NY State Senate Bill 2025-S3868

Senate Bill S3868

2025-2026 Legislative Session

Prohibits the enforcement of mandatory arbitration agreements clauses and joint-action waivers with respect to workplace disputes

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Current Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 30, 2025	referred to judiciary

2025-S3868 (ACTIVE) - Details

See Assembly Version of this Bill:: A1424
Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd §7515, CPLR
Versions Introduced in 2023-2024 Legislative Session:: S7925, A8462

2025-S3868 (ACTIVE) - Summary

Prohibits the enforcement of mandatory arbitration agreements clauses and joint-action waivers with respect to workplace disputes; clarifies that section 7515 of the civil practice laws and rules applies retroactively to nullify pre-existing illegal mandatory arbitration clauses.

2025-S3868 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S3868

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the civil practice law and rules, in relation to prohib-
iting the enforcement of mandatory arbitration agreements clauses and
joint-action waivers with respect to workplace disputes

 
PURPOSE:

To regulate and prohibit the enforcement of mandatory arbitration claus-
es in certain contracts and clarify the impact of existing law related
to them

 
SUMMARY OF PROVISIONS:

  Section  one  of the bill names the bill the Workers' Rights Enforcea-
bility Act.

  Section two of the bill declares legislative findings that detail  the
facts  surrounding  mandatory  arbitration clauses in New York.  Specif-

ically, mandatory  arbitration  clauses  and  joint-action  waivers  are
contrary  to  New  York  public policy and illegal in the state when not
preempted by federal law. The courts have misconstrued  previous  amend-
ments to the law regarding mandatory arbitration clauses and such amend-
ments  were  intended  to  retroactively  nullify  mandatory arbitration
clauses in the cases where the state law applies to.

  Section three of the bill amends § 7515 of the civil practice law  and
rules to redefine and expand the scope of prohibition in the law related
to  mandatory arbitration clauses. It splits the legal classification of
the clauses into mandatory pre-dispute  arbitration  clauses,  mandatory
post-dispute arbitration clauses and joint-action waiver clauses, adding
language  that bans their use in any contract of employment as well. The
section also sets forth various necessary conditions for the enforcement
of a mandatory post-dispute arbitration clause.

  Section four provides the severability clause.

  Section five of the bill provides the effective date.

 
JUSTIFICATION:

Despite New York's reputation as a leader in establishing and protecting
workers' rights, New York has lagged  behind  much  of  the  country  in
protecting  workers'  ability  to  vindicate  their rights in court. The
proliferation of mandatory arbitration clauses and class action  waivers
for  workers has led to most workers, especially low-wage workers, being
subject to forced arbitration at work. When New York first  enacted  its
Arbitration  Act  in the early twentieth century, arbitration was widely
understood as a more expedient dispute resolution process for businesses
on equal footing. The use of mandatory arbitration clauses for statutory
claims in the  non-union  employment  context  is  a  relatively  recent
phenomenon,  ushered  in, in part, by the U.S. Supreme Court's decisions
in Gilmer and Circuit City.

Unfortunately, in the  employment  context,  mandatory  arbitration  has
become  a  significant  barrier to workers being able to vindicate work-
place rights guaranteed by law. Without the right to trial by a judge or
jury, the right to appeal or the right to participate in group  actions,
most  workers  are  not  able to pursue claims for stolen wages or other
workplace violations as arbitration almost always provides a significant
advantage  to  businesses.  Because  of this, corporations use mandatory
arbitration clauses to effectively insulate themselves from  wrongdoing.
A  report by the National Employment Law Project estimated that in 2019,
New Yorkers lost $390 million in stolen wages that would not  be  recov-
ered due to mandatory arbitration clauses and class action waivers.

Sadly,  federal  laws and courts have seriously inhibited possible state
action that could challenge the prevalence and impact of mandatory arbi-
tration clauses, primarily through the  passage  of  the  Federal  Arbi-
tration  Act  ("FAA"), which allows for the use of mandatory arbitration
clauses and preempts most state law on the issue.  However, Section 1 of
the FAA provides that it does not apply to any "contracts of  employment
of  seamen, railroad employees, or any other class of workers engaged in
foreign or interstate commerce." The U.S.  Supreme Court later clarified
in Circuit City that this exemption only applies  to  the  contracts  of
employment  of  transportation  workers. Then, in New Prime, the Supreme
Court held that "contracts of employment"  is  an  expansive  term  that
includes any agreement to perform work, including a so-called "independ-
ent  contractor"  agreement.  This  provides  New York an opportunity to
regulate mandatory arbitration clauses in certain fields, which we  have
taken  advantage  of  before. However, after New Prime, some courts have
suggested that New York law still permits the enforcement  of  mandatory
arbitration  clauses  for  transportation workers who are not subject to
the FAA, a conclusion that this bill clarifies as incorrect.

