Is anyone aware of a KY law that prohibits the bank for charging non-customers a check cashing fee for on-us checks?

There is no Kentucky law that addresses the issue; i.e. it is neither expressly prohibited nor allowed. It's not as common here as it is in some of the eastern states, but I know a couple of Louisville banks do it.

If Andy has a checking account with your bank you have agreed to make payments according to his order. If Andy writes John a check and your bank refuses to cash it unless John pays a fee, then the person with the legitimate complaint is Andy. It's Andy with whom you have a contract and you are essentially refusing to make the payment he ordered you to make unless someone else pays you to do so.

You need to think about how your customers who have their payroll accounts with you might react and, perhaps, give them some advance notice as a courtesy.

I'm not forecasting doom and gloom if your do it, but you should talk to your legal counsel beforehand.

Some states (like mine, Massachusetts) have laws that require an employer to provide any employees who are paid by check a way to cash their payroll checks from that employer free of charge. If Kentucky had that sort of law, a business with its payroll account at your bank could have a problem if you refuse to cash their payroll checks gratis. Of course the employer could avoid the problem by having an in-house check cashing facility for its own payroll checks, but that's asking a lot of some businesses. Do check with bank counsel, as Ken, who knows Kentucky laws a heck of a lot better than I, has suggested.