Request By:
Mr. Vic Hellard, Jr.
Director
Legislative Research Commission
Capitol Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Carl Miller, Assistant Attorney General
For the benefit of the Personal Service Contract Subcommittee, you have requested an opinion of the Attorney General as to whether there is a maximum amount which an individual person may be paid under a personal service contract. You ask the following specific questions:
1. Should holders of personal service contracts be viewed as state 'employees' or as individual contractors?
2. If they are looked upon as individual contractors, should any 'salary type' limits apply to them?
3. If they are looked upon as 'employees,' should any 'salary type' limits apply to them?
4. If limits apply in either case, what are they?
It is our opinion that there is no constitutional or statutory limit as to the amount which may be paid under a personal service contract. The only limit is the reasonableness of the charges for the services rendered, and that is one of the matters to be reviewed by the subcommittee on each personal service contract, KRS 45.715.
It is a general characteristic of a contract for services that the contractor is not considered an employee of the contractee and that the relationship known in the law as a master and servant does not pertain. For this reason we believe that § 246 of the Kentucky Constitution and KRS 64.640 have no application to personal service contracts. It should also be noted that KRS 18.140, as amended by HB 660 in 1978, expressly exempts persons employed in a professional or scientific capacity from the classified service.
There are several practical differences between a contractor and an employee. A contractor has many expenses connected with his performance while a salaried employee is furnished all the equipment and aid he needs by the employer. The contractor may have to pay other employees, such as engineers, draftsmen, attorneys, clerks and secretaries. He will have to furnish his own equipment and overhead. It would be economically unrealistic to impose limitations on personal service contracts according to the limitation provided for employees' salaries.
The subcommittee created by HB 110 and the Professional Employment Commission created by HB 660 are both charged with the responsibility of looking into the necessity for personal service contracts, the qualifications of the contractor and the reasonableness of the charges. The Commission has the power to require cancellation or modification of a contract if it fails to meet proper standards. KRS 45.545. It is our opinion that there is no limit on the amount which can be paid on any personal service contract as far as the Constitution and the statutes are concerned.