New California Law Bans Choice Of Law Provisions In Employment Agreements

signing-contractCalifornia has passed a new law prohibiting employers from requiring workers to litigate claims under other states’ laws.

The law, which applies to agreements entered into, modified or extended beginning January 1, 2017, states that any agreement to pursue employment-related claims, including arbitration, outside of California or under the laws of another state violates public policy and is “voidable by the employee.” The new law codifies existing case law finding such choice of law provisions invalid.

This new law serves as a great reminder for California employers to review their employment agreements to make sure that they do not choose another state’s law. Likewise, multi-state employers with operations in California should make sure that the documents being signed by California employees either choose California law or are silent on what state’s law applies.

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