Forum Selection and California Code 925

In 2016, there were many laws that came before the Governor of California concerning workers’ compensation. Some were vetoed and some passed, each of which slightly changes the landscape of workers’ compensation law here in California. An important change in the law came in the form of S.B. 1241, which after ratification is now California Labor Code Section 925. This bill takes effect January 1, 2017 and changes the way that California employers can structure their contracts. Forum selection clauses are quite common in employment contracts and handbooks. These clauses typically state that the parties to the contract (i.e. the employer and employee) agree that any disputes arising out of the employment shall be subject to binding arbitration, or may also state the parties agree to submit their disputes to a jurisdiction outside of the State of California. As of today, any employee may sign one of these contracts before beginning employment, if so requested by his or her employer. However, under the new terms of the Labor Code, an employee that is not individually represented by an attorney during the employment negotiation may not be required to sign a contract for employment that includes:

1) to adjudicate a case outside of California if the claim arises in California; or

2) deprive the employee of the protections under California law if the claim arises in California.

To be eligible for these protections, an employee must primarily reside and work in California. Moreover, the section only applies to contracts “entered into, modified or extended on or after January 1, 2017.”

The language of the statute specifically states that employer cannot be forced to sign the contract as a “condition of employment.”  It is therefore not clear if the forum selection could be enforced on optional benefits.

So, what does this mean for workers’ compensation?  An employer may not require an employee to sign a contract that agrees that and work-related injury disputes, 132(a) claims, or other disputes relating to industrial injuries must be submitted to arbitration or must be decided in a court outside of California. This is true even of companies that are headquartered outside of California. Unless an employee has his or her own lawyer to negotiate the terms of the forum selection clause, then an employer may not compel an employee to sign a contract waiving his or her ability to litigate work-related injuries as a condition of employment. Clearly the legislature intends that each employee who works primarily in California to have the full protection of workers’ compensation laws in this state.

If you have questions about how the new law impacts your company’s current workers’ compensation forum selection, contact me today at (714) 516-8188. We will discuss your contract and ensure compliance with the new law.

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