Employment Agreements: Choice of Law and Forum Selection
When you are in the midst of negotiating your employment agreement with a new employer, it is easy to focus on certain provisions (e.g., compensation and benefits) at the expense of other provisions (e.g., choice of law and forum selection). Generally speaking, (a) a choice-of-law provision specifies the state law that will apply if you end up filing a lawsuit against your employer (e.g., for discrimination or failure to pay overtime); and (b) a forum selection provision designates the "forum" or location (e.g., Arizona state court) where you must file your lawsuit, if any, against your employer
Although choice-of-law and forum selection provisions might seem insignificant at first glance, they can be very important in the event that you sue your employer. For example, if you live in California – and the choice-of-law provision in your employment agreement designates Texas as the applicable law – you will likely be at a serious disadvantage in any lawsuit against your employer. This is because Texas’s employment laws are typically much less employee-friendly than California’s employment laws.
Likewise, if you live in California – and the forum selection provision designates the forum as a New York state court – you will likely be at serious disadvantage here as well. This is because if you file a lawsuit against your employer – and your case goes to trial – you will have to incur the expense of flying back and forth to New York as well as other expenses associated with litigating an out-of-state case.
The good news is that California Labor Code Section 925 (“Section 925”) is on your side. Specifically, Section 925 prohibits employers from requiring employees who primarily live and work in California from litigating employment disputes outside California or under any law other than California law. Below is a brief summary of Section 925:
No. 1: Section 925 applies to all employers that enter into employment agreements with employees who primarily live and work in California. This is true regardless of the location of the employer's headquarters (for instance, even if your employer’s headquarters are in Illinois).
Of note, Section 925 applies only to employees who primarily live and work in California. In other words, Section 925 does not apply to an employee who lives in California but works in another state (or vice versa).
No. 2: Section 925 applies only to employment agreements that were entered into, modified, or extended on or after January 1, 2017.
No. 3: None of the above restrictions apply to your employer if an attorney represented you during your employment agreement negotiations.
If you have questions about Section 925, call ((916) 612-0326) or email (firstname.lastname@example.org) Finley Employment Law today. We serve clients throughout California, including Sacramento, Folsom, Roseville, Granite Bay, and Elk Grove.
The information in this blog post is for general informational and advertising purposes only and is not, nor is it intended to be, legal advice. Instead, you should speak with a California employment attorney for advice regarding your individual situation.