Kentucky Division of Unemployment Insurance strives to ensure that employers, workers, and others involved in Kentucky Unemployment Insurance programs follow the laws, rules and required procedures.

Part of these efforts includes providing important information to all stakeholders in the process. Both state and federal law, not contractual agreements, determine which workers can be classified as independent contractors.

Kentucky Legislature Kentucky Revised Statutes KRS Chapter 341

KRS 341.990 Penalties (6)(a) “Any person who knowingly makes a false statement or representation, or who knowingly fails to disclose a material fact to prevent or reduce the payment of benefits to any worker entitled thereto, or to avoid becoming or remaining subject to this chapter, or to avoid or reduce any payment required of an employing unit under this chapter shall be guilty of a Class A misdemeanor unless the liability avoided or attempted to be avoided is one hundred dollars ($100) or more, in which case he shall be guilty of a Class D felony.”

Worker misclassification is illegal

This practice of misclassifying workers is illegal because it often leads to employers avoiding required workers’ compensation insurance, unemployment coverage, or other employer paid taxes and withholdings. There are serious consequences for employers that misclassify workers, including;

  • tax penalties and interest;
  • labor law and safety violations;
  • back unemployment insurance premiums; and
  • costly lawsuits if a worker is injured on the job.

We need your help

If you know a business is intentionally misclassifying its employees, please contact us immediately.

You may report worker misclassification or fraud by either of the methods identified below;

  1. Preferable method: Click on one of the Report buttons below and follow the information provided for completing the report.
  2. Email: You may print, complete and submit the attached document to:
  3. Fax: You may print, complete and submit the attached document to: 502-564-5590
  4. Phone: You may report by calling 502-564-6838. Please be prepared to provide the specifics of the information you are reporting in order for the phone contact to document for investigation.
  5. Mail: You may print, complete and submit the attached document to: Division of Unemployment Insurance, Tax Audit Branch, P.O. Box 948, Frankfort, Ky. 40601

Your identity will be kept confidential.


Misclassification occurs when an employer calls someone who is an employee a "subcontractor" or an "independent contractor" to avoid providing benefits such as Unemployment Insurance, or to avoid withholding and paying payroll taxes.


Fraud occurs when someone intentionally lies about a material fact in order to affect his/her obligations or benefits regarding unemployment insurance or workers compensation. Sometimes, fraud occurs when someone lies about a material fact in order to affect someone else‘s obligations or benefits.

Investigation Outcomes

Specific details about investigations must remain confidential.

Other Information Links

Department of the Treasury – Internal Revenue Service (IRS)

►Reporting Suspected Tax Fraud Activity to IRS use;
Information Referral Form 3949-A

►Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding use;
Form SS-8

Unemployment Insurance

Misclassification Information