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Volume XII, Number 182

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Court Finds California Labor Statute To Be No Bar To Charter Forum Selection Clause

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.  

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 119
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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