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Can Employers Contractually Limit an Employee’s Statute of Limitations? The Effect of Employment Contracts in New Jersey

June 1, 2016

By Ashley L. Toth, Esq.*

Key Points:

  • New Jersey permits employees to specifically waive/limit their statutory and common law rights in pre-employment contracts.
  • Current law permits employers to limit an employee’s two-year statute of limitations period in which to file claims against their employer in a pre-employment contract.
  • The New Jersey Supreme Court is expected to release a decision this Spring to determine whether an employer may legally limit an employee’s statute of limitations in a pre-employment contract.

 

 

Employers in New Jersey are anxiously awaiting the New Jersey Supreme Court’s decision in Rodriguez v. Raymour & Flanigan, 93 A.3d 760, 764-765 (App. Div. 2014) to determine whether an employer may contractually limit an employee’s two-year statute of limitations period in which to file claims against their employer. Current law permits New Jersey employees to specifically limit their statutory rights in pre-employment contracts. For example, an employer may require an employee to agree to arbitrate any claims that may arise out of the course of their employment, thus waiving any right the employee may have to file suit in state or federal court. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991).

In Rodriguez, the plaintiff applied for a delivery position with Raymour & Flanigan. The employment application, however, stated that if the employee were hired, he or she would have to agree to the following term:

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 limitations to the contrary.

The plaintiff signed the employment contract, agreeing to waive New Jersey’s applicable two-year statute of limitations period and accept a six-month statute of limitations. Thereafter, the plaintiff worked without issue for approximately three years. In October 2010, however, Raymour instituted a company-wide reduction in force (RIF), laying off 102 employees. The plaintiff was laid off as part of the RIF.

Nine months after the plaintiff was laid off, he filed suit, alleging he was terminated for having filed a prior workers’ compensation claim and due to his disability, in violation of the New Jersey Law Against Discrimination (NJLAD). The NJLAD generally applies a two-year statute of limitations to applicable claims. Here, however, the plaintiff had contractually agreed, in his employment application, to waive the two-year statute of limitations and accept a six-month statute of limitations.

Raymour & Flanigan filed a motion for summary judgment seeking to dismiss the plaintiff’s complaint as time-barred by the contractual statute of limitations. The plaintiff opposed, arguing that the contractual provision was unenforceable as a contract of adhesion and was unconscionable. The trial court agreed with the defendant and granted their motion for summary judgment. “In ruling on the motion, the court concluded that the waiver provision in the initial application ‘is clear’ and ‘is clearly brought to the attention of anybody reading the document because of the capital letters and large print.’” In addition, the trial court “found no basis for a finding ‘that six months is against any public policy or is an unreasonable time within which to bring a claim about which one would know immediately upon the event happening.’”

The plaintiff appealed the trial court’s summary judgment dismissal, and the Appellate Division affirmed. The New Jersey Supreme Court granted certiorari and, on December 1, 2015, heard oral argument on the subject. The Supreme Court’s decision on the issue is expected this Spring. In the meantime, however, employers are left wondering about the similar contractual limitation of actions provision of their current employment contracts.

*Ashley is an associate in our Cherry Hill, New Jersey office. She can be reached at 856.414.6400 or altoth@mdwcg.com.

Defense Digest, Vol. 22, No. 2, June 2016

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2016 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

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Ashley L. Toth
Associate
(856) 414-6400
altoth@mdwcg.com

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