THE STATUS OF MANDATORY ARBITRATION CLAUSES OF DISCRIMINATION CASES IN NY

Who knows? As reported earlier (https://jmpattorney.blogspot.com/2019/08/new-workplace-protections-signed-into.html), New York law prohibits mandatory arbitration to resolve cases of discrimination and sexual harassment.

However, on June 26, in Mahmoud Latif v. Morgan Stanley & Co. LLC (1:18-cv-11528) District Court, S.D. New York, the court held that an agreement to arbitrate sexual harassment claims is enforceable pursuant to the Federal Arbitration Act (FAA) and rejected arguments that New York law voids such an agreement.

The court in Latif was dealing with a prior NY law prohibiting arbitration: "(CPLR) Section 7515 is titled “Mandatory arbitration clauses; prohibited.” It was signed into law in April 2018 and became effective on July 11, 2018. The law was enacted as Part KK, Subpart B of the 2018-2019 New York budget bill. Part KK of this bill contains six subparts all addressing sexual harassment. These subparts address, among other things, certifications concerning sexual harassment in bids submitted to the state, “reimbursement of funds paid by state agencies, state entities and public entities for the payment of awards adjudicated in sexual harassment claims,” and a model policy and training program for the prevention of sexual harassment. 2018 N.Y. Sess. L., ch. 57, at 4-5. The bill was described in Senate Floor debate as “sweeping legislation that deals with the scourge of sexual harassment” and that “handles all different kinds of sexual harassment situations.” N.Y. State Senate, Stenographic Rec., 241st Leg., Reg. Sess., at 1855 (Mar. 30, 2018)."

Latif started the action prior to the enactment this year of legislation (S.6577/A.8421) providing even more sweeping new workplace harassment protections, as noted in the link above. The court in Latif was aware of this and stated: "On June 19, 2019, the New York legislature passed bill S6577/A8421, which would, inter alia, amend § 7515 to change the definition of “prohibited clause” and “mandatory arbitration clause” to encompass mandatory arbitration of claims of discrimination generally, rather than specifically of sexual harassment. For the same reasons described above, § 7515 as so amended would not provide a defense to the enforcement of the Arbitration Agreement."