Kafkaesque is an eponym from early-20th-century German-language writer Franz Kafka. It means (1) marked by surreal distortion or a sense of impending danger, or (2) of or relating to a nightmarish world where people are dehumanized by intricate bureaucratic systems. Both of these main senses refer to his work, much of which had these qualities.
Like most words ending in -esque, Kafkaesque does not require a hyphen. It is usually capitalized, though this may change if it remains in English a few more decades.
A former South African describes an experience one of her servants had with the police and thereby illuminates the Kafkaesque nightmare in which black people live. [Negro Digest (1963)]
On each side there were dozens of small, Kafkaesque cubicles. [Life (1969)]
These are the supervisory personnel working in the interstices of aKafkaesque bureaucracy that most mayors have never been able to fathom. [New York Magazine (1981)]
In a Kafkaesque case of justice betrayed but finally honored, all charges were dropped here today against three men who had spent 18 years in prison for a double murder they did not commit. [New York Times (1996)]
Friends of mine – a clever, funny, affectionate couple – are going through the Kafkaesque adoption process at the moment. [Telegraph (2012)]