In September 2018, the Kentucky Supreme Court stated that mandatory arbitration agreements violate state law. Recently, the Kentucky legislature enacted SB 7 to change that ruling. The Bill specifically states that employers may require an employee or applicant to execute an arbitration agreement as a condition of employment. The arbitration agreement must state a reasonable location for the arbitration, apply to both parties, ensure procedural fairness, provide at least one channel for pursuing a legal claim (e.g., individual arbitration), and allow an arbitrator to award the same type of relief as would be available through a court of law.

The Bill applies prospectively and retroactively so as to eliminate the effects of the prior court case. Notably, this permission for mandatory arbitration agreements does not apply to collective bargaining agreements.