KRS 341.030: "Wages" defined -- Impact of trust fund balance on taxable wage

base amount.

(1) As used in this chapter, unless the context clearly requires otherwise, and

except as provided in subsections (2) to (7) of this section, "wages" means all

remuneration for services, including commissions, bonuses, and, except for

services performed in agriculture and domestic employment, the cash value of

all remuneration in any medium other than cash. The reasonable cash value of

remuneration in any medium other than cash shall be estimated and

determined in accordance with rules prescribed by the commission.

(2) Amounts paid to traveling salesmen or other workers as allowance or

reimbursement for traveling or other expenses, incurred on the business of the

employing unit, constitute wages only to the extent of the excess of the

amounts over the expenses actually incurred and accounted for by the worker

to his employer; provided, however, that the cash value of meals and lodging

when furnished to the worker for the convenience of the employer shall not

constitute wages.

(3) For purposes of this chapter, the term "wages" includes tips which are:

(a) Received while performing services which constitute employment;

(b) Included in a written statement furnished to the employer pursuant to

Section 6053(a) of the Internal Revenue Code; and

(c) Shall be treated as having been paid by the employing unit.

(4) "Wages" does not include the amount of any payment made to, or on behalf of,

a worker under a plan or system established by an employing unit that makes

provision for its workers generally or for a class of its workers, including any

amount paid by an employing unit for insurance or annuities, or into a fund, to

provide for any such payment, on account of:

(a) Retirement;

(b) Sickness or accident disability but, in the case of payments made to an

employee or any of his dependents, this subsection shall exclude from the

term "wages" only payments which are received under a workers'

compensation law;

(c) Medical and hospitalization expenses in connection with accident or

sickness disability; or

(d) Death, if the worker has not:

1. The option to receive, instead of provision for the death benefit, any

part of the payment, or if the death benefit is insured, any part of the

premiums or contributions to premiums paid by his employing unit;

and

2. The right, under the provisions of the plan or system or policy of

insurance providing for the death benefit, to assign the benefit, or to

receive a cash consideration in lieu of it either upon his withdrawal

from the plan or system providing for the benefit or upon termination

of the plan or system or policy of insurance or of his employment

with his employing unit.

(5) "Wages" does not include any payment on account of sickness or accident

disability, or medical or hospitalization expenses in connection with sickness or

accident disability, made by an employer to, or on behalf of, an employee after

the expiration of six (6) calendar months following the last calendar month in

which the employee worked for the employer.

(6) "Wages" does not include the amount of any payment made by an employing

unit without deduction from the remuneration of the worker of the tax imposed

under Section 3101 of the Internal Revenue Code or any payment required

from an employer under a state unemployment compensation law with respect

to remuneration paid to an employee for domestic service in a private home of

the employer or for agricultural labor.

(7) (a) "Wages" does not, for the purposes of KRS 341.260 to 341.310, include

that part of remuneration which, after wages equal to eight thousand

dollars ($8,000) have been paid in a calendar year to a worker by a

subject employer or his predecessor with respect to covered employment

during any calendar year, is paid to the worker by the subject employer

during the calendar year unless that part of the wages is subject to a tax

under a federal law, imposing a tax against which credit may be taken for

contributions required to be paid into a state unemployment fund. On

January 1, 2012, the amount of eight thousand dollars ($8,000) in this

subsection shall increase to nine thousand dollars ($9,000), which shall

increase by an additional three hundred dollars ($300) on January 1 of

each subsequent year, unless limited by paragraph (b) or (c) of this

subsection, not to exceed twelve thousand dollars ($12,000). For the

purpose of this subsection, the term "covered employment" shall include

service constituting covered employment under any unemployment

compensation law of another state.

(b) If the trust fund balance on September 30 of a calendar year equals or

exceeds two hundred million dollars ($200,000,000), the taxable wage

base amount in effect at that time shall not increase on January 1 of the

next calendar year or on January 1 of subsequent calendar years, except

as provided in paragraphs (c) and (e) of this subsection.

(c) If the trust fund balance on September 30 of a calendar year equals or

exceeds two hundred million dollars ($200,000,000), but is twenty million

dollars ($20,000,000) or less lower than the trust fund balance amount

that would trigger in a lower schedule of contribution rates under KRS

341.270, the taxable wage base shall increase by three hundred dollars

($300) on January 1 of the next calendar year and that taxable wage base

amount shall be the taxable wage base amount in effect for subsequent

calendar years, subject to the limitations in paragraph (d) of this

subsection.

(d) The total number of years that the increase in the taxable wage base

shall be prohibited or limited under paragraph (b) or (c) of this subsection

shall not exceed the total number of years that contributing employers

paid additional federal unemployment taxes because of a reduction in the

credit against the federal unemployment tax established in 26 U.S.C. sec.

3302 beginning in 2011.

(e) If the taxable wage base on January 1 of the calendar year immediately

following the last year the increase in the taxable wage base was

prohibited or limited under this subsection is less than twelve thousand

dollars ($12,000), the taxable wage base amount shall be increased by

three hundred dollars ($300), and by an additional three hundred dollars

($300) on January 1 of each subsequent calendar year until the taxable

wage base amount reaches twelve thousand dollars ($12,000).

(f) Notwithstanding paragraphs (b) and (c) of this subsection, if the trust fund

balance is less than two hundred million dollars ($200,000,000) on

September 30 of a calendar year, the suspension of the taxable wage

base increase shall not occur.

(g) Notwithstanding any other provision of this subsection, any increase in

the maximum weekly benefit rate which otherwise would have occurred

except for the suspension of the taxable wage base increase shall be

implemented in accordance with the provisions of this chapter.

(h) The provisions of this subsection shall apply unless the United States

Department of Labor notifies the secretary that implementation of this

subsection would result in decertification of Kentucky's unemployment

insurance program, impact any cap application, affect the receipt of

emergency unemployment compensation funds, create an ineligibility for

receipt of federal funds, or result in other penalties or sanctions under the

Social Security Act or Federal Unemployment Tax Act, 26 U.S.C. secs.

3301 et seq.

(i) Notwithstanding any other provisions of this chapter, for the calendar

years 2021 and 2022, the taxable wage base increase shall be

suspended and the taxable wage base in effect for the calendar year

2020 shall be utilized.