Why it matters: Can a California employer cap the length of time an employee has to file suit alleging violations of the Fair Employment and Housing Act (FEHA)? An appellate court decision declined to state that any limitations would be invalid but did conclude that a six-month time period was unreasonable and refused to uphold the provision found in an employment agreement. “It is too short,” the court concluded.

Detailed Discussion

Ashley Ellis was one of several female employees who complained to U.S. Security about a sexually harassing supervisor. The man was eventually terminated. After Ellis later resigned from the company, she filed suit under the FEHA alleging sexual harassment and sex discrimination, retaliation, and failure to maintain an environment free from harassment. The suit was filed within the statutory time limits.

U.S. Security sought to dismiss the suit, relying on a provision in the agreement Ellis signed when she applied for her job as a security guard. The clause stated that “any claim or lawsuit . . . must be filed no more than six (6) months after the date of the employment action,” and waved “any statute of limitations to the contrary.”

A trial court granted the employer’s motion to dismiss Ellis’s suit, upholding the provision.

But the California Court of Appeal reversed, holding that “the shortened limitation provision is unreasonable and against public policy.”

The FEHA is not just any statutory scheme, the court wrote, but an elaborate law with more than 80 sections intended to “protect and safeguard” the rights of employees against discrimination. The statute includes a one-year statute of limitations in which to file an administrative claim with the Department of Fair Employment and Housing (DFEH) from the date of the unlawful act. Another one-year period is provided for an employee to file suit after receiving a right-to-sue letter.

Although parties may agree to contractually shorten a limitations period, the agreed-upon time period must be reasonable, the court said. The provision in Ellis’s agreement “seriously truncates the time she has to vindicate her statutory rights, drastically reducing the time to sue allowed by the FEHA.”

The time period under the statute was determined by the state legislature as providing an effective remedy under the FEHA. “Six months does not provide sufficient time for the effective pursuit of the judicial remedy,” the panel wrote. “It is too short.”

Noting that the legislature extended the statute of limitations for products liability cases from an “unduly short” one-year period to two years, “a fortiori is a six month limitation provision ‘unduly short’ in a FEHA case, which requires that the employee first report the claimed misconduct to the DFEH and await is action before any suit is ripe, necessarily delaying the filing of the complaint,” the court said.

Allowing a shortened limitation period would also thwart the DFEH’s administrative enforcement, the court added, and create anomalous results. “[S]ince the provision runs six months from the ‘date of the employment action’ on which the employee’s suit is based, it would mean different limitations periods for different FEHA claims,” the court explained. “As applied here, for example, one date would run from the time [the supervisor] harassed Ellis, another when her claim that U.S. Security failed to prevent harassment finally accrued, and yet another when she was retaliated against. This is not how the FEHA is designed to operate, with all claims timely if filed within one year from the right-to-sue letter.”

The court rejected U.S. Security’s attempts to argue that the shorter time period would encourage the promptness of bringing actions, writing that “[n]o claim can ever be stale under the FEHA limitations period.”

To read the opinion in Ellis v. U.S. Security, click here.