Additionally, the bill amends the law to also prohibit and  nullify  any
mandatory  arbitration  clause  or joint action waiver in a "contract of
employment," except where such prohibition is preempted by federal  law.
It  makes  clear  that  its  provisions  -  as well as those of previous
versions of CPLR 7515 - apply retroactively, too, as  some  courts  have
mistakenly  held  that  it  does  not;  if these judicial errors are not
corrected, a worker who started a job in 2018, and is a victim or sexual
harassment or discrimination in 2023 would still be forced to  arbitrate
because of the original employment contract.

 
PRIOR LEGISLATIVE HISTORY:

2023-2024: S7925 (Hoylman-Sigal), Died in committee

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
Immediately.

2025-S3868 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3868
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             January 30, 2025
                                ___________
 
 Introduced  by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
   when printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the civil practice law and rules, in relation to prohib-
   iting the enforcement of mandatory arbitration agreements clauses  and
   joint-action waivers with respect to workplace disputes

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. This act shall be known and may be cited as  the  "Workers'
 Rights Enforceability Act".
   § 2.  Legislative findings. 1. The legislature finds and declares that
 the  use  and enforcement of mandatory arbitration clauses and joint-ac-
 tion waivers in cases alleging workplace violations has been and contin-
 ues to be contrary to New York public policy. Accordingly, when  federal
 law  does  not  require enforcement of mandatory arbitration clauses and
 joint-action waivers, New York law does not permit their enforcement.
   2. The legislature further finds and declares that courts have miscon-
 strued previous amendments to section 7515 of the civil practice law and
 rules and that such amendments were intended and remain intended to have
 retroactive effect and to nullify mandatory arbitration clauses  entered
 into  prior to the original enactment of section 7515 of the civil prac-
 tice law and rules.
   § 3. Section 7515 of the civil practice law and  rules,  as  added  by
 section  1  of  subpart  B of part KK of chapter 57 of the laws of 2018,
 paragraphs 2 and 3 of subdivision (a) as amended by chapter 160  of  the
 laws of 2019, is amended to read as follows:
   § 7515. Mandatory arbitration clauses; prohibited. (a) Definitions. As
 used in this section:
   1.  The  term  "employer"  shall  have the same meaning as provided in
 subdivision five of section two hundred ninety-two of the executive law.
   2. The term "prohibited clause" shall mean  any  MANDATORY  PREDISPUTE
 ARBITRATION  clause  [or  provision]  OR ANY MANDATORY POSTDISPUTE ARBI-

