United States: New Jersey Employers Can Now Contractually Shorten Limitations Periods For Employee Lawsuits And Set Other Procedural Terms For Resolving Disputes

On June 19, 2014, the Appellate Division of the Superior Court of New Jersey affirmed an employer's right to control the manner for resolving employment disputes, including permitting an employer to shorten the applicable statute of limitations for state law wrongful termination claims, such as claims under the NJLAD, to six months.

In Rodriguez v. Raymours Furniture Company, Inc., No. A-4329-12T3 (N.J. Super. App. Div. June 19, 2014), a discharged employee brought claims for disability discrimination in violation of the New Jersey Law Against Discrimination (NJLAD) and retaliation for filing a workers compensation claim in violation of common law nine months after he was terminated.  While the statutory limitations period for both of these claims is two years, the employer had included language in the employment application shortening the limitations period to six months.

The two-page application contained the following language in all capitals, just above the signature:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH [THE DEFENDANT] 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 LIMITATIONS TO THE CONTRARY.

The plaintiff signed and dated the application and he was subsequently hired.  Based on these facts, the employer argued that the plaintiff's claims should be dismissed because he previously agreed to and failed to meet a six-month limitations period.  The court agreed.

Rejecting the plaintiff's public policy argument, the court noted that it is already established law that jury waivers and arbitration agreements are enforceable in the employment context, despite the effect of economic pressure on an employee seeking a job on relative bargaining power.  See e.g., Young v. Prudential Ins. Co. of Am., Inc., 297 N.J. Super. 605 (App. Div. 1997); Martindale v. Sandvik Inc., 173 N.J. 76 (2002).  Accordingly, there was no basis to disallow a contractual limitations period, provided it was reasonable.  Given the fact that the NJLAD allowed employees a period of six months to elect whether to bring their discrimination claims before the New Jersey Division of Civil Rights rather than in court, the Appellate Division was "hard pressed" to find the limitations period unreasonable. In addition, the court found determinative the fact that the employment application was simply written and of minimal length, and the operative language was conspicuous as it was in all capitals, right above the signature.

Employers should be aware of the distinction between New Jersey laws and federal anti-discrimination laws in this context.  Unlike New Jersey anti-discrimination laws, federal laws such as the Americans with Disabilities Act and Title VII do not permit an employee to file a claim in court without first filing a complaint with the Equal Employment Opportunity Commission (EEOC).  The court noted that a contractual limitation (i.e., six months) could not be enforced as to federal discrimination claims because it would abrogate the EEOC's exclusive jurisdictional period.

As the volume of employment litigation continues to rise, employers should continue to evaluate contractual provisions that may assist in controlling the costs associated with defending such claims.  Arbitration provisions, jury waivers, and now reducing certain limitations periods are all tools that employers should consider. 

This article is presented for informational purposes only and is not intended to constitute legal advice.