Two bills recently introduced in New York’s legislature could have a major impact on New York employers seeking to enter into employment-related agreements with employees.

Invalidating “Unconscionable” Contract Terms

On January 8, 2025, Assembly Bill No. 636 was introduced to amend the New York General Business Law (GBL). If passed, the bill would add a new section to the GBL that would invalidate certain terms in standard form contacts regarding dispute resolution on the grounds that such terms are substantively unconscionable. A “standard form contract” is defined in the bill as “any contract to which only one of the parties is an individual and that individual does not draft the contract.”

The bill outlines a rebuttable presumption that the following terms are substantively unconscionable, and therefore impermissible, when included in a standard form contract:

• A requirement for the parties to resolve legal claims in an “inconvenient venue;”
  • For state claims, an “inconvenient venue” is defined as “a place other than the county where the individual resides or the contract was consummated;” and
  • For federal claims, an “inconvenient venue” is defined as “a place other than the federal judicial district where the individual resides or the contract was consummated.”
• A waiver of an employee’s right to assert claims or seek remedies under state or federal law;
• A waiver to seek punitive damages;
• A requirement to bring an action prior to the expiration of the applicable...

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