In some jurisdictions, such as Michigan, an employer may be able to shorten the statute of limitations for an employee to file an employment discrimination lawsuit. Shortened limitations periods are sometimes included in employment applications, employment agreements, andor employee handbooks provided to employees. For example, although an employee may normally have three years to file a sexual harassment lawsuit under applicable state law, an employer may attempt to shorten that period to less than three years by substituting a six-month limitations period. If an employee fails to file a lawsuit within the shorter limitations period, the lawsuit may be barred as untimely. Assuming a reduced limitations period is generally permissible in your jurisdiction, it may not, according to a recent federal appellate court decision, serve to bar all employment-related claims filed outside the shortened limitations period.
The Sixth Circuit Court of Appeals recently held in Boaz v. FedEx Customer Info. Services, Inc. that a shortened six-month limitations period did not bar claims arising under the FLSA or the Equal Pay Act (EPA), which was enacted as an amendment to the FLSA. In the case, the employee filed a lawsuit claiming she was she denied overtime compensation in violation of the FLSA and was paid less than her male predecessor, who performed the same duties. However, she failed to file her lawsuit within the six-month limitations period set forth in her employment agreement, which provided: “To the extent the law allows an employee to bring legal action against [the company], I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis for my lawsuit, whichever expires first.”
Under the FLSA, an employee generally has two years (or three years for willful violations of the FLSA) to file a claim. Also, unlike with most other employment claims, courts have generally concluded that employees may not waive claims arising under the FLSA without the prior approval of the U.S. Department of Labor or the court. The question in the Boaz case was whether the shortened six-month limitations period operated as a waiver of the employee’s rights under the FLSA. The Sixth Circuit held that the reduced limitations period indeed operated an impermissible waiver of the employee’s FLSA claim and was, therefore, invalid. The Court concluded that the same rationale applied to the employee’s EPA claim which likewise could not be waived.
This recent decision reminds employers that they should be aware that otherwise enforceable shortened limitations periods — where a state allows such limitations shortening — may not serve to bar all claims, particularly those arising under the FLSA or EPA. The waiver or settlement of FLSA or EPA claims requires U.S. Department of Labor or Court approval.