Kentucky Termination Laws

October 1st 2024

If you’re involved in ending an employment relationship in Kentucky, it’s important to understand your rights and responsibilities. Whether it’s a standard termination or a wrongful termination, knowing the rules helps make sure the process is fair and follows state and federal laws. This guide explains the key things to keep in mind, covering the rules and protections for employment termination in Kentucky.

This Guide Covers

Legal Considerations for Termination in Kentucky
At-Will Employment in Kentucky
Lawful Termination in Kentucky
Legal Protections During Termination in Kentucky
Terminated Employee Benefits in Kentucky
Layoffs in Kentucky
Resignations in Kentucky
Legal Cases Related to Wrongful Termination in Kentucky

Legal Considerations for Termination in Kentucky

Firing an employee in Kentucky requires compliance with state and federal laws. Here are the key points employers must consider:

  • Employment Contracts: Be sure to thoroughly review any contracts related to employment, such as collective bargaining agreements, to confirm that the correct termination steps are being followed. If there is an employment contract in place, employers must align the termination with the conditions outlined in the agreement.
  • Discrimination Protections: It is imperative that employers do not base termination decisions on protected characteristics, including race, color, religion, sex, national origin, age, disability, or genetic information. Any form of discrimination during the termination process could result in legal actions under both federal and state anti-discrimination statutes.
  • Retaliation Protections: Employers cannot retaliate against employees who engage in protected activities. This includes situations where employees report discrimination or harassment, take part in investigations, or assert their legal rights.
  • Notification Protocols: Kentucky law does not require employers to give termination notices by a specific time or method. However, employers should follow any notice guidelines outlined in employment contracts, collective bargaining agreements, or company policies.
  • Final Paycheck: Kentucky law (KRS 337.055) requires employers to promptly pay final wages, including earned wages and unused vacation or PTO. Employers must pay by the next payday or within 14 days of termination, whichever comes later.
  • Severance Agreements: When offering severance packages, employers must comply with legal standards and include a release of claims to prevent future disputes. It’s important to note that severance pay is not required by federal law or Kentucky employment statutes, even in cases of involuntary termination.
  • Record-Keeping: It’s important to keep clear and thorough records, including reasons for termination, performance evaluations, disciplinary actions, and relevant communications. These records help support termination decisions and can be required if legal issues arise.

At-Will Employment in Kentucky

What is At-Will Employment?

At-will employment gives both the employer and employee the right to end the work relationship at any time, with or without notice. In Kentucky, this means that either party can terminate employment for almost any reason, as long as it’s not an illegal reason, such as discrimination or retaliation. Unless a specific contract states otherwise, there are no long-term obligations under this employment model.

What are the Exceptions to At-Will Employment in Kentucky?

Kentucky follows the at-will employment principle, but several exceptions are designed to protect employees from wrongful termination:

  • Public Policy Exception: Employees in Kentucky cannot be terminated for reasons that violate established public policy. Examples include dismissal for filing claims related to workspace injuries or illnesses, refusing to commit illegal acts at the employer’s request, or asserting rights under specific state statutes like safety and health companies.
  • Anti-Discrimination Laws: Federal and state laws prohibit employers from terminating employees based on race, color, religion, sex, national origin, age (40 and older), disability, or genetic information.
  • Contractual Exceptions: If an employment contract exists that specifies terms for termination, employers must adhere to these terms. This may limit the employer’s ability to terminate at will if the contract requires cause for termination.

Employment Under Contract in Kentucky

An employment contract in Kentucky outlines job duties, salary, and termination conditions. While Kentucky allows for written contracts, it also acknowledges implied agreements, which can arise from verbal statements. Yet, these contracts must comply with legal standards and cannot contradict public policy, such as penalizing employees for taking jury duty, which is protected by law.

For more details, check out our in-depth guide to firing employees in Kentucky.

