S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3208
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             February 4, 2019
                                ___________
 
 Introduced by Sens. COMRIE, SEPULVEDA -- 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 ASSEM-
 BLY, 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 Section 399-c of the general business law is REPEALED and a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 INDIVID-
 UAL 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  AGREE-
 MENT  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  AGREE-
 MENTS.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE, NO MANDATO-
 RY  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD01197-01-9

 S. 3208                             2
 
 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
 CHOICE ABOUT  HOW  TO  RESOLVE  THEIR  DISPUTES  WITH  THE  EMPLOYER  OR
 MERCHANT.  IN ADDITION, MANDATORY ARBITRATION AGREEMENTS PREVENT EMPLOY-
 EES 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 AGREE-
 MENTS.  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, UNENFORCE-
 ABLE AND VOID. ANY SUCH ARBITRATION AGREEMENT SHALL BE CONSIDERED SEVER-
 ABLE, 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  WORK-
 ERS 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 NEGO-
 TIATED 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  THERE-
 OF,  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 AGREE-
 MENT 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.