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No more out-of-state arbitration for California employees

Some employment contracts require that workers agree to arbitrate employment disputes in a specific state — possibly a different state than where they work or live. However, a new California law is putting an end to that.

The law, SB 1241, prohibits employers from requiring that California employees adjudicate employment disputes in a different state, according to a legislative analysis of the law. It also prohibits employers from depriving employees of protection of California law.

It affects workers who live and work in California and companies that employ them. It exempts employees who are represented by legal counsel in negotiating the terms of an agreement.

“Employers with California-based employees should review their employment-related agreement templates to determine whether they will violate the new California statute,” according to a Lexology article [1] by law firm Kilpatrick Townsend & Stockton. “Employers with employees in California as well as in other states should consider adopting special arbitration and employment-related agreements for use only with California-based employees, thereby complying with the new statute while retaining more employer-friendly venue and choice-of-law provisions in agreements with employees outside of California.”

Gov. Jerry Brown signed the law last month. It takes effect Jan. 1.

“This is a great victory for California workers, and I am pleased the governor signed this bill to prevent employees from having to travel across country, paying out of their own pocket, to resolve their disputes in arbitration,” said Sen. Bob Wieckwoski, a Democrat, who authored the bill.

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