ADR Agreements Acceptable Condition of Employment Under Kentucky Statutory Amendment

Employers in Kentucky are now expressly permitted to require an employee or prospective employee to agree to arbitrate or engage in some form of alternative dispute resolution as a condition of employment. On March 25, 2019, Gov. Matt Bevin signed a statutory amendment authorizing this change to KRS § 336.700. This law applies retroactively to agreements that have already been executed by employees before March 25, 2019.

This amended statute does a number of things. First, it eliminates the uncertainty surrounding the enforceability of arbitration agreements following a recent decision by the Supreme Court of Kentucky in Northern Kentucky Area Development District v. Snyder. The amendment to KRS § 336.700 is clear that employers in Kentucky can condition an offer of employment upon an agreement to arbitrate or to engage in alternative dispute resolution. The amendment applies retroactively to agreements already executed, removing all doubt as to their enforceability. Second, the amended statute permits employers to require employees or prospective employees to reduce the period of time during which they can bring claims against the employer or prospective employer so long as that reduction does not reduce the time period to bring claims by more than 50 percent. Again, this applies retroactively to agreements that have already been executed. Finally, the amended statute permits employers to condition employment offers upon the successful completion of a background check.

Employers should review the law, KRS § 336.700, as well as their job applications and new hire documentation to ensure compliance. Employers are also advised to contact their legal counsel with any questions regarding the amended statute or with questions about the enforceability of arbitration agreements or limitations of actions.