But we have an arbitration clause: Considerations when hiring Californians

7 minute read

It’s 4:45 p.m. on Friday. The human resources (HR) director calls and tells you that your company—or if you are outside counsel, your client—is finally expanding their sales operation to the West Coast. As part of that effort, the company is hiring a new employee, and the HR director needs a draft employment agreement by Monday morning. You ask for the particulars so you can assemble a standard agreement. Thirty minutes later, you receive the requested information and notice that, while your client is headquartered in, say, Nashville, Tennessee, the prospective employee lives and works in Sonoma County, California.

Saturday afternoon (while you could be at a barbecue), you are scrolling through the company’s model employment agreement, adding information, and tweaking here and there. As you scroll faster through the standard legal provisions near the end, you note the arbitration clause and its Tennessee choice-of-law provision. You are not a California lawyer[1] and wonder if a California court will enforce the arbitration agreement and respect the Tennessee choice-of-law provision or a choice-of-law provision favoring any state’s law other than California. The answer is more complex than you would hope.

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