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Which state’s law matters for employment contract questions?

I recently learned that one of my LinkedIn answers in Employment and Labor Law [no longer available at LinkedIn because this feature was discontinued] was selected as the Best Answer. The question and my answer are reproduced below.

Question: Which state law matters for employment contract questions (for the CEO of a firm), the law of the state of incorporation or the law of the state where the headquarters are located?

Answer: Please note that you actually have asked two different questions: (1) Which state’s law governs? (2) Where can / must the lawsuit be brought?

Answer to Q1: Most employment agreements will specify the applicable law. For agreements that do not, the court will need to make a “choice of law” decision. Assuming that the employee resides and works in the state where the company is headquartered, that state’s law probably will be chosen.

Answer to Q2: If the agreement has a mandatory jurisdiction and venue provision (stating where the suit *must* be filed), then that provision will apply – even if the law of a different state is to be applied. Otherwise, it is conceivable that multiple states could satisfy venue and jurisdiction requirements, though, again, the state where both parties are located would be most likely.

Getting to what may be the heart of your questions: In an employment-contract lawsuit, where the company is incorporated is not likely to matter.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Contracts, Employment