Court Refuses to Enforce Shortened Limitations Period for Title VII Claims

 By: Carol G. Schley, Clark Hill PLC

 

Michigan courts have long recognized the enforceability of shortened statute of limitations provisions in employment-related documents, such as applications and employment agreements.  In general, these provisions significantly shorten the time period that applicants or employees would otherwise have under law to assert claims and file lawsuits against the employer.  Recently, however, the U.S. Sixth Circuit Court of Appeals held that shortened statute of limitations provisions are unenforceable for claims asserted in federal court under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based upon race, color, religion, sex and national origin.

In Logan v. MGM Grand Detroit Casino, Barbrie Logan commenced employment with MGM in 2007.  As part of the hiring process, she signed an application that included a provision requiring her to bring any claims against MGM “no more than six (6) months after the date of the employment action that is the subject of the lawsuit.”  Ms. Logan subsequently resigned her employment on December 4, 2014, which she asserted was a constructive discharge.  She filed an EEOC charge 216 days later, alleging sex discrimination and retaliation in violation of Title VII, and the EEOC issued her a right to sue letter in November 2015.  On February 17, 2016, 440 days after she resigned her employment, Ms. Logan filed a lawsuit against MGM.  The trial court dismissed Ms. Logan’s claims on summary judgment, finding that they were barred by the 6 months limitations period in her employment application.  However, the Court of Appeals reversed and reinstated her claims, primarily relying on two grounds for its decision.

First, the court discussed the detailed enforcement scheme that is encompassed within Title VII, which includes: (i) a requirement that the claimant first file a charge with the EEOC before pursuing claims in court; (ii) specific deadlines for filing an EEOC charge (180 days or 300 days depending on the circumstances); (iii) a deadline for the EEOC to investigate the charge; and (iv) a deadline for the claimant to file a lawsuit once the EEOC issues a right to sue letter (90 days from receipt of the letter).  Further, the court noted that, unlike other federal statutes, Title VII does not only provide for damages to a claimant, but also requires the EEOC to investigate and mediate the dispute as a first step in an attempt to reach a resolution.  According to the court, “Any alterations to the statutory limitation period necessarily risk upsetting this delicate balance, removing the incentive of employers to cooperate with the EEOC, and encouraging litigation that gives short shrift to pre-suit investigation and potential resolution of disputes through the EEOC and analog state and local agencies.”

Second, the Court of Appeals held that Title VII was enacted in order to be “national in scope” and “required uniform enforcement.”  Per the court, allowing parties to contractually shorten the statute of limitations, and allowing courts to determine whether or not such provisions were enforceable based upon state law, would undermine these objectives.  While the court recognized that Michigan courts have enforced contractual provisions shortening the statute of limitations to six months in the employment context, “[i]t is not difficult to imagine, however, that in a different state courts could come to an opposite conclusion on this determination.  This is turn would give rise to the anomalous result that similarly situated plaintiffs in different states would have different rights in the enforcement of wholly federal claims in federal courts.”

What is the upshot of this case for employers?  Statute of limitations provisions that conflict with the time frames in Title VII will no longer be enforced for Title VII claims asserted in federal courts located within the Sixth Circuit (which includes Michigan, Ohio, Kentucky and Tennessee).  However, such provisions will still be recognized and enforced with respect to claims brought in Michigan state courts and may also still be enforced by federal courts for other types of claims.  Therefore, requiring applicants and employees to sign a shortened statute of limitations provision is still recommended, as they are generally an effective way to shorten the time period in which the employer can be sued for many types of claims.  However, employers who require applicants and employees to sign a shortened statute of limitations provision should have the provision reviewed by legal counsel to ensure it encompasses all applicable claims and has the best chance of surviving judicial scrutiny.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  October 2019