Human Resources News & Insights

Is there a legal time bomb in your employment agreement?

Many companies ask new hires to sign an agreement that limits the time an employee has to file a workplace claim. A recent court ruling could make those employers change their minds.

Tracey Madry, an employee of a concrete manufacturer in Michigan, filed suit against her company claiming a violation of the Family and Medical Leave Act.

Too late, said company officials. Madry had signed a job application that said she agreed to limit her time frame for filing an action against the company.

Here’s the key part of the document she signed:

“I agree that any action or suit against the firm arising out of my employment or termination of employment, including but not limited to claims arising under the State or federal civil rights statutes, must be brought within 180 days of the event giving rise to the claims or be forever barred. I waive any limitations periods to the contrary.”

The federal statute of limitations for an FMLA case is two years — three if the violation is willful.

But Madry by signing the job application, Madry had made a different deal, company attorneys argued. She hadn’t brought her suit within the 180-day time frame, so her claim should be dismissed.

Unreasonable time frame

The judge wasn’t buying it.

The court acknowledged that, “as a general principle, and under certain circumstances, a statute of limitations may be contractually shortened.”

This wasn’t one of those circumstances. The court quoted a Supreme Court ruling in an FLSA case, which noted that decisions interpreting the FLSA have often emphasized the “nonwaivable” nature of an individual employee’s right to a minimum wage and to overtime pay under the Act.

“The same reasoning applies to the FMLA,” the judge wrote — limiting the FMLA’s statute of limitations to six months would limit employees’ opportunity to exercise rights guaranteed by federal law.

Cite: Madry v. Gladiator National Corp. For a look at the full decision, go here.

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  • Getreal

    It sounds like an attorney wrote the document signed by Madry. Was the thinking to let the courts decide its legality if challenged? I have seen similar statements written by companies but tossed out by counsel because they wouldn’t stand up to a challenge. The employer needs to either find an attorney or find a better one.

  • HR Kansas

    You can’t limit the time frame as a condition of employment, otherwise the laws would be meaningless and all employers would have these limitations written into the applications. Now you can limit the time frame during a termination if they sign an agreement to do so as a condition of severence or even payment for accrued benefits (if company policy is to treat unused benefits (liek vacation) as lost upon seperation).