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Client Alert: California Restricts Employment Agreements Containing Out-of-State Choice of Law and Venue Provisions

Insight Thomas M. White Thomas M. White · November 11, 2016

A new statute and several new restrictions on certain California employment agreements that may affect enterprises' operations.

Mr. White explains the latest amendment to the California Labor Code which will become effective on January 1, 2017. This amendment adds a new provision requiring that employment disputes regarding California resident employees be subject to the substantive law of California and that the arbitration or litigation of such matters be held in California. These requirements will have a significant effect on how out-of-state employers negotiate and draft employment, separation and confidentiality agreements.  Moreover, as described below, some of the statutory language is subject to interpretation and thus may result in violations of law by unsuspecting employers.

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