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New California Law Prohibits the Use of Out-of-State Venues in Employment Contracts

labor-law.jpgA new California law which went into effect on January 1st, 2017 adds a new section (Section 925) to the California Labor Code and it restricts some employer rights. Employers are now no longer able to require out-of-state adjudication or arbitration in employment contracts. This applies to the contracts of all employees who reside primarily within the state of California. Employers with questions about the effects of this new law should consult with an experienced San Jose business law attorney to ensure that their firm is always in full compliance.

Four Things Employers Need to Know About Senate Bill 1241

1. Many Companies Will Be Affected

Employers that operate throughout the nation or in multiple states often use standard form employment agreements. These agreements frequently call for the use of out-of-state venues to resolve employment contract-related legal disputes. As of January 1st, 2017, is disallowed in California. Adjudication must be conducted in-state.

2. Attorneys' Fees Are Available Under the Statute

Included within the new law is a provision that allows for attorneys' fees. This means that any party who successfully takes action under this statute will be able to recover compensation for the full extent of their related legal fees. This is very important to recognize as it will encourage more employees to take legal action if they are asked to sign an employment agreement with an unlawful venue requirement. The state legislature believes this will work as an enforcement mechanism.

3. There Are Exceptions

The law does include some narrow exceptions. For example, in cases where an employee is represented by his or her own attorney during the employment contract negotiation process, this law will not apply. To be clear, this exception is only for employees represented individually by an attorney. That means that the law still applies to all employees who are represented by an attorney as part of a class.

4. Employers Must Review and Update Employment Agreements

Ultimately, all companies operating within the state of California must take the time to review and update their employment agreements. Your employment contracts must always be in full compliance with California law. This is especially important in this case since attorneys' fees are provided under the statute. The failure to update employment agreements will likely cost your business a lot of money in the long run. Please take action.

Contact Our Office Today

At Diemer, Whitman & Cardosi, LLP, our dedicated San Jose business law attorneys have extensive experience handling a wide variety of business litigation issues, including employment law compliance. If you have questions about California's new employment agreement venue rules or employment law in general, please contact our team today. We represent employers throughout Northern California, including in San Francisco and Oakland.



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