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Using Forum Selection Clauses to Reduce the Uncertainty of NY's and CA's Differing Views on Non-Compete Agreements

By Adam J. Safer
May 01, 2017

New York enforces reasonable employee agreements not to compete. California does not. This creates a nettlesome but common situation when a New York employer has employees who work in a different state. While the issue is not limited to New York and California, the laws of New York and California — where so many entertainment companies are based — are of special interest to the industry. Both jurisdictions have fairly well-developed laws. Just as importantly, the laws of these jurisdictions provide a sharp contrast.

What happens when a New York company employs personnel in California? Are the employees subject to the law in New York or the law in California? The answer is surprisingly uncertain. Even where parties have agreed to apply New York law, a New York court may apply that law and enforce restrictions while a California court, under those same circumstances, may disregard New York law and invalidate the restrictions as against its strong public policy.

The unsurprising result is that, in recent years, California employees and New York employers have engaged in expensive races to the courthouse based on the perception that by being first to court, they increase their likelihood of success. This perception unfortunately is supported by some case law in both jurisdictions.

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