803 KAR 1:045.
Contractors, subcontractors, prevailing rates of wages.
RELATES TO: KRS
AND CONFORMITY: KRS 337.520 authorizes the executive director to make
administrative regulations he may deem appropriate to carry out the provisions
and purposes of KRS 337.505 to 337.550. The function of this administrative
regulation is to interpret the requirements of payments which may be considered
as paying the prevailing rates of wages by contractors and subcontractors.
Section 1. The
Statutory Provisions. The statute requires all contractors and subcontractors
to pay not less than the prevailing rate of wages in legal tender without any
deductions. The statute provides an exemption to this requirement where the
employer and employee enter into an agreement in writing at the beginning of or
during any term of employment covering deductions for food, sleep
accommodations or any similar item if this agreement is submitted by the
employer to the office and is approved by the office as fair and reasonable.
Section 2. Free and
Clear Payment; Kickbacks. Wages cannot be considered to have been paid by the
employer and received by the employee unless they are paid finally and
unconditionally or "free and clear." The payment of wages as required
by the statute will not be met where the employee kicks back directly or
indirectly to the employer or to another person for the employer's benefit the
whole or part of the wage delivered to the employee. This is true whether the
kickback is made in cash or in other than cash. For example, if it is a
requirement of the employer that the employee must provide a uniform which will
be used in, or is specifically required for, the performance of the employee's
particular work, there would be a violation of the statute when the cost of
furnishing and maintaining the uniform by the employee cuts into the prevailing
rate of pay.
Section 3. Payment
Made to Person Other than Employee. (1) Taxes which are assessed against the
employee and which are collected by the employer and forwarded to the
appropriate governmental agency may be deducted from the prevailing rate of
wages. This is applicable to the employee's share of social security, as well
as other federal, state, or local taxes. No deduction may be made for any tax
or share of a tax which the law requires to be borne by the employer.
(2) Where an
employer is legally obliged, as by order of a court of competent and
appropriate jurisdiction, to pay a sum for the benefit or credit of the
employee to a creditor of the employee, trustee, or other third party, under
garnishment, wage attachment, trustee process, or bankruptcy proceeding,
deduction from wages of the actual sum so paid is not prohibited; provided,
that neither the employer nor any person acting in his behalf or interest
derives any profit or benefit from the transaction.
(3)(a) Where an
employer is directed by a voluntary assignment or order of his creditor, donee,
or other third party, deductions from wages of the actual sum so paid is not
prohibited, provided, that neither the employer nor any person acting in his
behalf or interest, directly or indirectly, derives any profit or benefit from
(b) No payment by
the employer to a third party will be recognized as a valid payment of wages
required by the statute where it appears that such payment was part of a plan
or arrangement to evade or circumvent the statute. For the protection of both
employer and employee, it is suggested that full and adequate record of all
assignments and orders be kept and preserved.
(c) Under the
principles stated in paragraphs (a) and (b) of this subsection, employers will
be permitted to deduct from wages sums paid at the employee's direction to
third persons for the following purposes: sums paid, as authorized by the
employee, for the purchase in his behalf of Savings Bonds; union dues paid
pursuant to a collective bargaining agreement with bona fide representatives of
the employees; employees' accounts with merchants independent of the employer;
insurance premiums; voluntary contributions to churches and charitable,
fraternal, athletic, and social organizations or societies from which the
employer receives no profit or benefit directly or indirectly. (1 Ky.R. 833; eff.
5-14-75; TAm eff. 8-9-2007.)