•  Summary 
  •  Actions 
  •  Committee Votes 
  •  Floor Votes 
  •  Memo 
  •  Text 
  •  LFIN 
  •  Chamber Video/Transcript 

A05240 Summary:

COSPNSRWeinstein, Sepulveda, Seawright, Galef, Williams, Miller MG, Gottfried, Abinanti, D'Urso, Jaffee, Zebrowski
Rpld & add 399-c, Gen Bus L
Prohibits mandatory arbitration agreements in consumer and employment contracts; repeals existing provisions prohibiting mandatory arbitration clauses in certain consumer contracts.
Go to top

A05240 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Dinowitz
  TITLE OF BILL: 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   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to comprehensively update the General Busi- ness Law's section regarding mandatory arbitration clauses and the way in which they are regulated in New York State.   SUMMARY OF SPECIFIC PROVISIONS: Section one of the bill repeals the current section 399-c of the General Business Law and replaces it with a new section 399-c. The terms "consumer dispute", "employment dispute", and "mandatory arbitration agreement" are defined in this section. The section bans mandatory arbi- tration clauses in New York State and declares them unenforceable much like the original section 399-c did. The section bans mandatory arbi- tration clauses from being included in insurance contracts. The section would ban workers exempted from the Federal Arbitration Act from being forced to sign mandatory arbitration clauses resulting from an employ- ment contract. The section would also ban any mandatory arbitration agreement that is not enforceable under federal law. Section two contains the effective date.   JUSTIFICATION: As mandatory arbitration clauses in contracts for consumer goods, services, and employment have become more and more commonplace, consum- ers are increasingly forced to resolve disputes via arbitration. In many cases, consumers are unaware that the contract they are signing requires them to resolve disputes through arbitration, and not through the court system. They are in effect unknowingly signing away the right to their "day in court." Questions continue to be raised about the fairness of the arbitration process, due to studies finding that arbiters tend to disproportionately rule in favor of businesses over the consumers. Private arbitration companies have a financial incentive to rule in favor of the business that is paying for their services. Given these questions, it is appro- priate to amend the state law to make sure that every New Yorker knows their rights when it comes to agreeing to arbitration clauses in contracts.   PRIOR LEGISLATIVE HISTORY: 2015-16 - A.9956A - Third Reading Cal. No. 192   FISCAL IMPLICATIONS: None to the State   EFFECTIVE DATE: This act shall take effect on the one hundred eightieth day after it shall have become a law.
Go to top