Employment contracts - forum selection

Lori B

Hi

Our company is multistate and has various sales staff/managers sign restrictive covenant agreements. There is a forum selection clause that basically says if either party sues, it will be in the state where corporate headquarters is located. Does anyone have any experience with similar terms? Are they enforceable for the employee who lives out of state? Thanks.

System

It was my understanding in one of my Employment Law Seminars that you should have this stipulation in contracts with multi-state employees. The attorney that gave the seminar was very specific about making sure that we all enter that language in our contracts.

Theresa Gegen TX

If your employment contracts have provisions restricting the employee from competing with the employer after he leaves employment, enforceability of that provision will depend on the law of the state where the employee worked.

In Texas, for example, the Courts will reject a choice of law clause that applies a different state's law to questions about whether or not the employee can compete (and if it is not drafted correctly under Texas law, it will not be enforced). Most states, like Texas, consider that issue a matter of public policy and will apply local law reguardless.

There may be other provisions that also will be considered a matter of public policy by the local jurisdiction, in which case your choice of law clause will be rejected.

Therefore, the person who drafts the contract should consider the law of the state in which the contract was entered and the law of the state in which the contract will be performed. The safest route is to try to draft provisions that will be enforceable in both jurisidictions.

Good Luck!