What if an employer chooses to require its employees to sign an agreement, which states that if the employee wants to sue the employer he/she must agree to abide by a shorter statute of limitations period than is established by law? Would that agreement be enforceable? This was precisely the question that the New Jersey Supreme Court addressed in its recent landmark decision, dated June 15, 2016, wherein it found such agreements to be unenforceable as they relate to the New Jersey Law Against Discrimination (“LAD”).
Facts of the Case and Procedural History
The plaintiff applied for a job with the defendant employer and as part of that process, he completed an application for employment. On the last page of the job application there was a section that applicants were instructed to read very carefully before signing. The relevant section of the document read, in bold and capital letters, that by submitting the job application, the employee agreed that any claim or lawsuit relating to the employee’s service with the employer must be filed no more than six months after the date of the employment action that is the subject of the claim or lawsuit. The relevant section of the application went on to further state that the employee “waive[s] any statute of limitations to the contrary.” Plaintiff signed the application, including the section regarding his waiver of any statute of limitations contrary to the agreement language.
Plaintiff worked for the defendant employer for approximately three years before being terminated. Upon plaintiff’s termination from his employment, plaintiff brought suit against his employer alleging illegal employment discrimination in violation of the LAD. Plaintiff filed suit seven months after his termination from employment. Although the statute of limitations for a LAD claim is two years from the discriminatory action, and plaintiff had filed well within two years from the discriminatory action (termination), the employer moved to dismiss the suit. The employer reasoned that the plaintiff had already signed an agreement that the applicable statute of limitations for any claim would be six months and plaintiff filed his claim after the six month period had already passed. The court agreed with employer and dismissed plaintiff’s case. Plaintiff appealed the court’s decision and the Appellate Division upheld the lower court’s decision to dismiss the case due to the agreement regarding the statute of limitations that plaintiff signed. Plaintiff then requested review by the Supreme Court of New Jersey. The Supreme Court overruled the lower courts and found that plaintiff’s discrimination claim was not time barred and should proceed.
Supreme Court Findings
The New Jersey Supreme Court held that a private agreement that frustrates the LAD’s public purpose, by shortening two year statute of limitations, cannot be enforced. First, the Court reasoned that if a party were to agree to shorten the statute of limitations regarding a LAD claim, it would “directly impact and undermine the integrated nature of the statutory avenues of relief and the election of remedies that are substantively available to victims of discrimination under the LAD.” In other words, if the statute of limitations was shorter than two years due to a private agreement, litigants would not have enough time to try to resolve the matter administratively with the Division on Civil Rights, before moving the claim to Superior Court if the administrative process extended too long.
Second, the Court reasoned that a shorter statute of limitations period would deprive litigants of the opportunity to bring suit because a person may not be aware of his/her potential claim(s) within the first six months after the employment action occurs. Third, a privately agreed upon statute of limitations frustrates the public purpose of uniformity and certainty as to a set statute of limitations for LAD claims. Fourth, a shorter statute of limitations may compel attorneys to file premature LAD claims. Finally, allowing a private agreement shortening the LAD statute of limitations would also deprive an employer of the opportunity to investigate claims and possibly resolve a complaint before suit is filed because the employee would rushed to file claims in court. Thus, a waiver provision in an agreement shortening the LAD statute of limitations is unenforceable.
In order to review the full text of this decision see Rodriguez v. Raymours Furniture Co., Inc., _____ N.J. _____ (2016).
What Does this Mean to Employers?
The LAD statute of limitations is set in stone (for now) and cannot be changed by private agreement. Employees have two years to file their claims. This time period allows the employee time to analyze whether or not he/she has a claim, allows time for an employee to file with the Division on Civil Rights (if the employee desires to do so) and allows time for an employer to investigate a claim and possibly resolve a matter before a lawsuit is filed.