may stay out. Partners and members without a meaningful partnership agreement, articles of organization or operating agreement must be covered.
How to File the Kentucky Workers Comp Exemption
The form is Form No. 4, Employee’s Notice of Rejection of Workers’ Compensation Act (corporate officers and other employees). It is withdrawn with Form No. 5, Written Notice of Withdrawal of Form No. 4 Rejection Notice. Sole proprietors and contractors with no employees use the Affidavit of Exemption from KRS Chapter 342 (Individual) to show exemption for building permits.
Partners and LLC members file no form: they are simply not covered unless they add a policy endorsement.. It is filed with Form 4 is given to the employer, and the employer must file the original notarized form with the Kentucky Department of Workers’ Claims right away. Copies of the form come from the Compliance Branch (502-564-5550, [email protected]).
The Affidavit of Exemption (Individual) goes to the local building official, who files the original with the Department of Workers’ Claims. Information page: https://elc.ky.gov/Workers-Compensation/Pages/Security-Compliance.aspx. Renewal: Form 4 has no stated expiration. It stays in effect until the employee withdraws it by filing Form No. 5 (803 KAR 25:130). The form lists a specific employer and insurer, so a new employer generally means a new Form 4.
Confirm the details with the Department of Workers’ Claims.. Filing on the state’s own site costs nothing beyond any statutory fee — the “exemption filing services” that advertise on this search charge for the same form.
Kentucky Workers Comp Exemption Rules at a Glance
The exact Kentucky workers comp exemption rules every owner should check before deciding to go without coverage:
| Employee threshold | 1 |
| Who may elect out | Sole proprietors, partners and LLC members are not covered unless they choose to be. Under KRS 342.012 they may elect into coverage through an endorsement on their workers’ comp policy. That only applies to “qualified” partners and members, meaning those with a meaningful partnership agreement, articles of organization or operating agreement. Partners and LLC members who are not qualified must be covered. Corporate officers count as employees under KRS 342.640(2), but each officer may reject coverage individually by filing a Form 4. The sources checked give no ownership-percentage limit and no limit on how many officers may reject. Any owner who has employees must still cover those employees. |
| Corporate officers | KRS 342.640(2) makes corporate officers employees. An officer may exempt themselves by filing Form No. 4, the Employee’s Notice of Rejection of Workers’ Compensation Act (KRS 342.395; 803 KAR 25:130). It must be the original form obtained from the Department of Workers’ Claims, with the officer’s notarized signature and the employer’s acknowledgment. The notice does not take effect until the original notarized form is filed with the Department. |
| LLC members and partners | KRS 342.012: sole proprietors, partners and LLC members are not covered unless they elect in by a policy endorsement. Only “qualified” partners and members may stay out. Partners and members without a meaningful partnership agreement, articles of organization or operating agreement must be covered. |
| Form | Form No. 4, Employee’s Notice of Rejection of Workers’ Compensation Act (corporate officers and other employees). It is withdrawn with Form No. 5, Written Notice of Withdrawal of Form No. 4 Rejection Notice. Sole proprietors and contractors with no employees use the Affidavit of Exemption from KRS Chapter 342 (Individual) to show exemption for building permits. Partners and LLC members file no form: they are simply not covered unless they add a policy endorsement. |
| Where to file | Form 4 is given to the employer, and the employer must file the original notarized form with the Kentucky Department of Workers’ Claims right away. Copies of the form come from the Compliance Branch (502-564-5550, [email protected]). The Affidavit of Exemption (Individual) goes to the local building official, who files the original with the Department of Workers’ Claims. Information page: https://elc.ky.gov/Workers-Compensation/Pages/Security-Compliance.aspx |
| Renewal | Form 4 has no stated expiration. It stays in effect until the employee withdraws it by filing Form No. 5 (803 KAR 25:130). The form lists a specific employer and insurer, so a new employer generally means a new Form 4. Confirm the details with the Department of Workers’ Claims. |
| Proof of exemption or coverage | The Department of Workers’ Claims has an online Insurance Coverage Lookup at https://kyworkersclaims.lms.ky.gov/CoverageLookup, searchable by name, FEIN, city, zip or employer ID. If coverage is not in that database, the business is not considered covered. Insurers also issue certificates of insurance. Exempt individuals use the Affidavit of Exemption from KRS Chapter 342 (Individual) for building permits. |
What A Kentucky Workers Comp Exemption Gives Up
Filing a Form 4 gives up the right to workers’ compensation benefits. An employee who rejected coverage may bring a common-law lawsuit against the employer, but the employer keeps all of its common-law defenses. Owners who never elected in have no workers’ comp benefits if they are injured.
