A recent case from the Northern District of Illinois, Lugihibl v. Fifth Third Bank (Case No. 13 CV 7193, March 16, 2015, Kennelly, M.), held that Title VII and ADEA limitations periods can be contractually shortened under certain circumstances, despite the general 300-day limitations to bring such claims in Illinois.
In Lugihibl, a bank employee brought sex and age discrimination and retaliation claims against his employer after he was discharged. While the discharged employee filed his EEOC charge within the 300-day period allowed in Illinois, he filed it after the six-month (or 180-day) period that he contractually agreed to in his incentive compensation agreement for bringing such claims. Specifically, the incentive compensation agreement stated that the employee would not commence an employment-related action “[m]ore than six months after the termination of Employee’s employment, if the action or suit is related to the termination of Employee’s employment,” or “[m]ore than six months after the event or occurrence on which Employee’s claim is based, if the action or suit is based on an event or occurrence other than the termination of Employee’s employment.” The discharged employee also contractually agreed to waive any statute of limitations periods that were contrary to this position.
The bank asserted that it had discharged the employee for a host of legitimate, non-discriminatory reasons and, further, that his EEOC charge of discrimination was untimely in any event since it was filed after the shortened six-month period for bringing such claims. After the employee filed suit in federal court, the bank filed a motion for summary judgment asserting, among other things, that the employee’s discrimination and retaliation claims were time barred by the incentive compensation agreement.
In holding for the bank, the Court expressly held that the relevant contract containing the reduced limitations period was unambiguous, supported by adequate consideration and that the provision was supported by existing law. In reaching this holding, the Court relied on several cases, including the Seventh Circuit in Doe v. Blue Cross Blue Shield United of Wisconsin, 112 F.3d 869 (7th Cir. 1997), and the dominant view in contract law that contractual limitations periods shorter than statute of limitations are permissible, provided they are reasonable. Here, the Court held that there was nothing unreasonable about the six-month time period contained in the contract because the default period for filing an EEOC charge is actually 180 days (or six months). Importantly, the Court’s holding in this case is specifically limited to contractually shortening the limitation period for filing EEOC charges and the Court recognized that an employer cannot contractually limit the time period in which an employee can file a lawsuit in federal court.
In light of the Court’s ruling in Lugihibl, employers should strongly consider whether it makes sense to incorporate a shorter limitations period for filing EEOC charges in employment agreements or other agreements, as it may later be useful in the event an existing or discharged employee decides to file an EEOC charge long after the allegedly discriminatory or retaliatory conduct occurs.