Will New York Ban Class Action Waivers? Lawmakers Pass Bill, Governor’s Approval Unclear

Quick Hits

• New York State lawmakers have passed a bill that would ban the enforcement of class action waivers in some circumstances and other waivers of workers’ rights under the Human Rights Law.
• The bill includes exceptions for bona fide settlements, post-employment agreements, and collective bargaining agreements, while also considering federal preemption under the Federal Arbitration Act.
• The bill has not yet been signed by the governor.

On May 13, 2026, the New York State Legislature passed Senate Bill S4424-A, titled the “Anti-Waiver of Employment Rights Act.” The bill could have significant implications for employers, but it has yet to be delivered to Governor Kathy Hochul for signature, leaving open the possibility that it will be amended via chapter amendments or pulled before delivery.

Overview of the Bill

S4424-A would amend both the New York Labor Law (by adding § 219-e) and the Executive Law (by adding § 302) to declare void any express or implied contractual provision that waives or limits an employee’s substantive or procedural rights, remedies, or claims under those statutes. The legislature’s stated intent is to codify what it considers having always been the law—that rights under the Labor Law and Human Rights Law are “mandatory and non-waivable through private agreement.”

The bill specifically targets employer practices such as requiring employees to sign agreements that contractually shorten statutes of limitations for bringing claims under the Labor Law or Human Rights Law, or that waive other statutory rights and procedural enforcement mechanisms.

Impact on Class Action Waivers

The bill could potentially have a direct and significant impact on class action waivers in the employment context, at least for employees who are not covered by the Federal Arbitration Act (FAA). The legislature expressly declares that “it is the policy of this state that workers be permitted to enforce these rights collectively, including through article 9 of the civil practice law and rules,” which governs class actions.

The bill’s findings further state that following some “erroneous” court decisions, some employers have required employees to waive “procedural mechanisms to enforce those rights collectively, such as article 9 of the civil practice law and rules,” and that such waivers “have always been and continue to be against public policy.”

Because the bill, as currently written, would void any contractual provision waiving an employee’s “substantive or procedural rights, remedies, or claim” under the Labor Law or Human Rights Law, class action waivers in employment agreements relating to those statutes could be rendered unenforceable in New York for some employees.

Key Exceptions

The bill would carve out three notable exceptions:

• Bona fide settlements: Waivers that are mutually agreed to and included in the settlement of “any good faith bona fide dispute not raised or initiated by the employer” would be allowed.
• Post-employment agreements: Mutually agreed waivers included in agreements entered into upon or following the termination of employment would be permitted.
• Collective bargaining agreements: The bill would not apply to “dispute resolution processes contained in the terms of a collective bargaining agreement” (CBA), or where a waiver in a CBA is “expressly authorized by the statute establishing the substantive or procedural right, privilege, or remedy.”

Additionally, the bill contains a federal preemption savings clause, stating that the provisions shall not apply where their application would be preempted by federal law. This is a significant qualification, as the Supreme Court of the United States has held that the FAA preempts state laws that single out arbitration agreements—including those containing class action waivers—for disfavored treatment.

However, the FAA does not cover all employees. Notably, interstate transportation workers are excluded from the FAA and could, therefore, be subject to this proposed law. That means that class action waivers with New York interstate transportation workers could be subject to this proposed law.

Key Takeaways

The bill, if enacted, would have implications for some New York employers that have included class action waivers in employment arbitration agreements, as well as New York employers that use agreements that shorten limitations periods, include claim-release language, or include other procedural-right waivers.

However, the bill has not yet been delivered to the governor, and it remains unclear whether she will sign it or whether an agreement will be reached on potential chapter amendments. The bill, along with other key bills impacting employers, is likely to be delivered in batches toward the end of the year. Thus, employers need not take immediate action, though there may still be an opportunity to influence the final form of the legislation, should it be signed. Employers should keep informed about upcoming developments.

Ogletree Deakins’ New York offices and Arbitration and Alternative Dispute Resolution Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution, Class Action, Employment Law, and New York blogs as additional information becomes available.

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