Chapter 23 - § 23.6 • CHOICE OF LAW

• Jurisdiction: Colorado

§ 23.6 • CHOICE OF LAW

Employment agreements may contain a "choice of law" provision, which allows the parties to agree that a particular state's laws will be used to interpret the agreement. In the absence of a choice of law provision, the laws of the state where the employee will perform his or her services will govern the agreement, unless another state has a more significant relationship to the transaction and the parties. Employers with employees in multiple states sometimes include choice of law provisions in order to avoid uncertainty over the law that would govern contract disputes and to improve predictability and uniformity. The law of the state chosen by the parties will be applied provided there is a reasonable basis for the choice, such as the state where a business's headquarters is located.

Where Colorado law would apply in the absence of a choice of law provision, courts will enforce a contractual choice of law provision unless applying the chosen law would be contrary to a fundamental policy of Colorado and Colorado has a materially greater interest than the chosen state in the issue being decided.¹¹ Colorado has a fundamental public policy in favor of competition, and that public policy is reflected in the statute that voids restrictive covenants absent an exemption. Accordingly, Colorado courts have refused to apply another state's law when the application of that state's law would result in the enforcement of a restrictive covenant that would not be enforceable under Colorado law.¹² Where, however, the application of another state's law would not violate a fundamental public policy of Colorado and Colorado does not have a materially greater interest than the chosen state in the issue being...