Staffing agency license in Kentucky: no license since 2000, but PEO and health care rules

Kentucky has not licensed employment agencies since 2000, when the General Assembly repealed every operative section of KRS chapter 340: the permit, the surety bond, the contract form rules and the fee restrictions. No state license applies to an agency that charges job seekers, an employer-paid search firm or a temporary staffing firm. Two newer regimes fill part of the gap: professional employer organizations register with the Department of Workers' Claims under a 2022 law, and agencies that supply temporary direct care staff to hospitals and long-term care facilities register with the Cabinet for Health and Family Services at $3,000 a year.

This page covers the repeal, both registrations, the Kentucky rule on conversion fees for health care workers, and the employer accounts a staffing firm needs. For states that still license agencies, see employment agency license requirements.

The 2000 repeal of KRS chapter 340

House Bill 620 of the 2000 session, "AN ACT relating to private employment agencies," became 2000 Ky. Acts ch. 236, effective July 14, 2000. It repealed the definitions, the permit to operate, the application and fee section, records, the surety bond, contract form and fee restrictions, enforcement, the advisory council and the penalty section. On the KRS chapter 340 page, every section is marked repealed.

The practical result as of October 2026:

I did not check city or county ordinances. With the state fee restrictions gone, the terms of any fee you charge a candidate, and any conversion fee you charge a non-health care client, are governed by your contracts and general consumer law.

PEO registration: the 2022 replacement for employee leasing

Older guides describe Kentucky employee leasing companies registering under KRS 342.615. That section was repealed by 2022 Ky. Acts ch. 50, effective July 14, 2022, and replaced with a PEO law in KRS 336.230 to 336.250.

• Who is covered. Anyone conducting business as a professional employer organization, staff leasing company, employee leasing company or administrative employer (KRS 336.232). Persons providing temporary help services, meaning firms that recruit their own employees, assign them to clients and customarily try to reassign them, are excluded.
• Registration. With the Department of Workers' Claims under KRS 336.236. Since July 15, 2024, an unregistered business may not offer PEO services or use the PEO, staff leasing or employee leasing names. The application lists owners of 25 percent or more, operating names from the past five years, and an audited GAAP financial statement no older than 13 months without a going-concern qualification.
• Renewal. Within 180 days after fiscal year end, with updated financials.
• Fees. The statute caps the initial fee at $500, annual renewal at $250, and a limited registration at $250 (KRS 336.238). I could not confirm the amounts actually set by regulation.
• Financial standing. Positive working capital, or a bond, letter of credit or securities equal to the deficiency plus $100,000 (KRS 336.240).
• Limited registration. For out-of-state PEOs with no Kentucky office and no more than 50 Kentucky employees, valid one year.
• Penalties. For knowingly operating unregistered or giving false information: denial, revocation or restriction of registration, a civil penalty of up to $1,000 per violation, probation or a cease and desist order (KRS 336.250).

The same chapter settles a workers' compensation question for ordinary temp firms: under KRS 336.244, "A temporary help service shall be deemed the employer of a temporary worker" for workers' compensation purposes.

Health care services agencies

Kentucky regulates agencies that refer temporary direct care staff to assisted living communities, long-term care facilities and hospitals. "Temporary" means an undefined term or less than 24 continuous months, and in-house pools a facility runs for its own affiliates are excluded (KRS 216.718).

Registration

• Required before operating or advertising, with the Cabinet for Health and Family Services, separately for each location (KRS 216.720).
• Fee: $3,000 per registration, for the initial filing and each annual renewal, under 906 KAR 1:210. Renewal applications are due at least 60 days before expiration.
• Voided by a change of controlling person, a sale or a management transfer; a new owner reapplies with the fee within 30 days.
• Requirements: professional and general liability insurance, a $10,000 employee dishonesty bond, workers' compensation for all temporary staff, and records kept five years (KRS 216.722).
• Quarterly reports due February 1, May 1, August 1 and November 1.
• Penalty: denial, or revocation with a $25,000 monetary penalty.

Conversion fees and recruiting limits

KRS 216.724 is one of the more detailed state rules on conversion fees. A health care services agency may not:

• restrict a temporary direct care worker's employment, "including but not limited to contract buy-out provisions or contract non-compete clauses";
• require liquidated damages, employment fees or other payment if the worker is hired permanently, except a fee payable solely by the facility where the contract "specifies that the amount will be reduced pro-rata" according to the time the worker spent on the agency's payroll; or
• solicit or recruit the facility's current staff.

A worker contract that breaks these rules is an unfair trade practice and void. The limits do not apply to placing permanent staff. If you staff Kentucky facilities, the practical step is a conversion clause with a stated declining schedule, for example (illustrative only) a fee that falls by a fixed fraction for each week the worker has been on assignment. See temp-to-perm conversion fee for drafting patterns, and check that yours actually declines with payroll time as the statute requires.

During declared emergencies, KRS 367.374 also bars grossly excessive prices for direct care staff services provided by a health care services agency.

Employer accounts every Kentucky staffing firm needs

• Workers' compensation. Required of any employer with one or more employees in Kentucky, other than one engaged solely in agriculture (KRS 342.630). Going uninsured brings civil fines of $100 to $1,000 per offense, with each employee and each day a separate offense, criminal penalties of up to 180 days in jail, and personal liability for officers who authorized it (KRS 342.990). See staffing agency insurance requirements.
• Unemployment insurance. Through the Office of Unemployment Insurance in the Education and Labor Cabinet. An employer becomes subject after paying $1,500 in wages in a quarter or employing someone in 20 weeks of the current or prior year (KRS 341.070). I found no Kentucky statute requiring temps to contact the agency for reassignment, though I did not review the unemployment regulations.
• Withholding. Every employer paying wages must withhold Kentucky income tax (KRS 141.310).
• Secretary of State. Register an out-of-state entity, and file a certificate of assumed name for any trade name you use.

I found no Kentucky farm labor contractor license, talent agency license or day labor statute as of October 2026. Federal farm labor contractor registration still applies. If you also staff across the river, see Ohio's rules.

A Kentucky checklist

KENTUCKY CHECK — [date] — owner: [name]

Model:
  [ ] Employer-paid direct hire or search: no state license
  [ ] Candidate-paid fees: no license; contract reviewed by counsel
  [ ] Temp/contract, we employ: employer accounts below
  [ ] Direct care staff to hospitals/LTC/assisted living: CHFS registration
  [ ] Co-employment of client workforce: DWC PEO registration (336.236)

If health care staffing:
  $3,000 registration per location; renewal 60 days early   [ ]
  $10,000 dishonesty bond; liability insurance             [ ]
  Conversion clause pro-rated, facility-paid only          [ ]
  Quarterly reports calendared                             [ ]

Employer accounts:
  Workers' comp from first employee                       [ ]
  UI account; withholding account                         [ ]
Next review: [date]