6th Circuit: An agreement that shortens the limitations period for FLSA and EPA claims is not enforceable because it deprives the employees of his rights under those laws

by Baker Donelson
Contact

The Sixth Circuit recently made clear in Boaz v. FedEx, et al., No. 12-5319, that an employer cannot shorten the time within which an employee can bring claims under the FLSA and EPA. In Boaz, the Sixth Circuit rejected an attempt by FedEx to shorten the limitations period of claims through an employment agreement provision by holding that the provision was void because it deprived the employee of her rights under the FLSA and the EPA. The decision reversed the district court’s grant of summary judgment on the issue in FedEx’s favor and sent the case back to the district court. The opinion is a good reminder of what an employer can get away with when it comes to claims under the FLSA.

When Plaintiff-Appellant Margaret Boaz was hired by FedEx in 1997, she signed an employment agreement that included the following clause:

To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.

After changing positions several times through the years, Boaz sued FedEx in 2009 alleging that FedEx has violated (1) the Equal Pay Act (EPA) by paying her less than a male predecessor and (2) the Fair Labor Standards Act (FLSA) by failing to pay her overtime. Because Boaz’s last paycheck—the last allegedly illegal activity—was issued more than six months before she filed suit, FedEx moved for summary judgment based on the provision in her agreement that shortened the limitations period of her claims to six months. The U.S. District Court for the Western District of Tennessee agreed with FedEx, and granted its summary judgment motion.

Though Boaz’s last paycheck had indeed been issued more than six months before she filed suit, it had been issued within both statutes’ three-year statutory limitations period. Thus, if she could get around the six-month limitation, she could proceed with her claims.  In an attempt to do so, Boaz appealed to the Sixth Circuit and argued that the provision was void. 

When the agreement was drafted, FedEx undoubtedly knew that an employee could not waive claims under the FLSA or the EPA so it tried to limit any potential exposure by shortening the limitations period. The three-judge panel would have none of it. Judge Kethledge began his opinion with the following sentence: “The Supreme Court held decades ago that an employee  is not free to waive her claims under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.” With that opener, FedEx had to know this one wasn’t going to end well.

The court reversed the district court’s grant of summary judgment because it held that the provision deprived Boaz of her statutory rights and was therefore void. The court reached back to the mid-1940’s when the U.S. Supreme Court held in Brooklyn Savs. Bank v. O’Neil, 324 U.S. 697 (1945) that employees may not waive their rights under the FLSA. The high court prohibited the waiver of such rights because it was concerned “that an employer could circumvent the Act’s requirements—and thus gain a competitive advantage over its competitors—by having its employees waive their rights under the Act.”

Applying this longstanding precedent to this case, the court noted that Boaz “accrued a FLSA claim” every time she received an allegedly illegal paycheck over the last three years. And because her employment agreement would deprive her of bringing the claims she accrued before the six-month period in the agreement but after the three-year statutory period, the provision was “invalid.”  

FedEx (and Quicken Loans via an amicus brief) had attempted to convince the court that because other courts have enforced agreements that shorten the limitations period for Title VII claims, it should allow the same for FLSA and EPA claims here. The Court didn’t buy it, holding that (1) Title VII claims—unlike FLSA claims—can be waived, and (2) the rationale for prohibiting waiver of FLSA claims is not present for Title VII claims. The court explained that its second point was true because an employer who refuses to hire members of a certain race does not gain a competitive advantage by doing so, but an employer who pays employees less than minimum wage arguably gains a competitive advantage from doing so.

The court did note, however, that employees may waive their right to a judicial forum by agreeing to arbitrate their FLSA claims as long as the forum is a fair one.    

Finally, the court explained that the same analysis applied to Boaz’s EPA claims because the EPA was enacted as an amendment to the FLSA after the Supreme Court had ruled that FLSA claims could not be waived. Thus, the Court reasoned that “by folding the Equal Pay Act into the FLSA, Congress meant for claims under the Equal Pay Act to be unwaivable as well.”

Bottom Line: Remember these guidelines about FLSA and EPA claims: An employee can agree to arbitrate them and even to waive their ability to bring them as part of a class action, but they cannot waive them—which now clearly includes agreeing to shorten the time within with they can bring them. Though this was a Sixth Circuit opinion (applicable to Kentucky, Ohio, Michigan, Tennessee), other circuits may reach the same conclusion.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson
Contact
more
less

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!