Why it matters: Following passage by the State Assembly, the New York Senate is considering a bill that would prohibit state entities from contracting with any business that requires employees or independent contractors to sign an arbitration agreement. Similar to the so-called Franken Amendment added to the federal Defense Appropriations bill a few years ago, the proposed law applies to agreements covering arbitration for claims under Title VII and enumerated torts. Currently being considered by the Senate Finance Committee, the proposed law could signal a movement toward limiting employment-related arbitration agreements.

Detailed Discussion

On May 5, the New York State Assembly unanimously passed A4791. The legislation would prohibit a state entity from contracting with any business which mandates that an employee or independent contractor agree to arbitrate certain claims.

Specifically, employees bringing any claims arising under Title VII or any tort related to or arising from discrimination, sexual assault or harassment (including assault, battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring) must be allowed to litigate or the state comptroller would be unable to approve the employer’s contract.

The bill includes an exemption for arbitration required by a collective bargaining agreement as well as a waiver that can be granted “to respond to an emergency arising from unforeseen causes.” The waiver can last no longer than necessary, and the agency granting it must explain why it was used.

After unanimous passage in the Assembly (by a vote of 131 to 0), the proposed law moved to the Senate, where it was referred to the Finance Committee for consideration. If enacted, the bill would take immediate effect.

In 2009, Sen. Al Franken (D-Minn.) added a similar provision to the federal Defense Appropriations bill. Pursuant to that legislation, defense contractors were barred from receiving federal funds if they utilized mandatory arbitration for employee claims of sexual assault, assault and battery, intentional infliction of emotional distress, and negligent hiring, retention, and supervision.

To read Bill A4791, click here