On May 5, 2014, the New York Assembly passed a bill limiting the use of arbitration provisions for employment claims by businesses that contract with New York State. The bill would prohibit New York state agencies from entering into a contract with a 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. The result of the bill, if it becomes law, would be to require employers to adjudicate employment claims before the courts instead of using arbitration.
The New York bill is similar to a provision adopted by the federal government in 2009 limiting the use of arbitration provisions for employment claims by defense contractors. That provision, known as the “Franken Amendment” after Senator Al Franken of Minnesota, forbids defense contractors from entering into or enforcing provisions requiring arbitration of claims under Title VII or any tort related to or arising out of sexual assault or harassment. The provision also requires that prime defense contractors certify that their subcontractors have agreed to the same restrictions on arbitration provisions.
The New York bill now moves to the New York Senate for consideration. The passage of such bills demonstrates some legislature’s willingness to limit arbitration options for employment claims.