Senate passes bill clarifying Kentucky’s policies on arbitration agreement

On Thursday, the state Senate passed legislation to clarify Kentucky’s arbitration statutes. Arbitration agreements are a common contract between the employer and employee to resolve any potential conflicts outside of court and are used by many public and private employers.

Senate Bill 7, sponsored by Senate President Robert Stivers, comes in response to an October 2018 Kentucky Supreme Court decision stating that because of Kentucky’s vague arbitration statute, all arbitration agreements as a condition of employment between employers and employees are null and void. With this decision, Kentucky is the only state in the nation to prohibit employers’ use of arbitration agreements as a condition of employment.

Senate Bill 7 will restore the right of employers to have arbitration agreements as a condition of employment upon hiring an individual. In addition, Senate Bill 7 seeks to ensure the rights of employers and employees to agree to rehire an employee during pending litigation, agree to a modified period of limitations when permitted under the applicable law, and clarifies that a candidate for employment can provide consent for a background check prior to hiring when federal or state law requires to prior consent.

The Kentucky Chamber, along with the Kentucky League of Cities and other employer groups, strongly support Senate Bill 7.

Senate Bill 7 passed through the Senate with a 26-10 vote and now heads to the House to be heard in committee.