Class action plaintiffs’ lawyers and their allies generally do not like arbitration, especially where the arbitration agreements effectuate a waiver of the ability of a worker or a consumer to bring a class action. Advocates for workers and consumers have attacked arbitration agreements through various avenues in the courts and in the court of public opinion. Recently, their efforts also have focused on passage of legislation.
On Monday, May 5, 2014, the New York State Assembly passed legislation – known as Bill A4791-2013 – prohibiting State entities from contracting with any business that requires an employee or independent contractor performing work under the contract to arbitrate claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising from discrimination, sexual assault, or harassment. Such torts may include assault, battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring. If this legislation is enacted, all employers who do business with any State government entity in New York would be required to allow their employees to adjudicate employment claims before the courts instead of using arbitration. Exempt from the bill is any arbitration that is mandated by a collective bargaining agreement between the employer and/or independent contractor. The bill also provides for a waiver to be granted “to respond to an emergency arising from unforeseen causes,” but the waiver is to be no longer than necessary in duration and the State agency granting the waiver is obligated to list the reasons for granting it.
The New York legislation follows in the footsteps of a similar federal provision known as the “Franken Amendment,” which was added as part of a defense spending bill and signed into law in 2009. The Franken Amendment, named after Senator Al Franken of Minnesota, bars federal funds from going to defense contractors that continue to apply mandatory arbitration clauses to claims of sexual assault, assault and battery, intentional infliction of emotional distress, and negligent hiring, retention and supervision. The law also requires the subcontractors on federal projects to certify to the same arbitration restriction.
These pieces of legislation indicate the beginning of a trend towards limiting the arbitration options for employment claims.
The New York bill now moves to the Republican-controlled New York Senate for consideration. Stay tuned for future developments on this front in New York and in other states.