S T A T E O F N E W Y O R K
________________________________________________________________________
3458
2019-2020 Regular Sessions
I N A S S E M B L Y
January 29, 2019
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Introduced by M. of A. DINOWITZ, WEINSTEIN, COOK, MAGNARELLI, SIMON,
BLAKE, MOSLEY, ORTIZ, GOTTFRIED, OTIS, BICHOTTE, STECK, ABINANTI --
Multi-Sponsored by -- M. of A. GLICK -- read once and referred to the
Committee on Governmental Operations
AN ACT to amend the state finance law, in relation to prohibiting state
agencies from entering into contracts with entities which enforce
mandatory arbitration clauses in contracts with consumers and employ-
ees
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 165 of the state finance law is amended by adding a
new subdivision 9 to read as follows:
9. MANDATORY ARBITRATION CLAUSES PROHIBITED. A. FOR THE PURPOSES OF
THIS SUBDIVISION "MANDATORY ARBITRATION CLAUSE" SHALL MEAN A TERM OR
PROVISION CONTAINED IN A WRITTEN CONTRACT FOR THE SALE OR PURCHASE OF
CONSUMER GOODS WHICH REQUIRES THE PARTIES TO SUCH CONTRACT TO SUBMIT ANY
CONTROVERSY 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 DECISION OF THE ARBITRATOR OR PANEL OF ARBITRATORS IN ITS
APPLICATION TO THE CONSUMER PARTY SHALL BE FINAL AND NOT SUBJECT TO
COURT REVIEW. THIS SHALL NOT INCLUDE ARBITRATION THAT IS MANDATED BY A
COLLECTIVE BARGAINING AGREEMENT BETWEEN SUCH VENDOR AND EMPLOYEE AND/OR
INDEPENDENT CONTRACTOR.
B. STATE AGENCIES SHALL NOT CONTRACT OR DO BUSINESS FOR THE SUPPLY OF
COMMODITIES, SERVICES OR CONSTRUCTION WITH ANY CONTRACTOR OR VENDOR, OR
THE PARENT COMPANY OR ANY SUBSIDIARY OF SUCH CONTRACTOR OR VENDOR, WHO
INCLUDES AND ENFORCES MANDATORY ARBITRATION CLAUSES IN CONTRACTS WITH
ITS EMPLOYEES OR CONSUMERS. WHERE MANDATORY ARBITRATION CLAUSES EXIST IN
ANY SUCH CONTRACTS THE CONTRACTOR OR VENDOR SHALL, WITHIN ONE HUNDRED
EIGHTY DAYS BEFORE DOING BUSINESS WITH THE STATE, PROVIDE REASONABLE
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00770-01-9
A. 3458 2
NOTICE TO ITS CONSUMERS OR EMPLOYEES THAT IT WILL CEASE ENFORCING ARBI-
TRATION CLAUSES IN CONSUMER OR EMPLOYMENT CONTRACTS.
C. A PERSON "DOES BUSINESS WITH THE STATE" WHEN IT OR ANY OF ITS
SUBSIDIARIES OR PARENT ENTITIES RECEIVES STATE FUNDS EXCEEDING ONE
HUNDRED THOUSAND DOLLARS IN EXCHANGE FOR GOODS OR SERVICES PROVIDED TO
THE STATE OR A THIRD PARTY. PERSONS "DOING BUSINESS WITH THE STATE"
INCLUDE, BUT ARE NOT LIMITED TO, PERSONS PERFORMING PUBLIC WORK ON STATE
CONTRACTS, MERCHANTS OF GOODS OR SERVICES PURCHASED BY THE STATE, AND
PERSONS PROVIDING SERVICES TO THIRD PARTIES IN EXCHANGE FOR FUNDS
PROVIDED DIRECTLY FROM THE STATE.
D. UPON RECEIVING INFORMATION THAT A CONTRACTOR IS IN VIOLATION OF THE
PROVISIONS OF THIS SECTION, THE STATE ATTORNEY GENERAL SHALL REVIEW SUCH
INFORMATION AND OFFER THE CONTRACTOR AN OPPORTUNITY TO RESPOND. IF THE
ATTORNEY GENERAL FINDS THAT A VIOLATION HAS OCCURRED, IT SHALL TAKE SUCH
ACTION AS MAY BE APPROPRIATE AND PROVIDED FOR BY LAW, RULE OR CONTRACT,
INCLUDING, BUT NOT LIMITED TO, IMPOSING SANCTIONS, SEEKING COMPLIANCE,
RECOVERING DAMAGES OR DECLARING THE CONTRACTOR IN DEFAULT.
E. BEFORE CONTRACTING WITH ANY VENDOR OR CONTRACTOR, THE STATE AGENCY
SHALL CONFIRM THAT SUCH CONTRACTOR OR VENDOR, OR ITS PARENT ENTITIES AND
ITS SUBSIDIARIES, DOES NOT INCLUDE OR ENFORCE MANDATORY ARBITRATION
CLAUSES WITH CONSUMERS OR EMPLOYEES, AND SHALL ENSURE, WHEN APPROPRIATE,
THAT A CONTRACT BETWEEN THE STATE AGENCY AND THE CONTRACTOR INCLUDES A
PROVISION PROHIBITING THAT CONTRACTOR, ITS PARENT ENTITIES AND ITS
SUBSIDIARIES, FROM INCLUDING OR ENFORCING MANDATORY ARBITRATION CLAUSES.
§ 2. This act shall take effect immediately and shall apply to state
contracts entered into on and after such date.