New Jersey Court Approves Contract That Limits Employee’s Time to Bring Discrimination Claim

by Pepper Hamilton LLP
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The Appellate Division of the Superior Court of New Jersey ruled on June 19, 2014 that an employee is bound by his agreement in an employment application to a six-month limitation period to file any suit against his employer. In Rodriguez v. Raymours Furniture Company, Inc.1, the court granted summary judgment for furniture retailer Raymour & Flanigan, dismissing a discrimination suit filed eight months after the employee was fired, even though the New Jersey Law Against Discrimination (NJ LAD) carries a two-year statute of limitations.

In 2007, Raymour & Flanigan hired the plaintiff, Sergio Rodriguez, as a customer delivery assistant. As part of the application process, Rodriguez completed and signed an employment application, which provided in part: “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitation to the contrary.” In 2010, Raymour and Flanigan promoted Rodriguez to a driver position, and Rodriguez completed a second application that did not contain any language limiting the statute of limitations time period. Shortly thereafter, Rodriguez injured his knee at work, for which he underwent surgery. Rodriguez returned to work, first on light duty and two weeks later to unrestricted work. Three days after his return to unrestricted work, Raymour & Flanigan instituted a reduction in force, laying off 102 workers including Rodriguez. According to the company, Rodriguez was selected for the reduction in force because of substandard performance. Nine months later, Rodriguez filed a complaint against his former employer, alleging retaliation for having filed a workers compensation claim and discrimination on the basis of his disability, in violation of the NJ LAD.

The company moved to dismiss the plaintiff’s claims on the basis of the contractual statute of limitations found in the first employment application filled out and signed by Rodriguez. The Appellate Division agreed, rejecting Rodriguez’s argument that the statute of limitations provision was unconscionable and therefore unenforceable, stating:

The disputed contract provision was not buried in a large volume of documents. It was contained in a two-page application and set forth very conspicuously in bold oversized print and capital lettering, just above the applicant’s signature line. The terminology was clear and uncomplicated. Plaintiff was under no pressure to complete and sign the application. Indeed, he was permitted to take it home and complete it at his leisure …

2014 N.J. Super. LEXIS 88,*20

The court also ruled that the six-month limitation was not substantively unconscionable because, “in the absence of a statute to the contrary, parties are free to contractually limit the time within which an action may be brought, as long as the contractual time is reasonable and does not violate public policy.” Id.*13 (quoting Order of United Comm. Travelers of Am. v. Wolfe, 331 U.S. 586, 608 (1947)). Importantly, the court noted that unlike claims brought pursuant to federal anti-discrimination statutes, employees in New Jersey may bring employment discrimination claims pursuant to the NJ LAD either by way of the administrative agency or by immediately proceeding with a civil action. Consequently, an agreement to shorten the limitations period would not nullify the New Jersey employees’ ability to seek recourse. While noting that “New Jersey has a strong public policy [to protect workers’ rights], as evidenced by various statutory enactments protecting the rights of workers and prohibiting discrimination in the workplace,” the Appellate Division stated that “... public policy is not harmed by a contractually agreed-upon shortened limitation provision within which a worker can make a claim against his or her employer if that shortened period is reasonable.” Id. at *28.

Finally, the court held that the second employment application filled out by Rodriguez in connection with his promotion, which application did not contain the six-month limitation provision, did not supersede and eliminate the prior contact. In particular, the court stated that “the second application was merely a means of obtaining further information from plaintiff relevant to the new position to which he was being promoted, a driver. It sought information about his driving experience and driving record. His employment with defendant was uninterrupted by this promotion.” Id. at *29-30.

The Appellate Division’s decision to uphold the shortened statute of limitations provides support for employers who seek to contractually limit the amount of time under which an employee can pursue an employment-related claim. Any such contractual limitations clause must be very clear, prominent and reasonable in length. The contractual limitations period allowed by the court in this case would be limited to New Jersey state discrimination law claims. Claims brought under federal anti-discrimination laws, such as Title VII, likely would not be barred by the contractual provision. A shortened deadline for filing state law discrimination claims still provides a significant benefit to New Jersey employers, however, for several reasons. Most plaintiff lawyers suing employers prefer to bring claims under the NJ LAD, rather than Title VII because the NJ LAD provides broader remedies. Title VII also requires employees to exhaust administrative remedies before they may file suit. Title VII carries a 300-day limitations period—significantly shorter than the NJ LAD’s two-year statute of limitations. Finally, an employer may remove Title VII claims to federal court, which is generally a more favorable forum than New Jersey state court for employers in discrimination suits. As a result, a contractual limitations period, while not a panacea, can provide significant benefits to employers without any added expense or risk to the employer.2

Endnotes

1 Superior Court of New Jersey, Appellate Division, Case No. A-4329-12T3, 2014 N.J. Super. LEXIS 88 (App.Div. June 19, 2014).

2 According to the New Jersey Law Journal, this battle might not be over, as plaintiff’s counsel plans to file a Petition for Certiorari to the New Jersey Supreme Court.

 

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.

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