Lawful Termination in Kentucky

Legal Grounds for Termination in Kentucky

Employers can dismiss employees for a variety of legal reasons, as long as those reasons do not violate established labor laws. Below are the most common legal grounds for termination in Kentucky:

  • Unsatisfactory Performance: Employers have the authority to dismiss an employee due to inadequate job performance if the individual does not meet the required standards or expectations for their position. This could involve consistent failure to perform tasks effectively or persistent underperformance.
  • Misconduct: Kentucky allows employers to terminate employees for breaching company policies. Such actions might include theft, fraud, or acts of violence that compromise the company’s integrity are valid grounds for termination.
  • Violation of Company Policies: Employees in Kentucky may face termination for violating company policies related to confidentiality, workplace conduct, or safety.

How Do I File a Wrongful Termination Claim in Kentucky?

To initiate a wrongful termination claim, the first step is determining whether the termination violated legal protections, such as discrimination, retaliation, breach of public policy, or breach of contract. It’s important to gather all relevant documentation, including employment contracts, related communications, and performance evaluations, to support the claim.

Employees can file the complaint with the appropriate agency. For federal discrimination claims, individuals can file with the Equal Employment Opportunity Commission (EEOC), while state-level claims may be handled by the Kentucky Commission on Human Rights (KCHR). It’s necessary to be mindful of the filing deadlines, which are typically within 180 days of the termination.

Legal Protections During Termination in Kentucky

Both state and federal laws provide various legal protections to employees during the termination process. Fundamental laws that protect Kentucky employees include:

  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act of 1964 requires employers with 15 or more employees to avoid discrimination based on race, color, religion, sex, or national origin. It governs all aspects of employment, including hiring, firing, promotions, pay, and other work conditions, ensuring equal opportunities and preventing discriminatory practices in the workplace.
  • Americans with Disabilities Act (ADA): The Americans with Disabilities Act prohibits discrimination against qualified individuals with disabilities. Under Title I of the ADA, employers with 15 or more employees cannot discriminate against employees with disabilities in matters of hiring, termination, or other employment conditions.
  • Family and Medical Leave Act (FMLA): The Family and Medical Leave Act of 1993 allows eligible employees up to 12 weeks of unpaid, job-protected leave annually for family or medical reasons.
  • Age Discrimination in Employment Act (ADEA): The Age Discrimination in Employment Act of 1975 safeguards workers aged 40 and older from discrimination in the workplace, including decisions related to termination. 
  • Occupational Safety and Health Act (OSHA): The Occupational Safety and Health Act of 1970 protects workers who report unsafe conditions from being fired. Employees can report violations or refuse hazardous work without fearing retaliation.
  • Kentucky Civil Rights Act:  Similar to federal standards, the Kentucky Civil Rights Act of 1966 prohibits discrimination based on race, national origin, color, or religion, offering additional protections against wrongful termination.

Terminated Employee Benefits in Kentucky

Fired employees in Kentucky may qualify for various benefits based on the circumstances of their dismissal. Some of the benefits include:

  • Final Paycheck: According to Kentucky Revised Statutes (KRS) 337.055, employers must promptly provide final paychecks. Employers must provide the final payment, including all earned wages, by the next regular payday after terminating an employee.
  • COBRA Healthcare Benefits: Employees who are terminated may continue their health insurance under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Eligible employees must receive a COBRA election notice from their employer detailing their rights and the costs associated with continuing their health insurance coverage.
  • Unemployment Benefits: Terminated employees in Kentucky may be eligible for unemployment insurance if they meet certain criteria. This includes having worked within the state during the past 12 months, meeting a minimum earnings threshold, and actively seeking employment each week benefits are claimed. Employees can apply for these benefits through the Kentucky Office of Unemployment Insurance.
  • Severance Pay: While severance pay is not mandated by Kentucky law, if it is specified in an employment contract or company policy, employers are obligated to provide it.

Layoffs in Kentucky

When companies in Kentucky need to reduce their workforce or restructure, they must comply with federal laws. One such law is the Worker Adjustment and Retraining Notification Act of 1988 (WARN). This act requires businesses with 100 or more employees to give 60 days’ notice before major layoffs or plant closures.

Laid-off employees have rights and may qualify for unemployment benefits if they meet state requirements for earnings and job searches. Also, under COBRA, laid-off workers can extend their health insurance coverage after employment ends.

It’s important for employers to follow these notification and compensation rules closely to avoid legal issues. Meanwhile, employees can seek state-provided job retraining and placement services to help with their transition.

