New Jersey Appellate Court Upholds Agreements Shortening the Statute of Limitations for Employment-Related Claims

On June 19, 2014, in Rodriguez v. Raymours Furniture Company, Inc., the New Jersey Appellate Division upheld the validity of a provision in an employment application form by which the job applicant agreed that, if hired, he or she would bring any employment-related claim within 6 months after the claim arose. Plaintiff alleged he was terminated because of a disability in violation of the New Jersey Law Against Discrimination (“LAD”) and in retaliation for having filed a workers compensation claim. The Appellate Division held that because the plaintiff brought these claims 9 months after his termination they were barred by the 6-month limitations period in the application form even though they were brought well within the 2-year statute of limitations period otherwise applicable to these types of claims.

Background

When plaintiff applied for a job with defendant in 2007 he was required to complete an application form which included the following language:

READ CAREFULLY BEFORE SIGNING – IF YOU ARE HIRED, THE FOLLOWING BECOMES PART OF YOUR OFFICIAL EMPLOYMENT RECORD AND PERSONNEL FILE.

* * * * *

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.

In 2010, plaintiff completed another application form in connection with his promotion to a new position. This form did not contain a provision shortening the period in which to bring an action against the company.

In July of 2010, plaintiff underwent surgery for a work-related knee injury and returned to work in September. On October 1, 2010, he was terminated as part of a company-wide reduction-in-force (“RIF”). According to the company, plaintiff was selected for the RIF because of performance problems.

In July of 2011, plaintiff filed suit alleging that his termination was (1) the result of disability discrimination in violation of the LAD and (2) in retaliation for the workers compensation claim he had filed in connection with his knee injury. The trial court granted the company’s motion for summary judgment, agreeing with the company that plaintiff’s claims were time barred by the 6-month limitation period in plaintiff’s original employment application, despite the 2-year limitations period otherwise applicable to LAD and workers compensation retaliation claims.

The Appellate Division’s Opinion

The Appellate Division agreed with plaintiff that the job application containing the 6-month time period in which to sue was a contract of adhesion, as it was self evident the form was non-negotiable. Nevertheless, the court ruled that contracts of adhesion are not unconscionable per se and held that plaintiff had failed to demonstrate that the shortened period in which to sue was unconscionable.

The court concluded that the provision was not procedurally unconscionable because, rather than being “buried in a large volume of documents,” it was contained in a two-page form “and set forth very conspicuously in bold oversized print and capital lettering, just above the applicant’s signature line. The terminology was clear and uncomplicated. In addition, Plaintiff was put under no pressure to complete and sign the application quickly. Indeed, he was permitted to take it home and complete it at his leisure, which he did …” (The court also noted that while the defendant was in a superior bargaining position, it did not hold a monopoly on jobs of the type for which plaintiff was applying. “Plaintiff was under no compulsion to pursue the application if he was dissatisfied with any of the terms of employment, including the shortened limitation period ” The court therefore found that the inequality of bargaining power between the plaintiff and the company was not an unusual circumstance in the employment setting and did not by itself render the limitations provision unconscionable.)

The Appellate Division also determined that the provision was not substantively unconscionable. The court cited a number of court decisions from other jurisdictions upholding similar provisions and noted that plaintiff had failed to cite to any contrary authority. The court distinguished court rulings invalidating 6-month limitations periods for claims brought under the federal employment discrimination laws, because under federal law a claimant before suing must file a charge with the EEOC, which maintains exclusive jurisdiction over the matter for 180 days. Thus a 6-month limitations period could preclude the employee from bringing suit altogether. The court also noted that the New Jersey legislature itself had imposed a 6-month limitations period for the option of filing an administrative claim under the LAD, and thus “we are hard pressed to judicially declare that six months is an unreasonable, conscience-shocking time period in which a claimant must choose the other available route, a civil lawsuit.” The Appellate Division declared that whether a shorter limitations period for court suits was consistent with the goals of the LAD was a matter for the legislature to consider, not the courts, and that to date the legislature had not exhibited any concerns generally about contractual terms that shortened the statutory limitations period.

Finally, the court declined to give any legal significance to the fact that the application plaintiff signed in connection with his promotion did not contain a provision shortening the period in which to bring suit against the company. The court rejected plaintiff’s contention that the application for the promotion constituted a “novation,” ruling that a novation cannot be presumed and finding no evidence that the parties intended to extinguish the limitations period in the original job application.

Richard S. Zackin is a Director in the Gibbons Employment & Labor Law Department.
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