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Kentucky at odds over employee arbitration agreements

The relationship between an employee, employer and the company can be a complicated one. That is why employees must understand what rights they have under state and federal laws to ensure that employers do not treat them unfairly.

That is also why employees must know what options they have to resolve any employment issues they face. However, a recent law regarding arbitration agreements has some Kentucky employees worried.

What is a mandatory arbitration agreement?

In 2018, Kentucky became the first state to ban mandatory arbitration agreements. These agreements limit employees’ options to manage disputes, such as:

  • Wage and hour claims;
  • Discrimination complaints; and
  • Sexual harassment claims.

Mandatory arbitration agreements work as their name implies. They only allow employees to resolve employment disputes through arbitration. By signing the agreement, they agree not to take a claim against their employer to trial.

Arbitration does not prevent employees from obtaining justice or compensation. But it does restrict how they can resolve these serious cases that impact their lives.

Banning these agreements simply gave employees more options to get justice if they experienced unfair treatment in the workplace.

New law reversed the old stance on arbitration agreements

As of June 2019, Kentucky employers can once again enforce arbitration agreements. The reversal of the ban did not come without controversy or conflict between both lawmakers and employees alike. Many employees and lawmakers believe this law gives employers too much power.

However, the new law includes several measures to protect the rights of employees. It requires employers to:

  • Establish a neutral and reasonable location for the arbitration in the agreement;
  • Make sure there is a fair process to choose a neutral arbitrator, to eliminate conflicts of interest; and
  • Ensure that the arbitrator can award either party any form of compensation or relief.

So, even if employers enforce these agreements, they still cannot violate employees’ rights. If employees are subject to mandatory arbitration and unsure of how to move forward, it might still be beneficial to speak with an experienced attorney to determine the next steps they can take.