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Employers Cannot Shorten Time Frame to Bring Claims Under N.J. LAD

June 16, 2016

By Emily J. Hanlon

In a decision issued yesterday in Rodriguez v. Raymours Furniture Company, the Supreme Court of New Jersey ruled that provisions in employment agreements shortening the limitations period for bringing claims under the New Jersey Law Against Discrimination (LAD) are unenforceable.

At issue in the trial court was the disability discrimination claim of a Raymour & Flanigan employee who, after suffering a work-related injury requiring a five-month absence from work, was terminated as a part of a reduction-in-force just two days after resuming his full-duty responsibilities. In his employment agreement, the plaintiff agreed 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.” Plaintiff further agreed: “I waive any statute of limitations to the contrary.”

The trial court granted Raymour & Flanigan’s motion for summary judgment based on the six-month contractual limitation provision, as plaintiff had not brought suit until seven months after his termination. The Appellate Division affirmed.

Reversing the trial court’s decision, the Supreme Court focused on the public policy interests embodied in the LAD, noting that the Appellate Division had focused only on cases that generally dealt with private agreements to shorten statutes of limitations pertaining to common law actions, and had not “engage[d] in any searching analysis of whether public policy was contravened by the shortening of a limitations period for a public interest statute.”

The Supreme Court reviewed the legislative history of the LAD and decisional law recognizing the private and public interests in eradicating discrimination that are intertwined in and furthered by the LAD, also noting that the Legislature has acted only to strengthen the LAD over time, adding more protections and for more classes of individuals. The court concluded that contractual shortening of the LAD’s two-year limitations period is not simply shortening a limitations period for a private matter, and rather is contrary to the important public policy expressed in and by the LAD.

The Court further reasoned that because discrimination claims take time to pursue, shortening the limitations period effectively eliminates claims. The Court also noted that shortening of the limitations period “would seriously affect an employer’s ability to protect itself,” given that there are powerful incentives on employers “to first receive workplace complaints, investigate them, and respond appropriately to limit their liability,” and that such investigations take time.

Additionally, the Court reasoned that shortening the limitations period would foreclose plaintiffs from choosing alternative avenues of relief in tandem. The LAD permits employees to first file a complaint in the Division on Civil Rights within six months of the employment action, and then withdraw the DCR claim and proceed in Superior Court at any time before the DCR makes a final determination and within the two-year statutory limitations period. Shortening the limitation period to six months forces plaintiffs to choose between filing an administrative claim or a claim in Superior Court within that time period, cutting off the option of filing first in the DCR and then later in the Superior Court.

For employers who have agreements shortening the limitations periods under the NJ LAD, such agreements are now unenforceable. Also, be aware that this decision may impact time-shortening agreements under other New Jersey employer protection statutes, such as the Conscientious Employee Protection Act.

For more information regarding this or other labor and employment issues, please contact Emily J. Hanlon, a member of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

 

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