In 2016, California added Section 925to its Labor Code. Cal. Stats. 2016, ch. 632. That statute prohibits an employer from requiring 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:
- Require the employee to adjudicate or arbitrate outside of California a claim arising in California.
- Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.
Any provision of a contract that violates this statute will be voidable by the employee. If a provision is rendered void at the request of the employee, the matter must be adjudicated in California and California law must govern the dispute. See New California Law Threatens To Destroy Plan Uniformity.
Yesterday, a California Court of Appeal addressed the question of whether a Delaware forum selection charter provision violated Section 925. Grove v. Juul Labs, 2022 Cal. App. LEXIS 353. In this case, a former employee/optionee of the company brought class and derivative claims against the company. The company's charter and the plaintiff's stock option agreement included Delaware choice of forum provisions. The Court of Appeal found that the charter forum selection clause was not part of an employment contract and was not rendered void by Section 925.
For other posts concerning Labor Code Section 925, see Copenhagen Counsel Causes Choice Of Delaware Law and New California Labor Code Statute Results In Enforceable Covenant Not To Compete.
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