S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5240
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 7, 2017
                                ___________
 
 Introduced  by  M. of A. DINOWITZ, WEINSTEIN, SEPULVEDA -- read once and
   referred to the Committee on Consumer Affairs and 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 Section 399-c of the general business law is REPEALED and a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  INDI-
 VIDUAL  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
 POLICY  OF  THIS  STATE. BECAUSE EMPLOYEES AND CONSUMERS ARE REQUIRED TO
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD03793-01-7

 A. 5240                             2
 
 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.