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Another Victory for Employee's Rights with S.B. 1241

Some forced arbitration clauses in employment contracts restrict the rights of employees to seek redress when they have been treated unfairly, improperly or unlawfully by their employers. Now California is saying no to these clauses when they choose to litigate or arbitrate outside of California.

Out-of-State Arbitration Clauses

These contract provisions allow employers to take a California employment issue and litigate or arbitrate it in another state that has different employment laws. Because California has very strong labor laws, this is an effective way for companies to obtain more advantageous rulings for their business practices in a state that may be more favorable to them.

Companies and attorneys opposed to the bill argue that this complicates legal issues for large corporations that have offices spread across the nation. These employers often choose to handle claims in their corporate home state for predictability and continuity. But considering the resources, dedicated legal teams and financial backing of these large companies, are they the entities that actually need better protections?

The worker is typically the little guy in these "David and Goliath" scenarios. They lack the clout, the knowledge, and the money to mount an effective claim against the wrong doings of their employers in another state. This is especially apparent when the state in play offers fewer protections for employees. If you perform the bulk of your employment within California, it stands to reason that any employment disputes should be resolved under the jurisdiction of California where the issue exists.

California Senate Bill No. 1241

If you live and work primarily in California, this bill prohibits employers from making you agree to employment provisions that compel you to go outside the state to adjudicate a California claim, and abandon the protections of California law in your employment claim, when the issue arises in-state.

If you are an employee who enters into a contract that does this, you have the right to void that provision, and any ensuing employment claims will be litigated under California law. When you retain a lawyer to enforce these rights, you may be able to recover reasonable attorney fees from your employer. An exception to this law applies if you had legal counsel at the time, allowing you to negotiate the terms of the employment contract at issue.

Governor Jerry Brown signed this legislation on September 25, 2016. The new law will take effect on the first day of 2017, and will apply to employment contracts that begin on or after this date or are extended or modified on or after January 1, 2017.

If you have questions about the legality of your employment contract or believe that you may have a labor or wage claim against your employer, contact a knowledgeable California employment law attorney to discuss your situation and safeguard your rights under our strong state laws.


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