Can an Owner of a Kentucky Business Draw Unemployment?


In Kentucky, the Office of Employment and Training administers the commonwealth's unemployment insurance benefits pursuant to the Kentucky Revised Statutes. Eligible claimants receive between $39 and $415 of weekly benefits, current as of 2011. Claimants must register for work, look for full-time work and must have involuntarily separated from work and must meet the monetary eligibility requirements. Owners of Kentucky businesses are ineligible to receive unemployment insurance benefits unless they were officers of a corporation.

The Kentucky Revised Statutes requires all businesses to pay unemployment insurance taxes for their employees. The commonwealth provides a limited exception for domestic, non-profit and agricultural employers who hire a small number of employees and pay limited wages. Under Kentucky law, sole proprietors and partners are ineligible to draw unemployment benefits, since unemployment benefits apply only to their employees. Owners of general partnerships and sole proprietorships are ineligible to establish new unemployment insurance claims if they become unemployed after their businesses fail. However, corporate officers can draw benefits in limited circumstances.

Self-Employment Unemployment Insurance Laws

There is no voluntary contribution allowance for partners, independent contractors and sole proprietors. Although some states allow sole proprietors and partners to make self-employment unemployment benefit contributions, in Kentucky, these business entities cannot make voluntary contributions for themselves. However, corporate officers can elect self-coverage. Corporate officers who are unemployed through no fault of their own and were not responsible for their corporate failings are eligible to draw unemployment insurance benefits. For example, if a corporate officer was terminated by other majority shareholders, they may be eligible to draw benefits if their reasons for termination were not for illegal conduct or violation of company policies.

Eligibility Requirements

Claimants who receive unemployment benefits from the Kentucky Office of Employment and Training are required to register for work and look for full-time work. To receive unemployment benefits, self-employed claimants must have worked for other employers to receive unemployment benefits. In other words, sole proprietors or business owners cannot receive unemployment benefits if they became unemployed after beginning their own businesses. Claimants must establish monetary eligibility by working for other employers as employees and not as independent contractors or sole proprietors.


Kentucky law requires that employees who terminate employment voluntarily have good cause reasons for doing so. According to the Kentucky Revised Statutes, claimants leaving work voluntarily to pursue self-employment do not have good cause reasons for terminating employment and are ineligible to receive unemployment insurance benefits. However, if they begin their own companies after an involuntary termination for a lack of available work, they may be able to pursue self-employment and receive unemployment insurance benefits if they continue to look for other full-time work and report self-employment earnings.

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