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02080-01-5

 S. 3868                             2
 
 TRATION CLAUSE in any contract, HANDBOOK, OR OTHER DOCUMENT  ADOPTED  AS
 THE  POLICY  OF A COVERED ENTITY, INCLUDING A JOINT-ACTION WAIVER, which
 requires [as a condition of the enforcement of the contract or obtaining
 remedies  under the contract] that the parties submit to mandatory arbi-
 tration to resolve any allegation or claim:
   (I) of discrimination, in  violation  of  laws  prohibiting  discrimi-
 nation,  including  but not limited to, article fifteen of the executive
 law; OR
   (II) ARISING FROM, CONCERNING, OR RELATED TO A CONTRACT OF EMPLOYMENT.
   3. The term "mandatory PREDISPUTE arbitration  clause"  shall  mean  a
 term  or  provision  [contained  in] OF a written contract, HANDBOOK, OR
 OTHER DOCUMENT ADOPTED AS THE POLICY OF A COVERED ENTITY which  requires
 the  parties  [to  such contract to submit any matter thereafter arising
 under such contract to arbitration prior  to  the  commencement  of  any
 legal  action  to enforce the provisions of such contract and which also
 further provides language to the effect that the facts found or determi-
 nation made by the arbitrator or panel of arbitrators in its application
 to a party alleging discrimination, in  violation  of  laws  prohibiting
 discrimination,  including  but  not  limited to, article fifteen of the
 executive law shall be  final  and  not  subject  to  independent  court
 review],  RELATED NON-SIGNATORIES, OR THIRD-PARTY BENEFICIARIES TO ARBI-
 TRATE A DISPUTE THAT HAD NOT YET ARISEN AT THE TIME OF THE MAKING OF THE
 CONTRACT, HANDBOOK, OR OTHER DOCUMENT ADOPTED AS THE POLICY OF A COVERED
 ENTITY, REGARDLESS OF WHETHER SUCH  CLAUSE  CONTAINS  A  PROVISION  THAT
 PURPORTS TO ALLOW A PARTY TO OPT-OUT WITHIN A LIMITED TIME PERIOD.
   4.  THE  TERM  "MANDATORY POSTDISPUTE ARBITRATION CLAUSE" SHALL MEAN A
 TERM OR PROVISION OF A WRITTEN CONTRACT,  HANDBOOK,  OR  OTHER  DOCUMENT
 ADOPTED  AS  THE  POLICY  OF A COVERED ENTITY THAT REQUIRES THE PARTIES,
 RELATED NON-SIGNATORIES, OR THIRD-PARTY  BENEFICIARIES  TO  ARBITRATE  A
 DISPUTE  THAT  AROSE  BEFORE  THE  TIME OF THE MAKING OF THE CONTRACT OR
 DOCUMENT, REGARDLESS OF WHETHER SUCH CLAUSE CONTAINS  A  PROVISION  THAT
 PURPORTS TO ALLOW A PARTY TO OPT-OUT WITHIN A LIMITED TIME PERIOD.
   5.  THE TERM "JOINT-ACTION WAIVER" SHALL MEAN A TERM OR PROVISION OF A
 WRITTEN CONTRACT, HANDBOOK, OR OTHER DOCUMENT ADOPTED AS THE POLICY OF A
 COVERED ENTITY, WHETHER OR NOT PART OF A PREDISPUTE OR POSTDISPUTE ARBI-
 TRATION CLAUSE, THAT WOULD PROHIBIT, OR WAIVE THE RIGHT OF, ONE  OF  THE
 PARTIES  TO  THE  CLAUSE TO PARTICIPATE IN A JOINT, CLASS, OR COLLECTIVE
 ACTION IN A JUDICIAL, ARBITRAL, ADMINISTRATIVE, OR OTHER  FORUM  RAISING
 CLAIMS ARISING FROM, CONCERNING, OR RELATED TO A CONTRACT OF EMPLOYMENT,
 REGARDLESS  OF WHETHER SUCH CLAUSE CONTAINS A PROVISION THAT PURPORTS TO
 ALLOW A PARTY TO OPT-OUT WITHIN A LIMITED TIME PERIOD.
   6. The term "arbitration" shall mean the  use  of  a  decision  making
 forum  conducted  by  an  arbitrator  or panel of arbitrators within the
 meaning and subject to the provisions of THIS article  [seventy-five  of
 the civil practice law and rules].
   7.  THE  TERM  "CONTRACT  OF  EMPLOYMENT"  SHALL  MEAN ANY CONTRACT TO
 PERFORM SERVICES FOR HIRE, REGARDLESS OF WHETHER OR  NOT  SUCH  CONTRACT
 ARISES FROM AN EMPLOYMENT RELATIONSHIP, AS DEFINED UNDER THE LABOR LAW.
   8.  THE  TERM "COVERED ENTITY" SHALL MEAN AN EMPLOYER OR AN INDIVIDUAL
 OR ENTITY THAT IS NOT ACTING AS AN EMPLOYER AND ENGAGES  INDIVIDUALS  TO
 PERFORM SERVICES FOR HIRE.
   (b)  [(i)]  1. Prohibition. Except where [inconsistent with] PREEMPTED
 BY federal law[,]:
   (I) no written contract,  HANDBOOK, OR OTHER DOCUMENT ADOPTED  AS  THE
 POLICY  OF  A  COVERED ENTITY entered into OR MADE EFFECTIVE on or after
 S. 3868                             3
 
