{"data":{"id":"us-ky/krs-336.234","jurisdiction":"us-ky","citation":"KRS 336.234","heading":"Limitations on professional employer agreements -- Covered employees","body":"deemed employees of clients for tax credits or economic incentives -- Use of\nprofessional employer organization services not to impact company status in\nbusiness with state or political subdivisions.\n(1) Nothing in any professional employer agreement, or in KRS 336.230 to 336.250,\nshall:\n(a)  Affect, modify, or amend any collective bargaining agreement, or the rights\nor obligations of any covered employee, client, or professi onal employer\norganization, covered by the federal Railway Labor Act or the National Labor\nRelations Act;\n(b) Affect, modify, or amend any contractual relationship or restrictive covenant\nbetween a covered employee and any client in effect at the time a pr ofessional\nemployer agreement becomes effective or any contractual relationship or\nrestrictive covenant that is entered into subsequently between a client and a\ncovered employee. A professional employer organization shall have no\nresponsibility in connecti on with, or arising out of, any existing or new\ncontractual relationship or restrictive covenant between the covered employee\nand client unless the professional employer organization has specifically\nagreed otherwise in writing;\n(c) Diminish, abolish, or r emove rights of covered employees to a client or\nobligations of the client to a covered employee existing prior to the effective\ndate of the professional employer agreement;\n(d) Create any new or additional enforceable right of a covered employee against\na professional employer organization that is not specifically provided by the\nprofessional employer agreement or KRS 336.230 to 336.250;\n(e) Affect, modify, or amend any state, local, or federal licensing, registration, or\ncertification requirement applicab le to any client or covered employee. A\ncovered employee who must be licensed, registered, or certified according to\nstatute or regulation is deemed solely an employee of the client for purposes\nof any such license, registration, or certification requireme nt. A professional\nemployer organization shall not be deemed to engage in any occupation, trade,\nprofession, or other activity that is subject to licensing, registration, or\ncertification requirements, or is otherwise regulated by a governmental entity,\nsolely by entering into and maintaining a co -employment relationship with a\ncovered employee who is subject to the requirements or regulations. A client\nshall have the sole right of direction and control of the professional or licensed\nactivities of a covere d employee and of the client's business. Covered\nemployees and clients shall remain subject to regulation by the regulatory\nagency responsible for licensing, registration, or certification of the covered\nemployees or clients; or\n(f) Include language in a p rofessional employer agreement or be construed in\nKRS 336.230 to 336.250 to abrogate any constitutional, statutory, or common\nlaw cause of action of persons not a party to the professional employer\nagreement.\n(2) For purposes of determining tax credits or  other economic incentives provided by\nthe Commonwealth based on employment, covered employees shall be deemed\nemployees solely of the client. A client shall be entitled to the benefit of any tax\ncredit, economic incentive, or other benefit arising as the result of the employment\nof a covered employee of the client. Notwithstanding that the professional employer\norganization is the federal form W -2 wage and tax statement reporting employer,\nthe client shall continue to qualify for the tax credit, economic i ncentive, or benefit.\nIf the grant or amount of any incentive is based on the number of employees, then\neach client shall be treated as employing only those covered employees that are co -\nemployed by each client. Covered employees working for other clients of the\nprofessional employer organization shall not be counted. Each professional\nemployer organization shall provide, upon request by a client or any state agency\nresponsible for administration of any tax credit, economic incentive, or benefit,\ninformation reasonably required to support any request, claim, application, or any\nother action by a client seeking the tax credit, economic incentive, or benefit,\nincluding wage information, and locations and duties of covered employees.\n(3) With respect to a bid, contract, purchase order, or agreement entered into with the\nCommonwealth or any political subdivision of the Commonwealth, a client\ncompany's status or certification as a small, minority -owned, disadvantaged, or\nwoman-owned business enterprise or as a his torically underutilized business shall\nnot be affected because the client company has entered into an agreement with or\nuses the services of a professional employer organization.","path":["KRS Chapter 336"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=52597","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:25Z","sha256":"15235469f9ffb5020f820e994dc79708819efe0652ad33c7e1ce6a9710224731","source_id":"us-ky","stale":false,"prev":"us-ky/krs-336.232","next":"us-ky/krs-336.236"},"notice":"GroundRules: Original legal text. Not legal advice."}