In a departure from historical precedent, where courts upheld agreements requiring employees to bring claims against their employers more quickly than otherwise required by law, the Sixth Circuit Court of Appeals (which covers Michigan, Ohio, Kentucky and Tennessee) has now prohibited such shortened limitation periods in discrimination lawsuits brought under the federal Civil Rights Act of 1964 (also referred to as Title VII).
It had become increasingly common for employers to require its employees to agree to bring any claim or lawsuit arising from their employment within a shorter period of time – often six months after the complained-of event - than would otherwise be permitted by applicable law. Such agreements are typically found in employment applications or other employment agreements.
In the last several decades, both state and federal courts have found such agreements to be enforceable, although exceptions were recognized for claims brought under the Family and Medical Leave Act (FMLA) and the Fair Labor Standards Act (FLSA), both of which contain express language prohibiting employees from waiving claims under those laws. On September 25, 2019, however, in Logan v. MGM Grand Detroit Casino, the Sixth Circuit carved out a new exception to agreements limiting the time in which to bring suits, concluding that such an agreement between MGM and its employee violated Title VII. Title VII prohibits employment discrimination based on various protected classes such as race, gender, religion and national origin, but requires an employee to first file a discrimination charge with the Equal Opportunity Commission (EEOC) before filing a lawsuit in court. Such employees generally have 300 days in which to file discrimination complaints with the EEOC. In Logan, the Court of Appeals held that, given the importance of the EEOC process (as evidenced by the agency’s elaborate administrative framework, created by Congress) parties cannot agree to waive that 300-day period in which such claims can be filed.
Several critical takeaways:
- This decision only applies to federal discrimination claims brought under Title VII. It does not apply to state discrimination lawsuits, such as those brought under Michigan’s Elliott-Larsen Civil Rights Act, or other state law claims, such as defamation or assault.
- For now at least, the decision only applies to suits brought under Title VII, and not lawsuits alleging age discrimination (Age Discrimination in Employment Act) or disability discrimination (Americans with Disabilities Act). Given the similarities between the administrative framework applicable to those suits and the Title VII EEOC process, it would not be entirely surprising if subsequent courts also prohibited shortened limitations periods for ADEA and ADA suits.
Even so, there are still advantages to requiring employees to shortened limitation periods. Employers that do not require such waivers may want to start doing so. Employers that already use these agreements should continue to do so. However, all employers should be aware that limitations-shortening agreements offer less of a shield against Title VII litigation than they did a few weeks ago. For specific information on how to incorporate an enforceable agreement of this nature in employment documents, employers should consult counsel.