Parties’ Choice of Law Not Always Honored
Choice of law provisions are commonly included in employment agreements because employers often have employees working in multiple states.
Most people believe that courts will enforce any (legal) agreement just as the contracting parties intended. While this is usually correct, sometimes a court must follow legal doctrines that weigh against enforcing a contract as written. One such situation involves the parties’ choice of which state’s law will apply.
A court will enforce the parties’ choice of law unless: (1) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice or (2) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state and which would be the state of the applicable law in the absence of an effective choice of law by the parties.
Choice of law provisions are commonly included in employment agreements because employers often have employees working in multiple states. In most cases, these provisions will be enforced as written, but they may not be enforced when the dispute centers on the violation of a non-compete clause. Because some states hold fundamentally opposite positions on non-compete issues, a court may not enforce the parties’ agreement with respect to a non-compete clause.
This article is presented by the Dallas employment law lawyers at Clouse Dunn LLP. To speak to an employment law attorney about a non-compete agreement, send an email to email@example.com or call (214) 239-2705.