Contracts can send us packing to other states

A New York resident worked as a sales representative in the New York territory of a New Jersey company.  He received a statement of all the sales he had made and his contract gave the exact commission rate due.  Yet, for no reason at all his boss just failed or refused to pay him.  Under New York’s Labor Law, the sales rep would be entitled to substantial penalties from his company, including double damages and attorney fees.  However, the employment contract provided that all suits had to be brought in New Jersey and that New Jersey law controlled to the exclusion of any other law.

The issue is whether the New Jersey employer could avoid the protection of NY’s Labor Law by these contract provisions.  In a case with similar contract provisions, but involving a Minnesota company, this question had been answered by New York’s highest court. (Boss v. Am. Express Fin. Advisors, Inc., 6 N.Y.3d 242, [2006]).  As the court previously recognized that the NY Labor Law was “enacted to strengthen and clarify the rights of employees to the payment of wages,” and that an employer could not generally skirt the law by a contract at odds with its protections, the plaintiff in the Boss case figured he could sue in NY.  His suit was thrown out.  The court held that there was also a strong policy that suits had to be brought in the place required by the parties’ contract and the arguments that New York law should apply could “have been made to a court in Minnesota–the forum the parties chose by contract.”  As to NY’s paramount desire that its own law be used to protect its workers, the court optimistically heeded that “we cannot assume that Minnesota courts would ignore it, any more than we would ignore the interests or policies of the State of Minnesota where they were implicated.”