New York State Stomps Out Mandatory Arbitration Clauses for Sexual Harassment Claims

New York law-makers are working overtime to prevent – and protect victims of – sexual harassment  by way of state and city laws, set to take effect in 2018 and 2019. As Loeb & Loeb noted recently, one such law, Section 7515 of the New York CPLR, which is effective as of July 11, 2018, mandates that New York employers with four or more employees are barred from requiring, in any contract entered into after the July 11, 2018 effective date, the mandatory binding arbitration of sexual harassment claims.  

Section 7515 also declares that, if a contract nevertheless contains such a prohibited provision – “presumably including ones entered into prior to July 11, 2018,” the firm states – the provision will be rendered null and void without affecting the enforceability of the remaining provisions of the contract.

Employers may continue to use mandatory pre-dispute arbitration provisions for claims other than those for sexual harassment. Also, because Section 7515 applies only to pre-dispute arbitration provisions, it does not prohibit parties from agreeing to arbitration for sexual harassment claims after a dispute arises. Also, as an exception to the new law, collective bargaining agreements may provide for mandatory pre-dispute arbitration of sexual harassment claims.

“While the issue has not yet been decided by any court,” the firm aptly states, “employers will likely argue that Section 7515 is pre-empted by the Federal Arbitration Act, which establishes Congress’ preference for arbitration as a means of dispute resolution and pre-empts any state rule discriminating on its face against arbitration.”