On March 25, 2019, Governor Bevin signed legislation providing that an employer may require an employee to sign an arbitration agreement as a condition of employment. The legislation, which amends KRS 336.700, is designed to reverse the Kentucky Supreme Court’s decision in Northern Ky. Area Development Dist. v. Snyder, 2017-SC-000277-DG (Ky. 2018), which held that employers may not condition employment upon execution of an arbitration agreement.
In Snyder, the Kentucky Supreme Court held that the Federal Arbitration Act (“FAA”) did not preempt KRS 336.700(2). Previously, KRS 336.700(2) stated that “no employer shall require as a condition or precondition of employment that any employee or person seeking employment waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit to which the employee or person seeking employment would otherwise be entitled under any provision of the Kentucky Revised Statutes or any federal law.”
As amended, KRS 336.700 allows any employer to “require an employee or person seeking employment to execute an agreement for arbitration, mediation, or other form of alternative dispute resolution as a condition or precondition of employment.” When it takes effect, the amended statute will apply retroactively and prospectively.
This legislation is welcome news for employers in Kentucky who were faced with uncertainty about the validity of existing arbitration agreements. The legislation brings Kentucky back into line with United States Supreme Court precedent and the majority of jurisdictions, which permit employers to require arbitration as a condition of employment.