Resignations in Kentucky

Resignations in Kentucky can occur under a variety of circumstances, with the decision to leave being either voluntary, made by the employee, or involuntary, influenced by conditions imposed by the employer.

Voluntary Resignations

Voluntary resignations happen when an employee decides to leave a job on their own accord, often due to personal reasons such as pursuing new opportunities, relocating, or retiring. Kentucky does not require employees to give advance notice before resigning unless it’s specified in an employment contract or company policy.

Involuntary Resignations

Known as constructive discharge, involuntary resignation in Kentucky occurs when intolerable work conditions force an employee to resign. Employees must show that the work environment was so adverse that a reasonable person would resign

To support a claim of constructive discharge in Kentucky, employees should document specific incidents that illustrate the unbearable conditions. Individuals applying for unemployment benefits must gather the necessary documents. They should submit their application to the Kentucky Office of Unemployment Insurance, which provides temporary financial assistance to those unemployed through no fault of their own. This program is a partnership between Kentucky and the U.S. Department of Labor.

Legal Cases Related to Wrongful Termination in Kentucky

1. Wrongful Termination and Retaliation Lead to $358,726 Verdict Against Christian County Board of Education

In the case of Steve “Andy” Putman v. Christian County Board of Education,  the court ruled in favor of Putman, awarding him $358,726 after his wrongful termination. He had reported sexual harassment by district transportation director David Clagg, who inappropriately touched him on several occasions. Instead of addressing the complaint, the Board retaliated by terminating Putman. This wrongful termination violated Title VII of the Civil Rights Act. A jury sided with Putman, awarding him a substantial settlement.

Key lessons learned from the case:
  • Employers must ensure they do not terminate employees in retaliation for reporting harassment or other workplace issues, as this can lead to wrongful termination claims.
  • Failure to properly address complaints and instead punishing employees who raise concerns can result in severe legal consequences.
  • Clear anti-harassment policies and procedures, along with careful handling of complaints, are vital to avoiding wrongful termination lawsuits.

2. Ryan’s Family Steakhouse Settles for $500,000 Over Wrongful Termination and Discrimination Claims

In the case EEOC v. Fire Mountain Restaurants LLC, the U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit against the company Fire Mountain Restaurants LLC, which operates Ryan’s Family Steakhouse in Paducah, Kentucky, citing serious violations of Title VII of the Civil Rights Act.

The lawsuit highlighted widespread racial and sexual discrimination at the restaurant, where black employees faced harassment and unfair terminations due to their race, and white workers who were associated with black colleagues were subjected to racial slurs. Female employees also experienced ongoing sexual harassment, including unwanted advances and degrading remarks. Those who reported these abuses faced retaliatory terminations.

The company settled the lawsuit for $500,000 through a consent decree. Beyond the monetary compensation, the company agreed to implement several corrective measures, including anti-discrimination training for managers and monitoring by the EEOC to prevent further incidents.

Key lessons learned from the case:
  • Employers must implement and uphold strong anti-discrimination and anti-harassment policies to prevent unlawful behavior and protect employees from unjust termination.
  • Not addressing complaints effectively can lead to major legal and financial consequences, making it super important to maintain a fair and safe workplace.
  • Retaliation through termination for reporting harassment or discrimination can expose companies to serious legal challenges and financial settlements.

3. Rental Pro Settles for $37,000 Over Wrongful Termination Due to Age Discrimination

In the case of EEOC v. Rental Pro, Ronald Johnson, aged 52, was terminated by Rental Pro, an equipment rental company based in Somerset, Kentucky, after the company’s owner expressed a preference for “younger and peppier” employees, seeking to inject “young blood” into the business. This age-based termination violated the Age Discrimination in Employment Act (ADEA), which protects workers over 40 from discrimination. The Equal Employment Opportunity Commission (EEOC) filed a lawsuit on behalf of Johnson, and the case was settled for $37,000 through a consent decree.

Key lessons learned from the case:
  • Terminating employees based on age is a direct violation of the ADEA, which ensures protections for older workers.
  • Employers must avoid age-related biases in hiring and termination decisions, focusing on qualifications and performance instead.
  • Termination for age-related reasons can lead to consequential legal penalties and financial settlements.

Learn more about Kentucky Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

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