How a new California law affects other States

Governor Jerry Brown signed a bill ensuring California employees are protected by California labor rights.

At first glance this sounds obvious, but – for corporations with headquarters outside of California- this is a bit more complicated.

The simple version of Senate Bill 1241 and section 925 is as follows:

Employees who live and work in California are protected by California labor laws. If a dispute occurs in California, employees can opt for a resolution within The Golden State – regardless of where company headquarters are located.

Key things to note

  • This only applies to employees who both primarily live and work in California.
  • This may void previously established Forum Selection Clauses (clauses stating where a dispute will be resolved. For example, a pay dispute).
  • It’s not illegal for an employer to seek resolution outside of California. California employees just have the option to say “eh, no. I’d rather resolve this issue in my state.” Arbitration and litigation must then proceed in California.
  • California employees must know they have this option.
  • This does not apply to employees negotiating an employment contract and are already individually represented by a lawyer.
  • The new law takes effect January 1, 2017.

To prepare, find out which of your employees primarily live and work within California. For employees who do not fit the “primarily” category, ensure both you and they have a clear cut understanding as to why.