One honest paragraph on the “ghost policy”: a minimum-premium policy with no employees sold to owners who need a certificate of insurance. It is legal in many states, but it is not a Kentucky workers comp exemption — it is coverage with nobody on it. If you add a worker, it must be reported, or the audit will find them.
Workers Exempt by Law in Kentucky
Separate from the owner’s election, Kentucky law exempts some classes of workers from coverage — commonly domestic workers below a threshold, casual labor, some farm labor and licensed real-estate agents paid by commission. A worker who does not fit a listed class counts toward the threshold, no matter what the 1099 says.
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Proving A Kentucky Workers Comp Exemption or Coverage
The Department of Workers’ Claims has an online Insurance Coverage Lookup at https://kyworkersclaims.lms.ky.gov/CoverageLookup, searchable by name, FEIN, city, zip or employer ID. If coverage is not in that database, the business is not considered covered. Insurers also issue certificates of insurance. Exempt individuals use the Affidavit of Exemption from KRS Chapter 342 (Individual) for building permits.
Why the Kentucky Workers Comp Exemption Matters
The Kentucky workers comp exemption is a trade: lower cost today against no safety net if you are hurt. The second half of the trade is the one the search results never lead with. Kentucky uses an opt-out model for employees. Any covered employee, not only a corporate officer, may reject coverage with a notarized Form 4, and it has no effect until the original is filed with the Department.
Owners use the opposite model: sole proprietors, qualified partners and qualified LLC members are out by default and opt in by policy endorsement (KRS 342.012). Building permits require either proof of coverage or the Individual Affidavit of Exemption. Confirm with the Department of Workers’ Claims and a licensed attorney before relying on any exemption.
If the Kentucky workers comp exemption rules above leave any doubt about whether a worker counts, ask the state agency before you decide — the answer is free, and the penalty for guessing wrong is not.
Employer side: the Kentucky requirements guide covers the threshold, who counts and the penalties in full. Hurt while exempt? You may still have a claim against a third party — a licensed attorney can say.
Frequently Asked Questions
Who can file a workers comp exemption in Kentucky?
Sole proprietors, partners and LLC members are not covered unless they choose to be. Under KRS 342.012 they may elect into coverage through an endorsement on their workers’ comp policy. That only applies to “qualified” partners and members, meaning those with a meaningful partnership agreement, articles of organization or operating agreement. Partners and LLC members who are not qualified must be covered.
Corporate officers count as employees under KRS 342.640(2), but each officer may reject coverage individually by filing a Form 4. The sources checked give no ownership-percentage limit and no limit on how many officers may reject. Any owner who has employees must still cover those employees.
What form is the Kentucky workers comp exemption?
Form No. 4, Employee’s Notice of Rejection of Workers’ Compensation Act (corporate officers and other employees). It is withdrawn with Form No. 5, Written Notice of Withdrawal of Form No. 4 Rejection Notice. Sole proprietors and contractors with no employees use the Affidavit of Exemption from KRS Chapter 342 (Individual) to show exemption for building permits.
Partners and LLC members file no form: they are simply not covered unless they add a policy endorsement.. File it on the state’s own site; filing services charge for the same form.
Can an exempt owner in Kentucky still collect benefits if hurt?
No. An exemption removes the owner from coverage, so there is no claim for medical care or lost wages. That is the trade.
Official Kentucky Sources & Resources
- Kentucky Kentucky Department of Workers’ Claims (Education and Labor Cabinet): https://elc.ky.gov/Workers-Compensation/Pages/default.aspx
- Kentucky Workers’ Comp Statute: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=51336
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
This Kentucky workers comp exemption guide was last verified against official Kentucky sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is informational only and is not legal, medical, or financial advice. Workers Comp Explained is an independent educational resource, not a law firm or insurer. Workers’ comp benefits, settlement values, deadlines, and requirements vary by state and by the specific facts of your injury and change over time, and any settlement figures here are illustrative only.
Confirm your rights and any deadline with your state’s workers’ compensation board and a licensed attorney before you act.