Employment Law Daily Contractual provision shortening two-year limitations period for NJ LAD claims unenforceable
Friday, June 17, 2016

Contractual provision shortening two-year limitations period for NJ LAD claims unenforceable

By Kathleen Kapusta, J.D. A private agreement that frustrates the public purpose imperative of New Jersey’s Law Against Discrimination by shortening the two-year limitations period for private LAD claims cannot be enforced, ruled a unanimous New Jersey Supreme Court, addressing a question of first impression. The LAD plays a uniquely important role in fulfilling the public imperative of eradicating discrimination, the state high court emphasized, observing that a "shortened time frame for instituting a legal action or losing that ability hampers enforcement of the public interest." Accordingly, the court reversed the decision of the court below that enforced an employer’s contractual six-month limitations period for bringing employment-related claims (Rodriguez v. Raymours Furniture Co., Inc., June 15, 2016, LaVecchia, J.). When the employee, who was not proficient in English, applied for a job with Raymours Furniture Company, he took the application home so that a friend could translate parts of it for him. The application included a provision stating that any claim or lawsuit against the company had to be filed within six months of the employment action giving rise to the lawsuit and waiving any limitations period to the contrary. Termination and lawsuit. The employee injured his knee and required surgery and physical therapy. Two days after he resumed full-duty work, he was terminated. Nearly seven months after he was fired, he sued Raymours alleging disability discrimination in violation of the LAD. Granting the employer’s motion for summary judgment, the trial court found the six-month limitations period was clear and unambiguous and was neither unreasonable nor against public policy. Affirming, the state appeals court held that absent a controlling prohibitory statute, parties may modify a statute of limitations so long as the shortened time period is reasonable. Privileged place. "The LAD occupies a privileged place among statutory enactments in New Jersey," declared the state supreme court, explaining that in "justifying the LAD’s enactment, the Legislature voiced its reasons for declaring abhorrence to discrimination in this state." The court also pointed out that in its Montells v. Haynes decision, it found the two-year limitations period applicable to personal injury actions comported with the purpose of the LAD, which was silent as to a limitations period, and provided needed uniformity. Twenty-three years later, said the court, the legislature has registered its tacit approval of that determination. The court next pointed out that to pursue relief under the LAD, a person alleging discrimination can file a complaint with the Division on Civil Rights (DCR) within six months of the cause of action or file a lawsuit in the superior court within two years. Permitting an aggrieved party to bring a discrimination claim to the DCR within six months furthers important public policies, the court explained, noting that it allows for an alternative dispute resolution of the discrimination claim. And while the DCR process is designed to provide more timely resolution than a court action, the court observed that this "aspirational goal" may not always be met and thus a party may withdraw the DCR complaint and proceed in court as long as the DCR has not made a final determination. This legislatively designed scheme acknowledges and allows a litigant to potentially utilize both forums, subject to the outer limit of the two-year limitations period for bringing an action in court, when the administrative procedure lags, the court explained. In addition, permitting the aggrieved person to bring a claim to the DCR allows the DCR to perform the function that the LAD mandates: prevent and eliminate discrimination. "The DCR," said the court, "represents the aggrieved public, which has been injured by the perpetuation of discrimination that our society deems intolerable." Freedom to contract. Turning to the strong belief in the freedom to contract, the court found this right must recede to "‘prevent its abuse, as otherwise it could be used to override all public interests.’" And while the issue here arose in a private action under the LAD, the court found that like all LAD actions, it "concerns more than a purely private cause of action affecting only private interests," as the private right of action authorized by the LAD advances and fulfills the private and legislatively declared public interest in the elimination of discrimination. "Hence, said the court, "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. If allowed to shorten the time for filing plaintiff’s LAD action, this contractual provision would curtail a claim designed to also further a public interest. As to the LAD, there is a marriage of interests that cannot be divorced." Moreover, said the court, the legislature’s more than two-decades-long acceptance of the two-year limitations period established by Montells for LAD claims has woven that limitations period into the fabric of the LAD. A shortening of this period would thwart the legislative scheme that includes the DCR remedy as a meaningful option. In fact, the court stated, the contractual limitations period at issue here "works as an effective divestiture of the right to pursue an administrative remedy," the court observed, noting that "the public interest in rooting out forbidden discrimination may not be lightly contracted away by private arrangement." Further, a statute of limitations period shorter than two years effectively eliminates claims as it may take time for an individual to realize he’s been the victim of discrimination and to bring a claim to an attorney. Thus, the shortened limitations period can lead to the dismissal of meritorious LAD claims. Nor can it be overlooked that case law has built in powerful incentives for employers to first receive workplace complaints, investigate them, and respond appropriately to limit their liability. Thus, any shortening of the limitations period would seriously affect an employer’s ability to protect itself. "Employers are partners in promoting the public policy of this state to deter and eradicate forbidden discrimination," the court observed. In this case, the court found that the employee’s substantive right to utilize all available avenues of relief, in tandem, was effectively foreclosed. Review of the interplay between the LAD’s administrative remedy and the right to file in superior court, and the joint public and private interests that are advanced by an LAD discrimination claim pursued in either forum, compelled the state high court to conclude that the contractual shortening of the LAD’s two-year limitations period for a private action is contrary to the public policy expressed in the LAD. Stating that the DCR remedy must remain accessible and vibrant, the court found that the LAD’s anti-discrimination public policy may not be contractually curtailed by a limitation on the time for such actions. Thus, the waiver provision at issue was unenforceable as to the LAD.

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