What's happening
This bill prohibits mandatory arbitration agreements in consumer, employment, and insurance contracts in New York, except when federal law requires otherwise.
Why it matters
Expands protections for consumers and employees. By clearly defining "consumer disputes" and "employment disputes," the bill aims to ensure broad coverage, protecting not just traditional purchases or jobs but also services like investments and all employment covered by federal law.
Targets pre-dispute arbitration clauses. The legislation specifically bans agreements that require arbitration of disputes before any issue arises, addressing concerns that individuals are forced to give up legal rights without knowing what future conflicts may occur.
Includes insurance contracts and certain exempted workers. The bill makes arbitration clauses in insurance contracts and contracts for seamen, railroad workers, and those in interstate commerce void and unenforceable, closing loopholes that have historically left these groups vulnerable to mandatory arbitration.
Carves out union-negotiated agreements and aligns with federal law. Collective bargaining agreements are exempt, and the law only applies where not preempted by federal law, indicating a focus on state-level authority and not disrupting federally negotiated labor protections.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Consumers and consumer-facing businesses
The bill would prohibit agreements requiring arbitration of future consumer disputes, including those involving credit and investment services, except when inconsistent with federal law.
Employers and employees
The bill would prohibit mandatory arbitration agreements covering future employment disputes, subject to federal law, while excluding agreements negotiated with labor unions through collective bargaining.
Insurers and insurance customers
Mandatory arbitration provisions in consumer insurance contracts or written insurance offerings would be void, while the remaining insurance contract terms would stay in effect.
Seamen, railroad employees and other interstate or foreign commerce workers
The bill would void mandatory arbitration provisions in their written employment contracts while preserving the remaining contract terms.
Headline styles
Ban Forced Arbitration Clauses
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
End Forced Arbitration Clauses
Assembly Floor Calendar · Sponsor Jeffrey Dinowitz
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
7924
IN SENATE
March 9, 2018
Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to prohibited mandatory arbitration agreements; and to repeal section 399-c of such law relating to prohibiting mandatory arbitration clauses in certain consumer contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 399-c of the general business law is REPEALED and a new section 399-c is added to read as follows:
§ 399-c. Prohibited mandatory arbitration agreements. 1. Definitions.
(a) The term "consumer dispute" shall mean a dispute between an individual who seeks or acquires real or personal property, services (including services relating to securities and other investments), money, or credit for personal, family or household purposes and the seller or provider of such property, services, money or credit.
(b) The term "employment dispute" shall mean a dispute between an employer and employee arising out of the relationship of employer and employee as defined in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203).
(c) The term "mandatory arbitration agreement" shall mean any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.
2. Prohibited mandatory consumer and employment arbitration agreements. Notwithstanding any other provision of this article, no mandatory arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute or consumer dispute.
3. Prohibition of effect of certain mandatory arbitration clauses or agreements. Mandatory arbitration clauses or agreements covering consumers and employee disputes are contrary to the established public policy of this state. Because employees and consumers are required to assent to these agreements as a condition of being an employee or consumer before any dispute has arisen with the employer or merchant, these agreements do not offer employees and consumers a meaningful
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03793-01-7
S. 7924 2
choice about how to resolve their disputes with the employer or merchant. In addition, mandatory arbitration agreements prevent employees and consumers from effectively vindicating their rights under state law. For these reasons, except when inconsistent with federal law, the state prohibits the formation and enforcement of mandatory arbitration agreements in employment and consumer contracts.
4. Prohibition of mandatory arbitration clauses in insurance agreements. A mandatory arbitration agreement within or part of any written contract for insurance with a consumer or other written agreement involving the offering of insurance to a consumer is invalid, unenforceable and void. Any such arbitration agreement shall be considered severable, and all other provisions of the contract for insurance shall remain in effect and given full force.
5. Prohibition of mandatory arbitration clauses in employment contracts for workers exempted from the Federal Arbitration Act. (a) A mandatory arbitration agreement within or part of any written contract of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce is unenforceable and void. Any such arbitration agreement shall be considered severable, and all other provisions of the employment contract shall remain in effect and given full force.
(b) The provisions of this section shall not apply to agreements negotiated with any labor union through collective bargaining.
6. Prohibition of mandatory arbitration clauses that are not governed by federal law. Any mandatory arbitration agreement, or portion thereof, in an employment or consumer contract is invalid, unenforceable and void, when the enforceability of such arbitration agreement, or the portion at issue, is governed by state law. Any such arbitration agreement shall be considered severable, and all other provisions of the employment contract shall remain in effect and given full force.
§ 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to prohibited mandatory arbitration agreements; and to repeal section 399-c of such law relating to prohibiting mandatory arbitration clauses in certain consumer contracts
Purpose or general idea of bill
The purpose of this bill is to comprehensively update the General Busi- ness Law's section regarding mandatory arbitration clauses and the way in which they are regulated in New York State.
Summary of specific provisions
Section one of the bill repeals the current section 399-c of the General Business Law and replaces it with a new section 399-c. The terms "consumer dispute", "employment dispute", and "mandatory arbitration agreement" are defined in this section. The section bans mandatory arbi- tration clauses in New York State and declares them unenforceable much like the original section 399-c did. The section bans mandatory arbi- tration clauses from being included in insurance contracts. The section would ban workers exempted from the Federal Arbitration Act from being forced to sign mandatory arbitration clauses resulting from an employ- ment contract. The section would also ban any mandatory arbitration agreement that is not enforceable under federal law.
Section two contains the effective date.
Justification
As mandatory arbitration clauses in contracts for consumer goods, services, and employment have become more and more commonplace, consum- ers are increasingly forced to resolve disputes via arbitration. In many cases, consumers are unaware that the contract they are signing requires them to resolve disputes through arbitration, and not through the court system. They are in effect unknowingly signing away the right to their "day in court."
Questions continue to be raised about the fairness of the arbitration process, due to studies finding that arbiters tend to disproportionately rule in favor of businesses over the consumers. Private arbitration companies have a financial incentive to rule in favor of the business that is paying for their services. Given these questions, it is appro- priate to amend the state law to make sure that every New Yorker knows their rights when it comes to agreeing to arbitration clauses in contracts.
Prior legislative history
2015-16 - A.9956A - Third Reading Cal. No. 192
Fiscal implications
None to the State
Effective date
This act shall take effect on the one hundred eightieth day after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.