Creating a Comprehensive Web Design Agreement
In a significant shift for California-based companies, a new amendment to the California Labor Code requires disputes with California-based employees to be resolved in California under California law. This change, effective as of January 1, 2017, marks a departure from the previous practice of resolving disputes under the governing law and jurisdiction of the company's base city and state.
The amendment applies to disputes involving employees who reside and work in California, and encompasses a wide range of legal matters, including but not limited to employment contracts, non-disclosure agreements, and other related issues. Employers who fail to comply with the new law may face legal consequences.
Best practices for including a "Governing Law and Jurisdiction" clause in a startup's contract have been outlined to ensure legal certainty and efficiency. These practices include clearly specifying the governing law, selecting a jurisdiction aligned with the startup's business model and risk tolerance, including a venue for dispute resolution, considering arbitration or mediation as alternative dispute resolution methods, drafting clear and reasonable clauses, and including a severability clause.
Clearly specifying the governing law involves identifying the specific state or country's laws that will govern the contract. This enhances predictability and facilitates consistent interpretation of the contract terms. Choosing a legal jurisdiction that supports the startup’s operational needs, protects intellectual property, offers favorable legal frameworks, and limits potential liabilities is also crucial.
Specifying not just the governing law but also the court or arbitration venue that will have jurisdiction to hear disputes avoids ambiguity about where disputes will be resolved. In some contracts, specifying arbitration can reduce costs and delays compared to litigation and is commonly favored in startup and tech agreements.
Drafting clear and reasonable clauses is essential to increase enforceability. Avoiding overbroad or unreasonable jurisdictional claims and ensuring the clause is tailored to legitimate business interests also increases its enforceability. Including a severability clause ensures that if a part of the clause or contract is unenforceable, the rest remains valid.
Consulting legal experts to tailor the clause for your jurisdiction and specific business context, especially in cross-border or offshore scenarios where compliance complexities are heightened, is highly recommended.
The new law may encourage other states to adopt similar legislation in the future, potentially impacting the way California-based companies handle legal matters involving their employees. It is important for startups to remain vigilant and adapt their contract practices accordingly.
A recent study by the legal AI platform LawGeex compared AI and lawyers, focusing on reviewing non-disclosure agreements (NDAs). The study involved twenty experienced lawyers and four hours to review five NDAs. The study was conducted in cooperation with law professors from Stanford University, Duke University School of Law, and University of Southern California.
Some California employers offer their workers the option to use platforms like Facebook, Messenger, Twitter, Pinterest, Linkedin, Whatsapp, and email for communication. However, the new California Labor Code amendment may necessitate a reevaluation of these communication practices for dispute resolution purposes.
- In the evolving landscape of data-and-cloud-computing and artificial-intelligence, startups need to carefully consider the governing law and jurisdiction clause in their contracts, especially with the new amendment to the California Labor Code, to ensure legal certainty, efficiency, and compliance.
- As technology advances, areas such as artificial-intelligence and legal matters like non-disclosure agreements become more prominent, necessitating a detailed understanding and application of data-and-cloud-computing and technology in legal AI platforms, as demonstrated in a recent study by LawGeex.
