Choice of Law & State Venue Provisions Now Restricted in California Employment Agreements


On September 25, 2016, California Governor Jerry Brown approved a new law allowing California employees to unilaterally void forum selection or choice of law clauses (not the entire agreement) in employment contracts. S.B. 1241 regulates where and under what law California employees can sue and arbitrate. The new law will take effect on January 1, 2017.contract-1464917_1920

Impact of SB 1241

Most agreements allow contracting parties to select a forum to litigate or arbitrate a dispute. Under S.B. 1241, employers are prohibited from requiring, as a condition of employment, an employee who primarily resides and works in California to agree to any contractual provisions that will: 1) require the employee to litigate or arbitrate claims arising in California in a foreign forum (outside of California); and 2) deprive the employee of the protection of California employment laws. The new law also includes, but is not limited to, executive contracts, covenants, and non-compete agreements.

An employee must be represented by legal counsel when negotiating an out-of-state venue, forum, or choice of law term. If a forum selection or choice of law provision is included in an employment agreement, the reviewing court can enjoin reliance on the provision, declare it unlawful, and award reasonable attorney fees.

S.B. 1241 will be codified as Section 925 of California Labor Code. Employers should review any employment or arbitration agreements to make sure they are in compliance with the new law. Employee contracts may need to be revised. Contact our law office for more information about modifying your existing employment agreements.


About Cabada & Hameed LLP

Cabada & Hameed LLP is a law firm serving the greater Southern California region. Formed by “big firm” veterans in 2009, the firm offers exceptional legal representation with experienced attorneys handling matters encompassing Labor & Employment and Business Law and Litigation. Cabada & Hameed LLP is certified as a Minority Owned Business (MBE) by the California Public Utilities Commission’s Supplier Clearinghouse and is a member of the California Minority Counsel Program. Partners and co-founders Francisco Cabada and Sayema Hameed bring over a decade of legal training and experience to every matter and ensure that clients receive individualized support and counsel, around-the-clock availability, the utmost discretion and maintenance of the highest professional and ethical standards. For more information, please visit the website www.cabadahameed.com.


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