 the effective date of this section shall contain a prohibited clause  as
 defined in paragraph two of subdivision (a) of this section[.]; AND
   (ii)  A  PROHIBITED  CLAUSE AS DEFINED IN PARAGRAPH TWO OF SUBDIVISION
 (A) OF THIS SECTION CONTAINED IN A WRITTEN CONTRACT, HANDBOOK, OR  OTHER
 DOCUMENT  ADOPTED AS THE POLICY OF A COVERED ENTITY ENTERED INTO OR MADE
 EFFECTIVE PRIOR TO THE EFFECTIVE DATE OF THIS SUBPARAGRAPH SHALL NOT  BE
 ENFORCEABLE.
   2.  Exceptions.  [Nothing]  NOTWITHSTANDING THE PROVISIONS OF SUBPARA-
 GRAPH (I) OF PARAGRAPH ONE OF THIS  SUBDIVISION,  NOTHING  contained  in
 this  section  shall  be construed to impair or prohibit [an employer] A
 COVERED ENTITY from  incorporating  a  non-prohibited  clause  or  other
 mandatory  arbitration provision THAT THE PARTIES AGREE UPON within such
 contract, [that the parties agree  upon]  PROVIDED  THAT  ANY  MANDATORY
 POSTDISPUTE  ARBITRATION  CLAUSE  MUST COMPLY WITH ALL OF THE CONDITIONS
 SET FORTH IN PARAGRAPH FOUR OF THIS SUBDIVISION TO BE PERMITTED.
   [(iii)] 3. Mandatory arbitration clause null and  void.  Except  where
 [inconsistent  with]  PREEMPTED  BY federal law, OR AS PROVIDED IN PARA-
 GRAPH FOUR OF THIS SUBDIVISION, the provisions of such prohibited clause
 as defined in paragraph two of subdivision (a) of this section shall  be
 null  and void. The inclusion of such clause in a written contract shall
 not serve to impair the enforceability of any other  provision  of  such
 contract.
   4. A MANDATORY POSTDISPUTE ARBITRATION CLAUSE MAY ONLY BE ENFORCED IF:
   (I)  THE  CLAUSE  WAS  NOT  REQUIRED  BY  THE  COVERED ENTITY, WAS NOT
 OBTAINED BY COERCION OR THREAT OF ADVERSE ACTION,  WAS  NOT  PART  OF  A
 LARGER  CONTRACT  OF EMPLOYMENT BUT WAS INSTEAD A SEPARATE DOCUMENT, AND
 WAS NOT MADE A CONDITION OF EMPLOYMENT, WORK OR  ANY  EMPLOYMENT-RELATED
 OR WORK-RELATED PRIVILEGE OR BENEFIT;
   (II)  EACH  PARTY AGREEING TO THE CLAUSE WAS INFORMED IN WRITING USING
 SUFFICIENTLY PLAIN LANGUAGE LIKELY TO BE UNDERSTOOD BY THE AVERAGE WORK-
 ER OF THE RIGHT OF THE PARTY TO REFUSE TO ENTER  THE  AGREEMENT  WITHOUT
 RETALIATION;
   (III)  EACH PARTY AGREEING TO THE CLAUSE DID SO AFTER A WAITING PERIOD
 OF NOT FEWER THAN FORTY DAYS, BEGINNING ON THE DATE ON WHICH  THE  PARTY
 WAS  PROVIDED  BOTH  THE FINAL TEXT OF THE AGREEMENT AND THE DISCLOSURES
 REQUIRED UNDER THIS PARAGRAPH;
   (IV) EACH PARTY AGREEING TO THE CLAUSE AFFIRMATIVELY CONSENTED TO  THE
 CLAUSE IN WRITING; AND
   (V)  A  PARTY  WAS REPRESENTED BY COUNSEL AT THE TIME OF THE MAKING OF
 THE  MANDATORY  POSTDISPUTE  ARBITRATION  CLAUSE,  THE  COVERED   ENTITY
 PROVIDED  THE  CLAUSE TO THAT PARTY'S COUNSEL AND GAVE ADVANCE NOTICE TO
 COUNSEL THAT THE PARTY WAS BEING ASKED TO CONSENT TO THE CLAUSE.
   (c) Where there is a conflict between any collective bargaining agree-
 ment and this section, such agreement shall be controlling.
   (D) NO COVERED ENTITY MAY DISCHARGE, THREATEN,  PENALIZE,  OR  IN  ANY
 OTHER  MANNER  DISCRIMINATE OR RETALIATE AGAINST A PERSON WHO REFUSES TO
 AGREE TO, OR OTHERWISE OBJECTS TO, THE PROVISIONS OF A MANDATORY PREDIS-
 PUTE ARBITRATION CLAUSE, A MANDATORY POSTDISPUTE ARBITRATION CLAUSE,  OR
 A  JOINT-ACTION  WAIVER.  A  PERSON WHO EXPERIENCES SUCH RETALIATION MAY
 BRING A CIVIL ACTION IN A COURT OF COMPETENT  JURISDICTION  AGAINST  ANY
 COVERED  ENTITY  OR  PERSONS  ALLEGED TO HAVE VIOLATED THE PROVISIONS OF
 THIS SECTION, AND MAY RECOVER ALL OF THE REMEDIES AVAILABLE UNDER  PARA-
 GRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED FIFTEEN OF THE LABOR
 LAW,  INCLUDING BUT NOT LIMITED TO LIQUIDATED DAMAGES, REASONABLE ATTOR-
 NEYS' FEES, AND COSTS.
 S. 3868                             4
 
