diff --git a/data/keyd.1.gz b/data/keyd.1.gz
index 346cbe4..e38a7ea 100644
Binary files a/data/keyd.1.gz and b/data/keyd.1.gz differ
diff --git a/docs/keyd.scdoc b/docs/keyd.scdoc
index 7f86564..02f0353 100644
--- a/docs/keyd.scdoc
+++ b/docs/keyd.scdoc
@@ -449,8 +449,7 @@ and can contain any of the following options:
 	*macro_repeat_timeout:* The time separating successive executions of a macro.
 	(default: 50)
 
-	*layer_indicator:* If set, this will turn the capslock light on whenever a layer with a non-empty modifier set
-	is active.
+	*layer_indicator:* If set, this will turn the capslock light on whenever a layer is active.
 	(default: 0)
 
 *Note:* Unicode characters and key sequences are treated as macros, and
diff --git a/src/daemon.c b/src/daemon.c
index 80a196b..765ba26 100644
--- a/src/daemon.c
+++ b/src/daemon.c
@@ -80,18 +80,25 @@ static void add_listener(int con)
 	listeners[nr_listeners++] = con;
 }
 
-static void layer_observer(const char *name, int state)
+static void layer_observer(struct keyboard *kbd, const char *name, int state)
 {
-	if (!nr_listeners)
-		return;
-
-	char buf[MAX_LAYER_NAME_LEN+2];
-	ssize_t bufsz = snprintf(buf, sizeof(buf), "%c%s\n", state ? '+' : '-', name);
 	size_t i;
+	char buf[MAX_LAYER_NAME_LEN+2];
+	ssize_t bufsz;
 
 	int keep[ARRAY_SIZE(listeners)];
 	size_t n = 0;
 
+	if (kbd->config.layer_indicator) {
+		for (i = 0; i < nr_devices; i++)
+			if (devices[i]->data == kbd)
+				device_set_led(devices[i], 1, state);
+	}
+
+	if (!nr_listeners)
+		return;
+
+	bufsz = snprintf(buf, sizeof(buf), "%c%s\n", state ? '+' : '-', name);
 	for (i = 0; i < nr_listeners; i++) {
 		ssize_t nw = write(listeners[i], buf, bufsz);
 
diff --git a/src/keyboard.c b/src/keyboard.c
index de13252..04cfb24 100644
--- a/src/keyboard.c
+++ b/src/keyboard.c
@@ -302,22 +302,6 @@ static void lookup_descriptor(struct keyboard *kbd, uint8_t code,
 	}
 }
 
-static void update_leds(struct keyboard *kbd)
-{
-	size_t i;
-	int active = 0;
-
-	if (!kbd->config.layer_indicator)
-		return;
-
-	for (i = 0; i < kbd->config.nr_layers; i++) {
-		if (kbd->layer_state[i].active && kbd->config.layers[i].mods)
-			active = 1;
-	}
-
-	set_led(1, active);
-}
-
 static void deactivate_layer(struct keyboard *kbd, int idx)
 {
 	dbg("Deactivating layer %s", kbd->config.layers[idx].name);
@@ -326,7 +310,7 @@ static void deactivate_layer(struct keyboard *kbd, int idx)
 	kbd->layer_state[idx].active--;
 
 	if (kbd->layer_observer)
-		kbd->layer_observer(kbd->config.layers[idx].name, 0);
+		kbd->layer_observer(kbd, kbd->config.layers[idx].name, 0);
 }
 
 /*
@@ -343,7 +327,7 @@ static void activate_layer(struct keyboard *kbd, uint8_t code, int idx)
 	kbd->last_layer_code = code;
 
 	if (kbd->layer_observer)
-		kbd->layer_observer(kbd->config.layers[idx].name, 1);
+		kbd->layer_observer(kbd, kbd->config.layers[idx].name, 1);
 }
 
 static void execute_command(const char *cmd)
@@ -394,8 +378,12 @@ static void clear(struct keyboard *kbd)
 	for (i = 1; i < kbd->config.nr_layers; i++) {
 		struct layer *layer = &kbd->config.layers[i];
 
-		if (layer->type != LT_LAYOUT)
+		if (layer->type != LT_LAYOUT) {
+			if (kbd->layer_state[i].active && kbd->layer_observer)
+				kbd->layer_observer(kbd, kbd->config.layers[i].name, 0);
+
 			memset(&kbd->layer_state[i], 0, sizeof kbd->layer_state[0]);
+		}
 	}
 
 	/* Neutralize upstroke for active keys. */
@@ -647,8 +635,6 @@ static long process_descriptor(struct keyboard *kbd, uint8_t code,
 		break;
 	}
 
-	update_leds(kbd);
-
 	if (pressed)
 		kbd->last_pressed_code = code;
 
@@ -656,8 +642,8 @@ static long process_descriptor(struct keyboard *kbd, uint8_t code,
 }
 
 struct keyboard *new_keyboard(struct config *config,
-			      void (*sink) (uint8_t, uint8_t),
-			      void (*layer_observer)(const char *name, int state))
+			      void (*sink) (uint8_t code, uint8_t pressed),
+			      void (*layer_observer)(struct keyboard *kbd, const char *name, int state))
 {
 	size_t i;
 	struct keyboard *kbd;
diff --git a/src/keyboard.h b/src/keyboard.h
index a98344d..94d3388 100644
--- a/src/keyboard.h
+++ b/src/keyboard.h
@@ -8,6 +8,7 @@
 
 #include "keyd.h"
 #include "config.h"
+#include "device.h"
 
 #define MAX_ACTIVE_KEYS	32
 #define CACHE_SIZE	16 //Effectively nkro
@@ -63,12 +64,12 @@ struct keyboard {
 
 	uint8_t keystate[256];
 	void (*output) (uint8_t code, uint8_t state);
-	void (*layer_observer) (const char *layer, int state);
+	void (*layer_observer) (struct keyboard *kbd, const char *layer, int state);
 };
 
 struct keyboard *new_keyboard(struct config *config,
-			      void (*sink) (uint8_t, uint8_t),
-			      void (*layer_observer)(const char *name, int state));
+			      void (*sink) (uint8_t code, uint8_t pressed),
+			      void (*layer_observer)(struct keyboard *kbd, const char *name, int state));
 
 long kbd_process_key_event(struct keyboard *kbd, uint8_t code, int pressed);
 int kbd_eval(struct keyboard *kbd, const char *exp);
diff --git a/src/keyd.c b/src/keyd.c
index c362f8e..dab9dc8 100644
--- a/src/keyd.c
+++ b/src/keyd.c
@@ -175,13 +175,3 @@ int main(int argc, char *argv[])
 
 	run_daemon(argc, argv);
 }
-
-/* TODO: find a better place for this. */
-void set_led(int led, int state)
-{
-//TODO: fixme
-//      size_t i;
-//
-//      for (i = 0; i < nr_devices; i++)
-//              device_set_led(&devices[i], led, state);
-}
diff --git a/src/keyd.h b/src/keyd.h
index efe443a..cdad0f8 100644
--- a/src/keyd.h
+++ b/src/keyd.h
@@ -47,8 +47,6 @@
 
 #define warn(fmt, ...) fprintf(stderr, "\033[31;1mERROR:\033[0m "fmt"\n", ##__VA_ARGS__)
 
-void set_led(int led, int state);
-
 enum event_type {
 	EV_DEV_ADD,
 	EV_DEV_REMOVE,