California employers are now prohibited from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a contract provision that would require the employee to adjudicate outside of California a claim arising in California or
deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

Any contract that violates these prohibitions is voidable, upon request of the employee, and any dispute over a voided provision must be adjudicated in California under California law. In such actions Courts are authorized to award reasonable attorney’s fees. Excepted from these provisions is a contract with an employee who was represented by legal counsel in its negotiation. The exception is a recognition that many executives are represented by counsel in their employment contract negotiations and theoretically do not need the protections now provided to lower level workers. Whether this presumption proves valid will be the litmus test for this law.

If you have a form employment agreement it is time to have it legally reviewed and updated to avoid the possibility that the agreement or some of its terms are voidable by your new employees.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.