   (E) THE APPLICABILITY OF THIS SECTION TO A PROHIBITED CLAUSE, AND  THE
 VALIDITY AND ENFORCEABILITY OF A PROHIBITED CLAUSE TO WHICH THIS CHAPTER
 APPLIES, SHALL BE DETERMINED BY A COURT OF COMPETENT JURISDICTION, IRRE-
 SPECTIVE  OF  WHETHER  THE  PARTY  RESISTING  ARBITRATION CHALLENGES THE
 PROHIBITED CLAUSE SPECIFICALLY OR IN CONJUNCTION WITH OTHER TERMS OF THE
 CONTRACT  CONTAINING SUCH PROHIBITED CLAUSE, AND IRRESPECTIVE OF WHETHER
 THE PROHIBITED CLAUSE, OR THE  CONTRACT,  HANDBOOK,  OR  OTHER  DOCUMENT
 ADOPTED AS THE POLICY OF A COVERED ENTITY IN WHICH THE PROHIBITED CLAUSE
 IS  FOUND,  PURPORTS  TO  DELEGATE SUCH DETERMINATIONS TO AN ARBITRATOR.
 EXCEPT WHERE INCONSISTENT WITH FEDERAL LAW, AN ISSUE AS TO WHETHER  THIS
 SECTION  APPLIES WITH RESPECT TO A PROHIBITED CLAUSE SHALL BE DETERMINED
 UNDER STATE LAW.
   (F) NOTWITHSTANDING ANY CHOICE OF LAW CLAUSE IN A CONTRACT,  HANDBOOK,
 OR OTHER DOCUMENT ADOPTED AS THE POLICY OF A COVERED ENTITY IN WHICH THE
 PROHIBITED  CLAUSE  IS  FOUND, OR ANY OTHER CONTRACTUAL PROVISION TO THE
 CONTRARY, NEW YORK LAW GOVERNS THE APPLICABILITY OF THIS  SECTION  TO  A
 PROHIBITED CLAUSE FOR A WORKER WHO, FOR ANY SIGNIFICANT PORTION OF THEIR
 SERVICES FOR A COVERED ENTITY, PERFORMED SERVICES IN NEW YORK.
   §  4.  Severability and construction.   If any clause, sentence, para-
 graph, subdivision, section or part of this act shall be adjudged by any
 court of competent jurisdiction to be invalid, or its  applicability  to
 any  person or circumstance is declared invalid, such judgment shall not
 affect, impair, or  invalidate  the  remainder  thereof,  but  shall  be
 confined  in  its operation to the clause, sentence, paragraph, subdivi-
 sion, section or part thereof directly involved in  the  controversy  in
 which  such  judgment shall have been rendered. It is hereby declared to
 be the intent of the legislature that this act would have  been  enacted
 even  if  such  invalid  provisions  had not been included herein.   The
 provisions of this act shall be liberally construed to  give  effect  to
 the purposes hereof.
   § 5. This act shall take effect immediately.

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