The New Jersey Supreme Court has overturned an appellate court decision that allowed a shortened limitations period for filing discrimination claims under the New Jersey Law Against Discrimination (“LAD”). Rodriguez v. Raymours Furniture Co., Inc., No. 074603 (June 15, 2016). In a case of first impression, the Court unanimously held that a private agreement shortening the two-year statute of limitations period for private LAD claims cannot be enforced.

Background

Nine months after his termination, Sergio Rodriguez filed a lawsuit in the Superior Court of New Jersey alleging that his former employer, Raymours Furniture Company, Inc., among other things, violated the LAD by discriminating against him based on his disability.

While the LAD itself contains no statute of limitations for bringing claims in state court, the state Supreme Court had established a two-year limitations to bring a suit.

The employer moved to dismiss Rodriguez’s claims, arguing that his complaint was time-barred under a waiver provision in Rodriguez’s initial employment application. The waiver required an applicant, if hired, to agree to bring employment-related causes of action against the employer within six months of the allegedly improper employment action.

The trial court granted the employer’s summary judgment motion and dismissed the complaint as time-barred.

On appeal, the Appellate Division upheld the trial court’s decision, finding the waiver provision that shortened to six months the two-year statute of limitations for filing claims against the employer enforceable.

Not Enforceable

The New Jersey Supreme Court disagreed with the lower courts.
It ruled a private agreement shortening the LAD statute of limitations period is unenforceable because:

  1. The legislature has effectively approved the two-year statute of limitations by not amending the LAD to provide for any other limitations period since it was established by case law 23 years ago and has acted consistently only to strengthen the LAD;
  2. The shortening of the limitations period would thwart the legislative scheme that gives an employee the option of taking his or her claim to the New Jersey Division on Civil Rights (“DCR”) within six months of the alleged unlawful employment action or filing a claim in the Superior Court within two years of the alleged unlawful employment action. The Supreme Court held that a shortened limitations period would work “as an effective divestiture of the right to pursue an administrative remedy” in the DCR. In essence, the Court viewed a six month limitations period as an insufficient period of time for a claimant to see if that agency would be able to provide remedial relief;
  3. Allowing a shortening of the statute of limitations might lead to the dismissal of otherwise meritorious LAD claims, as an employee does not always immediately realize that he or she was a victim of discrimination and needs time to take his or her claims to an attorney;
  4. Attorneys may file LAD actions prematurely in order to meet the shortened statute of limitations period. The Supreme Court noted that it may take attorneys “many months” to conduct a proper investigation to determine whether an employee’s claim is meritorious; and
  5. Shortening the statute of limitation period would affect an employer’s ability to protect itself, as employees would have to file claims before the employer was able to fully investigate and respond appropriately to a complaint.

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New Jersey employers having agreements with their employees shortening the time to file a LAD claim (i.e., to less than two years) will no longer be able to enforce those agreements in litigation. Employers that operate in other states may still be able to enforce the waiver after evaluating the risks and benefits. After proper consideration, some employers may choose to include these waivers along with other provisions such as jury waivers.