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Legislative Memo

T 518.465.7511
www.bcnys.org

BILL:

S.4438-A (Marcellino)/A.4791-A (Titone)

Support

SUBJECT:

Prohibiting the award of state contracts to vendors who use arbitration

 

DATE:

June 18, 2014

 

The Business Council of NYS, Inc. opposes S.4438-A (Marcellino)/A.4791-A (Titone) that would amend state finance law to prohibit state contracts from being awarded to a vendor if they require their employees to engage in arbitration instead of costly litigation for alleged violations under Title VII of the Civil Rights Act of 1964 or Article XV of the Executive Law.

New York is a difficult and expensive state in which to do business, and it already has a complex and challenging government procurement process. It is also ranked as one of the most litigious states contributing to the high cost of doing business. Employers constantly look for ways to keep their costs to a minimum while still providing quality goods and services to their consumers; one way they do that is through the use of arbitration.

Engaging in arbitration is beneficial to both the employer and the employee.  Not only does arbitration lead to a fair resolution in less time than litigation can but it is also less expensive. Arbitration saves both parties from paying high legal fees associated with litigation in a court system constantly working through a backlog of cases.

In no way do arbitration clauses prevent an employee from having the Equal Employment Opportunities Commission, the Division of Human Rights or another like administrative agency intervene on their behalf, or prevent them from pressing charges for criminal acts.

Barring vendors that require their employees to engage in arbitration from bidding on state contracts will increase the cost to taxpayers. The Federal Arbitration Act promotes the use of arbitration and there are numerous examples of case law that uphold its use. Enacting a state law prohibiting potential vendors from using it will result in higher costs to the state because of less competition and because companies would be required to change federally approved standard employee contracts to comply with one state's law.

For these reasons The Business Council of NYS opposes this legislation and respectfully asks the legislature not to enact it.