The COVID-19 pandemic ushered in a remote work trend implicating when sufficient contacts exist for courts to exercise personal jurisdiction over an out-of-state employer based on an employee working remotely in a forum state. A federal district court found the presence of a work-at-home employee in the forum state insufficient to exercise specific jurisdiction over the out-of-state employer absent affirmative actions by the employer targeting the state. ABA Litigation Section leaders offer suggestions for navigating the jurisdictional implications of remote work arrangements.
In Tripp v. Ascentage Pharma Group Int’l, a former employee sued his employer for employment-related claims. While he was employed by the defendant, the plaintiff worked remotely from his home in the forum state, and the employer had its principal place of business in another state. The U.S. District Court for the District of New Jersey granted the employer’s Rule 12(b)(2) motion because the plaintiff failed to allege facts sufficient to establish specific personal jurisdiction over the employer in the forum state. Rather than dismiss the case, the court transferred venue to the employer’s home state where personal jurisdiction could be asserted.
Since the plaintiff did not allege general personal jurisdiction, the court limited its analysis to specific jurisdiction. The court held that it could exercise specific personal jurisdiction over the employer only if “(1) [the employer] purposefully availed itself of the forum, (2) the claims arise out of or relate to at least one of the [employer’s] in-state activities, and (3) exercising personal jurisdiction comports with fair play and substantial justice.”
In Tripp, the plaintiff failed to sufficiently allege the first two factors. “An employee who works remotely from a home office, like [the plaintiff], does not automatically subject his employer to the jurisdiction of his home state,” the court explained. “Courts in this Circuit that have analyzed this home-office issue require more: specifically, some affirmative action by the employer targeting the forum state,” the court stated. The plaintiff alleged that at least 14 other employees worked for the defendant in the forum. But “[t]he mere existence of remote employees, without further information about their work functions, does not indicate that [the employer] purposefully targeted [the forum state],” the court added.
The court also found that the employer’s alleged contacts with the forum state were related to the employee’s presence. The court observed that the employee came closer to alleging the necessary contacts when he asserted that the employer used the employee’s physical location in the forum state so the employee could contact potential clients located in the area. However, “this vague and somewhat conclusory allegation would not support a finding” that the employer availed itself of the employee’s presence in the forum state for business purposes, the court concluded.
“The decision is consistent with a practical reality—an employer who permits an employee the convenience of working from home should not then be subject to personal jurisdiction in the employee’s home state. Otherwise, employers will prohibit work from home altogether or limit an employee’s choice of home residency,” observes Mark A. Romance, Miami, FL, cochair of the Litigation Section’s Commercial & Business Litigation Committee. “Although not determinative, a forum selection clause and a statement that the employer is not subjecting itself to jurisdiction in the state could be highly persuasive as to the intent of the parties, and a defendant’s intent is part of the jurisdictional analysis,” Romance suggests.
Employers and remote employees each face strategic decisions in bringing and defending claims. “Remote employees should not assume that they can sue their employers in the employee’s home state just because the employee happens to work there,” says Brian A. Hill, Washington, DC, cochair of the Section’s Business Torts & Unfair Competition Committee. “Purposeful availment clearly requires something more than just having a remote employee working from home in a given state,” Hill suggests.
Practitioners representing employees must evaluate the particular facts of the case to determine whether the selected forum can exercise personal jurisdiction over an out-of-state employer of a work-from-home employee in the state. “If representing a remote employee seeking to establish jurisdiction over the employer in the employee’s home state, I would look for as many contacts as possible between the employer and the forum state. If representing the employer, I would try to distance the employer’s contacts with the state to demonstrate that they are insufficient to establish specific or general jurisdiction,” adds Romance.
“An interesting question is how much evidence is necessary,” notes Jennifer L. Seme, Philadelphia, PA, cochair of the Section’s Trial Evidence & Practice Committee. “Would evidence that the employer advertised open jobs through recruiters in the forum state be sufficient? What if the employer attended an open house in the forum state to recruit employees?,” Seme adds. “Employees can save time and litigation expense by making sure they sue in a forum where the case is not likely to be dismissed or transferred for lack of personal jurisdiction,” Hill recommends.
