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Employment Contracts and Sexual Harassment

Employees who signed contracts may have found themselves in an expensive bind should they have had to sue the employer for sexual harassment if the employer was based out of state. To sue, an employee's contract may have stated that any legal action must have been taken in the jurisdiction and/or venue of the employer's base. If an employer was based on the east coast, this could cause an employee to drop a sexual harassment complaint due to the cost of traveling back and forth for litigation, and the additional risk of retaining an attorney out of state.

Existing Law

The existing law states that an employer cannot require an employee or applicant to sign a contract for work that contains an illegal clause. Currently, if an applicant signs an employment contract, if he or she has an issue that requires litigation or arbitration, the employer could force the issue to be arbitrated in the employer's state. Senate Bill No. 1241 applies to any employment contracts modified, entered into or extended after January 1, 2017, and covers any employment issue, including sexual harassment.

Senate Bill No. 1241

The new bill is Section 925 of the Labor Code - Chapter 632 of the California Statutes. If an employee works and lives in California, the employer cannot make the employee sign a contract that states litigation or arbitration for employment matters, including lawsuits for sexual harassment, is handled in the employer's home state. As long as the dispute happens in California, the employer cannot deprive the employee of the rules of the state.

This is a large benefit for employees, as it not only saves an employee the cost of adjudication in another state, but it also forces the employer to use California courts where California employment laws may be stricter than laws in other states.

If the contract violates the new law, the employee may void the contract, and the matter will be arbitrated or litigated in California. Additionally, the employee is entitled to injunctive relief, among other remedies, including attorneys' fees.

The one exception to the rule is if an employee is negotiating an employment contract and is represented by an attorney, and the employee agrees as part of negotiation, litigation and arbitration for sexual assault and other employment matters may be held out of state.

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