NJ Employers Beware: You Cannot Contract To Shorten The Statute Of Limitations
By Mukti Patel
In a potentially far-reaching decision, the New Jersey Supreme Court recently decided that employers cannot require employees to contract to shorten the statute of limitations to file claims under the New Jersey Law Against Discrimination (the “LAD”). At heart, Rodriguez v. Raymours Furniture Co. involved a clash between two competing interests – the well-established right of contract and the public interest in fighting employment discrimination.
The Court unanimously held that the former must give way to the latter.
At issue in the case was a provision in the application for employment that provided that any claim or lawsuit related to the employment must be brought by the employee within “six (6) months after the date of the employment action that is the subject of the claim or lawsuit.” The provision also expressly required potential applicants to waive any statute of limitations to the contrary.
Plaintiff submitted a signed application containing this provision, and after beginning employment, he was injured in a work-related accident and was out while being treated. Several months later, he resumed working on light-duty status but was then terminated, purportedly as part of a company-wide reduction in force (“RIF”). He sued approximately seven months later claiming discrimination in violation of the state statute, LAD.
Unsurprisingly, the employer claimed that the suit was barred as untimely under the six month provision in the employment application.
The NJ Supreme Court relied on the public purpose of the LAD and on the fact that the LAD serves a public purpose, not just a private one, of eliminating discrimination in employment practices, and held that parties cannot contract to limit the rights afforded under the LAD.
According to the Court, contractual shortening of the limitations period from the two years in the statute to six months frustrates the ability of employees to avail themselves of the full protections of the LAD, and, thus, hampers the LAD’s public purpose. The Court reasoned that six months did not provide sufficient time to pursue both the administrative and judicial avenues of adjudicating LAD claims, and therefore was impermissible.
Takeaway: First and foremost, employers should have their policies, employment agreements, applications, and other documents reviewed to ensure that they do not alter the time frame permitted to bring a LAD claim (which currently is two years).
Additionally, and this is important, while the decision is specifically concerned with the LAD, other statutes share an equally relevant public purpose. After all, the employer’s contractual provision at issue was not by its terms limited to a discrimination claim but covered all employment claims.
Other statutes, such as the New Jersey Paid Family Leave Act, Federal Family and Medical Leave Act, New Jersey Wage Payment Act, Fair Labor Standards Act, and the Conscientious Employee Protection Act, are also likely to be construed as serving a public purpose and may fall under the reasoning of the Rodriguez decision.
Employers should therefore seek counsel as to whether any other policies or practices that they utilize are affected by this decision.
By Mukti Patel