Employer’s attempt to contractually shorten limitations period on FMLA claim fails
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Tuesday, November 28, 2017

Employer’s attempt to contractually shorten limitations period on FMLA claim fails

A contractual provision in an on-line job application which purported to provide for a six-month limitations period for any employment-related claims was unenforceable with respect to an employee’s FMLA claims, ruled a federal district court in Utah in Zisumbo v. Convergys Corp. Finding that the FMLA provides a right employees would not otherwise enjoy, the court concluded that a contractual provision purporting to limit the FMLA’s two-year limitations period impeded that right and therefore violated public policy.

Contractual limitations period. In 2012, the employee submitted an on-line application for employment. The application stated that the employee agreed that any employment-related claims must be brought no more than six months after the action arose, and waived any statute of limitations that was longer than six months. Ultimately, the employee was hired, but was fired just over a year later on June 28, 2013. During her employment, she had taken some medical leave before being fired. She subsequently received notice from the employer that her health insurance policy through the company had been retroactively cancelled months before her termination, leaving her responsible for various unpaid medical bills.

Subsequently, a collections agency sued the employee to collect on unpaid medical bills. Those claims were settled and the employee brought a third-party complaint asserting FMLA and ERISA claims against the employer.

The employee’s complaint was filed on June 25, 2014, just under a year after her termination. Thus, her claims were timely under the statutory limitations period for the FMLA (two years) and ERISA (six years), but untimely under the restricted six-month contractual limitations period. The question then was whether her employment application validly altered the statutory limitations period for any claims under the FMLA and ERISA. The parties filed cross-motions for summary judgment.

FMLA claims. With regard to her FMLA claim, the employee argued that the application’s provision purporting to limit the two-year FMLA statutory limitations period to six-months was unenforceable because it violated public policy. While the general rule is that parties may contract to limit the statutorily-prescribed time to bring a lawsuit, their ability to do so is limited in two ways: (1) there must be no “controlling statute to the contrary,” and (2) the shorter limitations period must otherwise be reasonable.

District courts that have addressed the issue of whether parties may contractually limit the FMLA’s two-year limitations period have split on the issue. At the heart of the split is whether limitations periods are more properly considered a right employees or a procedural protection afforded employers. The FMLA itself prohibits an employer from interfering with or restraining an employee’s rights under the FMLA (but says nothing of expanding procedural protections for employers.)

The majority view is that a contract shortening the statutory two-year limitations period impedes that right and therefore violates public policy. However, a minority of district courts have concluded that statutes of limitations are not “rights” given to employees but instead “more correctly exist for the protection of defendants,” so contractually restricting them does not implicate statutory and regulatory provisions prohibiting interference with or waiver of FMLA rights.

In Zisumbo, the district court observed that while the Tenth Circuit had not weighed in on the matter, it nevertheless concluded that the majority interpretation was the better argument—that is, that contractual provisions restricting the statutory FMLA limitations period violated public policy and was therefore unenforceable.

The court noted that the FMLA expressly prohibits an employer from interfering with or restraining an employee’s rights under the FMLA, including the right to bring a federal suit within two years of any violation. Here, the six-month limitations period in the employment application interfered with those rights, and consequently ran afoul of the proscription on interfering with rights under the FMLA. Accordingly, the application’s shortened limitations period was contrary to public policy, and not enforceable.

ERISA claims. With regard to the employee’s ERISA claim, the district court noted that ERISA has no analogous provision precluding an employer from contractually restricting the statutory limitations period. In fact, both the Supreme Court and the Tenth Circuit have recognized that parties may contractually limit the time to bring ERISA claims. Therefore, the court concluded that the contractual six-month limitations period did not violate public policy as applied to the employee’s ERISA claim.

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