New Labor Code § 925 Limits Contractual Choice of Law in Employment Contracts

Starting on January 1, 2017, Labor Code section 925 is in effect.  The statute limits the enforcement of contracts that would require California employees to litigate their disputes with an employer in a venue outside California, or under a different set of laws.    

The new law applies to employment contracts "entered into, modified, or extended on or after January 1, 2017."  And the law only applies to "an employee who primarily resides and works in California."  As to such covered disputes, however, any contract provision designating a non-California forum or choice-of-law, will "voidable" at the election of the employee.  

Employers and employees should also be aware, however, that such provisions may also be unenforceable on the separate ground that enforcement would require an employee to waive a California legal right that is explicitly made "non-waivable," such as minimum wage,overtime, or non-discrimination laws. 

In any event, the full text of Labor Section 925 is as follows:

§ 925. Prohibition against requirement that employee residing and working in California adjudicate claim outside of California or be deprived of substantive protection of California law as condition of employment; violations and remedies; exception
(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:
(1) Require the employee to adjudicate outside of California a claim arising in California.
(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.
(b) Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.
(c) In addition to injunctive relief and any other remedies available, a court may award an employee who is enforcing his or her rights under this section reasonable attorney's fees.
(d) For purposes of this section, adjudication includes litigation and arbitration.
(e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.
(f) This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

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