KRS 199.887: Termination of active contract.

(1) Termination of an active contract between an employer, employee, child -care

provider, and a third-party administrator pursuant to this program shall occur in the

following circumstances:

(a) If the relationship between the employee and employer is severed, the

employer shall notify the child-care provider and the third-party administrator

within three (3) business days of the separation, and the contract is terminated

on the calendar date provided by the employer in the notification. If the

employer fails t o make this notification and the third -party administrator

issues a state match to the provider on behalf of that employer's employee,

then the employer shall reimburse the fund for the unnecessary state match;

(b) If the employer fails to make a contribut ion or contributions for the eligible

child-care costs in accordance to the terms of the contract, the child -care

provider shall notify the third -party administrator within five (5) business

days. After receiving notification from the provider, the third -party

administrator shall temporarily cease providing a state match and shall notify

the employer that the contract will be terminated unless the employer

remedies the nonpayment within five (5) business days of receiving

notification from the third -party a dministrator. If the provider fails to make

this notification and receives a state match from the third -party administrator

on behalf of that employer's employee, the provider shall reimburse the fund

for the unnecessary state match; or

(c) If the relation ship between the employee and the child care provider is

severed and the employee ceases to utilize the child care provider's services,

the employee shall notify the employer within three (3) business days, and the

employer shall notify the third-party administrator and terminate the contract.

(2) Termination of an active contract between an employer, employee, child -care

provider, and the third -party administrator pursuant to this program may occur in

the following circumstances:

(a) If the employee fails to pay the child -care provider for costs not covered by

the employer contribution and the state match in accordance to the terms of

the contract, the child-care provider may give the employee reasonable time to

remedy the nonpayment. The child -care provide r may notify the third -party

administrator and terminate the contract on the date that the notification was

issued. If the child -care provider voluntarily excuses the employee's

nonpayment or the child -care provider does not notify the third -party

administrator within two (2) calendar months from the date of the employee's

nonpayment and continues to provide services, then the contract made

between all the parties will automatically reflect the reduction in value;

(b) If the child -care provider ceases parti cipation or otherwise loses its rating in

the rating system described in KRS 199.8943, it shall notify all parties to the

agreement immediately; and

(c) The employer, employee, or child -care provider may terminate the contract at

any time and for any reaso n. The terminating party shall notify all the parties

to the contract and specify the desired termination date, which shall occur no

sooner than two (2) weeks from the date of notification unless the child -care

provider gives its consent to an earlier term ination date. All parties to the

contract shall be financially obligated, according to the provisions of the

contract, up to the termination date.

(3) Any child -care provider who receives an employer contribution as part of this

program or a state match fo r services not rendered and which will not be rendered

after the relationship between the employee and child care provider is severed or

after the termination of an active contract in accordance with this section shall

return those employer contributions and match funds to the respective parties within

five (5) days of receipt of the funds.