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Tag: choice of law

Choice of law provision in an employment contract

February 4, 2014

I ran across a well done article for HR professionals today on choice of law provisions in employment contracts.

Imagine this scenario – COKE (yes, I mean the company getting all of the negative press for their Superbowl ad (which I didn’t see, but really people, who cares)) has salesmen and women across the country. They all are asked to sign confidentiality and non-compete agreements saying they won’t go work for Pepsi within 1 year of being a sales rep for Coke. Does Coke (based in GA) really need to consult 50 different attorneys as to how to word these various agreements to reflect the nuances of each state law before asking employees in each state to sign?

Maybe.

Should they at least have some idea whether the employees in California are even bound by such a contract, or whether NY law even upholds such contracts for non owners? Ideally, yes. But realistically, most multi-state companies pick a state and include that state’s law as the relevant and binding choice of law provision for most if not all attorney contracts.

So you could conceivably live in Wyoming and be bound by Virginia law. Or, live in Virginia and sign a contract that states you are bound by Tennessee law. Do these choice of law provisions hold up? It depends on what court and what state is asked to rule on the issues. Do Non-competes themselves hold up? That also depends on what state law applies.

The moral of this rather boring tale is this: BEFORE YOU SIGN A CONTRACT AGREEING A CERTAIN STATE LAW APPLIES TO YOUR LIFE AND YOUR WORK, ask someone what the law says! Don’t assume anything and have a professional in that state (*not your cousin Jerry who went to law school but can’t pass the bar exam in any state) explain what it is you are agreeing to.

And then, and only then, can you determine whether you should even agree to sign the contract, or to be bound by the law of some far away place.