BILL ANALYSIS
AB 335
Page 1
GOVERNOR'S VETO
AB 335 (Fuentes)
As Amended July 23, 2009
2/3 vote
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|ASSEMBLY: |45-30|(May 18, 2009) |SENATE: |22-15|(September 1, |
| | | | | |2009) |
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|ASSEMBLY: |48-29|(September 9, | | | |
| | |2009) | | | |
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Original Committee Reference: L. & E.
SUMMARY : Establishes a rebuttable presumption related to
specified choice of law clauses or forum-selection clauses in
binding employment materials.
The Senate amendments :
1 Instead of enacting a direct prohibition, provide that any
choice of law or choice of forum provision in an employment
agreement, employment handbook, or other statement of an
employer's policies is presumed to be unconscionable, in
violation of the public policy of this state, and void if the
provision would do either of the following:
a) Require the employee or job applicant to arbitrate or
litigate a claim outside of California that arose from
employment or conduct occurring in California; or,
b) Deprive the employee or job applicant of the protection
of California law for claims arising from employment or
conduct occurring in California.
2)Require a court to consider all of the following factors to
determine whether a person seeking to enforce a choice of law
or choice of forum provision has rebutted the rebuttable
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presumption described above:
a) Whether the employee was represented by counsel in
negotiations regarding the employment agreement at the time
that the choice of law or choice of forum provision was
incorporated into the employment agreement;
b) Whether separate consideration was provided by the
employer in exchange for the choice of law or choice of
forum provision;
c) Whether the choice of law or choice of forum provision
provides the employee with rights and remedies that are
equal to, or greater than, those provided by California law
with respect to the claim; and,
d) Whether the choice of law or choice of forum provision
imposes a financial burden or other burden that would deter
the employee from pursuing a claim against his or her
employer.
3)Specify that this bill does not replace any other remedy
available under law.
AS PASSED BY THE ASSEMBLY , this bill:
1 Prohibited an employer from requiring an employee or job
applicant, as a condition of employment, to waive the
application of California law to any dispute regarding
employment, or the securing of employment, in California.
2)Prohibited an employer from requiring an employee or job
applicant, as a condition of employment, to resolve outside of
California any dispute regarding employment, or the securing
of employment, in California.
3)Provided that any choice of law, choice or forum, or choice of
venue provision in a job application, employment agreement,
employment handbook, or other statement of an employer's
policies is unconscionable, violative of the public policy of
this state, and void if the provision would have the effect of
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either of the following:
a) Requiring the employee or job applicant, as a condition
of employment, to resolve claims outside of California that
arose from employment, or the securing of employment, in
California; or,
b) Depriving the employee or job applicant of the
protection of California law for claims arising from
employment, or the securing of employment, in California.
4)Specified that nothing in this bill affects the right of an
employee to voluntarily agree to a choice of law or forum
selection provision that is not required as a condition of
employment and that is the subject of independent
consideration.
FISCAL EFFECT : None
COMMENTS : Under existing law, employers may insert certain
clauses in employment materials that predetermine the forum or
venue that an employee may bring an employment dispute (i.e.
forum/venue selection clauses) and/or the law, either the law of
a state or a nation, that will govern the employment dispute
(i.e. choice of law clauses). Employers may place these clauses
in job applications, employment agreements, employment
handbooks, or other statements of an employer's policies
applicable to its employees.
The California Employment Lawyers Association (CELA), the
sponsor of this bill, argues that this bill would prevent
unscrupulous employers from evading California's strong worker
protection laws. Additionally, this bill would assure adequate
access to an in-state forum for all California workers to bring
a labor or employment disptue. CELA states that forum selection
clauses and choice of law clauses pose a particularly acute
problem for lower income workers and disabled workers. Those
workers that do have the resources or ability to travel might
well find that the protection that they had under California law
does not exist, or is not as comprehensive, in the jurisdiction
that will be deciding their dispute.
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CELA contends that the current situation benefits out-of-state
employers at the expense of California employers. Employers who
remain subject to the rigorous requirements of California labor
and employment law are at a distinct competitive disadvantage
when an out-of-state employer uses a choice-of-law provision to
exempt itself from California's laws governing employment
relationships and adopt another State's less burdensome regime.
Correcting this problem therefore benefits California employers
as well as employees and contributes to fair competition in
California.
Opponents argue primarily that the measure is overbroad. They
state that, while they might agree that forcing a rank-and-file
employee to resolve disputes outside of California is unfair,
the bill would apply to every employee, including the chief
executive officer and president. National sales staff with
responsibilities in many states would presumably be covered if
the employment relationship was commenced in California. The
bill thus covers a large number of employees with full
bargaining power to agree to forum selection and choice of law
clauses. Opponents also state that proponents argue that the
bill does not absolutely prohibit forum selection and choice of
law clauses, merely that they not be required as a condition of
employment. They counter that this provides little solace to
employers seeking to enforce contracts fairly negotiated with
high-level employees, who will simply argue that they would not
have received the job had they not agreed to the clause. This
will simply be another point debated in a lawsuit.
Opponents also contend that, with respect to choice of law
clauses, courts already possess the authority to make decisions
in this area in the interests of justice. Therefore, this bill
is unnecessary.
This introduced version of this bill was identical to AB 1043
(Swanson) from 2007. That measure was vetoed by Governor
Schwarzenegger.
GOVERNOR'S VETO MESSAGE :
AB 335
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"This bill is similar to AB 1043 (Swanson, 2007), which I also
vetoed. Like AB 1043, this bill would discourage out-of-state
and multinational employers from hiring California based workers
and potentially contribute toward the growing problem of
unemployment. Additionally, the bill is unnecessary because
courts are already well equipped to determine when a choice of
law or choice of forum provision in a private contract should be
enforced in consideration of all applicable circumstances."
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0003239