KentuckySB 3432026 Regular SessionSenateWALLET

AN ACT relating to the Department of Workers' Claims and declaring an emergency.

Sponsored By: Phillip Wheeler (Republican)

Became Law

Effective Dates, EmergencyFundsGovernorLabor And IndustryReorganizationState AgenciesWorkers CompensationWorkforce

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 2 benefits, 2 costs, 2 mixed.

Tighter injury rules and fund cutoff

The law narrows what counts as a work injury. Mental or stress conditions do not count unless they come directly from a physical injury. Occupational disease still counts; natural aging and most infections do not unless your job raised the risk. The special fund has no liability if your injury, disability shown date, or last exposure was after December 9, 1996; earlier dates can still fall under its rules.

Premium credit for drug-free workplaces

Employers that run an approved drug-free workplace program get at least a 5% workers' comp premium credit, unless the Insurance Commissioner finds 5% is actuarially unsound. The Commissioner may also set credits for other safety programs after consulting the Department. You cannot claim this credit if you already take certain credits under KRS 304.13-412 or KRS Chapter 351.

Ongoing workers' comp premium assessments

The Funding Commission sets a yearly workers' comp premium assessment to pay down the special fund’s debt by December 31, 2029. It tells carriers, self-insured groups, and own-risk employers the next year's rate by October 1. Assessments are due each quarter by the 30th day after the quarter ends, and starting January 1, 2020, they must be paid electronically. For 1997 only, the law charged a 9% assessment on premiums.

More judges and oversight for claims

The Workers' Compensation Board has three full-time members appointed by the Governor, with appeals court judge qualifications and pay. Terms ending December 1, 2025 run to June 1, 2026; those ending December 1, 2026 run to June 1, 2027; those ending December 1, 2027 run to June 1, 2028; later terms last four years. Up to 19 administrative law judges hear claims; each is an attorney with five years' Kentucky experience and earns Circuit Judge pay. The chief judge gets $3,000 more per year, and new ALJs take office on June 1 after Senate confirmation. The Division of Security and Compliance adds five staff to audit self-insured employers' finances.

Insurer proof filing and rule freeze

Insurers that cover a Kentucky location must file proof of workers' comp coverage with the Department's Commissioner. The law voids or expires a proposed change to 803 KAR 25:190 as of April 14, 2022, and bars any identical or very similar rule from January 4, 2022 through June 1, 2023. The proposed amendment must be posted in the regulations compiler for the public.

New Department of Workers' Claims

The law creates the Department of Workers' Claims under the Governor with five parts: judges, claims processing, security and compliance, funds, and medical services. The Commissioner must have at least eight years of workers' comp legal practice and be confirmed by the Senate. All records, staff, budgets, and unspent funds move from the Education and Labor Cabinet, and existing regulations and decisions stay in effect unless changed. The Division of Workers' Compensation Funds runs the special fund and keeps payment records; after assets and liabilities shift, KEMIA runs the coal workers' pneumoconiosis fund.

Sponsors & Cosponsors

Sponsor

Phillip Wheeler
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 132 • No: 0

House vote • 3/27/2026

3rd reading, passed

Yes: 95 • No: 0

Senate vote • 3/10/2026