Seyfarth Synopsis: The Supreme Court of New Jersey rules that employers may not shorten the statute of limitations for claims of discrimination under the New Jersey Law Against Discrimination via private contract.

The law often gives employers and employees the option to resolve employment-related disputes via private contract. Examples include arbitration agreements, severance agreements, non-compete agreements, etc. In Rodriguez v. Raymours Furniture Company, Inc. (previously discussed here), the New Jersey Supreme Court abridged the employer’s prerogative to resolve employment dispute via private contract, holding that employers are prohibited from shortening the 2-year limitations period under the Law Against Discrimination (“LAD”).

Overview

In Rodriguez v. Raymours Furniture Company, Inc., the plaintiff, an Argentinian immigrant with limited proficiency in English, was hired as a Helper for Raymour & Flanigan in early 2007. At the time of his hiring, plaintiff completed an application that clearly provided in capitalized font, that any claim or law suit against the company must be filed within six months, and that he “waives any statute of limitations to the contrary.” Although plaintiff testified that he was unable to read much of the application, he conceded that he had certain portions translated by a friend and had no questions about the document's content at the time he applied. Nevertheless, plaintiff filed a lawsuit under the LAD seven months after his termination (and one month beyond the contractual limitations period), claiming that the shortened limitation period was unconscionable and contrary to public policy, and urging the court to “judicially impose a prohibition on agreements shortening limitation periods specifically in employment contracts.”

The trial court granted the company’s motion for summary judgment and dismissed the case. On appeal, the Appellate Division affirmed, declining to legislate from the bench and holding that although the application was a contract of adhesion, it was neither procedurally nor substantively unconscionable and did not contravene public policy. The court considered that plaintiff was fully aware of the fact that he was truncating his limitation period, that the disputed provision was conspicuous and that courts nationwide that have considered shortened limitations periods in employment contracts have given them widespread approval.

Supreme Court Decision

Rather than analyze the body of law approving private agreements to shorten statutes of limitations as did the Appellate Division, the Supreme Court chose to focus on the “public interest purpose of the LAD.” According to the Supreme Court, the LAD has an unequivocal goal to “eradicate” the cancer of discrimination, and thus the purpose of the LAD is to serve both public and private interests.

The Supreme Court was persuaded that the New Jersey legislature tacitly approved a 2-year statute of limitations for the LAD because they have not addressed the issue since the Supreme Court first decided upon the applicable limitations period in 1979, despite numerous other amendments to the LAD. Furthermore, the Supreme Court held that the legislature’s scheme for the LAD acknowledges that allegedly aggrieved individuals have the opportunity to bring an LAD claim to the New Jersey Division of Civil Rights within 6 months, or, in the alternative, to pursue a remedy within 2 years via the judicial process. Thus, employers would be acting contrary to legislative intent by circumventing the dual-forum availability with a contractual 6-month statute of limitations.

The Supreme Court also found that that “a contractual limitation on an individual’s right to pursue and eradicate discrimination of any form prohibited under the LAD is not simply shortening a limitations period for a private matter.” Rather, “if allowed to shorten the time for filing plaintiff’s LAD action, [the] contractual provision would curtail a claim designed to also further a public interest.”

Implications for Employers

Notably, this decision puts New Jersey at odds with many other jurisdictions countrywide. For instance, in New York, in Hunt v. Raymour & Flanigan, the Appellate Division, Second Department, recently decided the same issue involving the same employer and employment application, in favor of the company.

This case also departs from the prior holdings of New Jersey’s Appellate Division, and thus employers who relied on those prior decisions to contractually shorten limitations periods should review and revise those provisions now.