Does an employment agreement have to be governed by the state the company works in?

I live outside the state and will be working from home and the company that's employing me is on the other side of the country. which state's laws should govern - mine or theirs or could it be neutral?

thanks for all the answers so far. the state my company's offices in are in new jersey but i think they were formed in delaware. I'm from Kentucky and will be doing marketing throughout the US. Can we agree to a totally different state like NY?

The laws and venue in any agreement are subject to negotiation. Typically most companies will have the law and venue close to where they are. This minimizes their expenses in a potential law suit and raises the cost for anyone seeking to sue.

My guess is that they will not negotiate on this. However, you can say to them that as a resident of "some state", their labor laws apply and therefore the agreement should be in that state. This probably won't work.

I'd also caution you on negotiating this point. Unless they really, really want you, this could be a red flag to them not to hire you.

Good luck!

theirs unless choice of venue is different in the contract

EDITED BASED ON ADDITIONAL INFO:

You can negotiate anything. However, what would be the advantage for a firm doing business in NJ to agree to litigate in a separate state?

Even if there is no choice of law clause in your contract, new Jersey courts have held in the past that a contract made within its boundaries is sufficient for it to take personal and subject matter jurisdiction.

You are working for a company in new Jersey although you will be working from home. Therefore, as a matter of law, you have agreed to give NJ subject matter jurisdiction.

The question you need to ask yourself is "Is the issue one over which I will be able to let the job go if I don't get a satisfactory resolution?"

This subject is covered by the body of law known as "Conflict of Laws." There are different schools of thought on how to find which law governs a trans-state transaction.

First, the agreement can specify which state's laws govern.

Second, the choice of law question can be resolved by answering the question where was the contract formed. Generally, that is the state where the last act necessary to form the contract occurred, which usually means looking to see where the offer was accepted. (The usual method of forming a contract is for one party to make an offer and the other party to accept the offer.)

Third, the modern "grouping of contacts" approach asks which state has the greater interest in the transaction. I would have to know which state you are in to ascertain whether the state uses the grouping of contacts, formation of contract, or some other talisman of decision, and then I would need to know a few more facts. If you are sending your work product into the employer's state, it's a fair bet that the employer's home state has the greater impact and interest. If you are doing work in your state that stays there, it is your state that would seem to have the greater interest.

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Edited to reflect further information.

You should understand that choice of law and jurisdiction are distinct issues. Choice of law asks the question which State's law (or even which country's law) will govern a matter. Jurisdiction asks the question which states' courts have the legal authority to dispose of a case.

The question you posed goes to choice of law. Trans-state matters also raise questions of personal jurisdiction, which are fascinating questions but they are not what you asked about. Likewise, while "subject matter jurisdiction" is an impressive phrase, in this context all that it does is highlight that the Brand Hexe poster does not know what he's talking about and he does not sound like a lawyer.

You can agree to be bound by New York law even though New York does not seem to have a connection to this case. Section 5-1401 of the New York General Obligations Law governs here, and it says the parties can agree to be governed by New York law even if there is no connection, but this section does not apply to agreements for labor, personal services, or consumer transactions.

Therefore, there is a good chance that the New York statute would not apply to your contract, which appears to be one for personal services.

The fact that the company is a Delaware corporation is not significant. It is subject to Delaware corporation law, but its business is going to be governed by its domicile in New Jersey.

Again, without knowing where the case is pending and researching that state's choice of law rules, it's impossible to predict the outcome. If you negotiate this issue, it's substantially certain that the other side will insist on being governed by New Jersey law and suits being filed in New Jersey. If you keep mum, you might still prevail in having the contract enforced in Kentucky under the laws of the Commonwealth.