News & Updates

New Jersey Supreme Court Nixes Shortened Timeframe for LAD Claims June 27, 2016

The New Jersey Supreme Court recently overturned the longstanding policy of permitting employers and employees to agree to a shortened timeframe for an employee to file a discrimination suit under the New Jersey Law Against Discrimination (LAD). The case, Rodriguez v. Raymours Furniture Co., concerned the enforceability of a shortened statute of limitations contained in an employment application. The language in dispute, written in all capital letters and bold font, stated, “I agree that any claim or lawsuit relating to my service with [Defendant] must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.” The plaintiff signed the application and began his employment. 

Following a workplace injury in April 2010 that required surgery, the plaintiff returned to work in late September 2010 and was terminated two days later as part of a reduction in force. The plaintiff eventually sued — nine months after his termination — alleging he was terminated for his actual or perceived disability in violation of the LAD and in retaliation for obtaining workers’ compensation benefits.

The defendant sought summary judgment based on the waiver provision of the employment application. The plaintiff responded, in part, that the provision was void as a matter of public policy.

The trial court granted summary judgment, noting that the provision was clear and unambiguous, based in part on its capital letters and bold print, and that the contractually shortened statute of limitations was neither unreasonable nor against public policy. The appellate court affirmed. It also noted that the statute of limitations to bring a matter to the administrative agency charged with enforcing the LAD, the New Jersey Division on Civil Rights (DCR), is six months; therefore, contractually shortening the statute of limitations to bring suit to mirror that timeframe did not prohibit the plaintiff from pursuing a remedy under the LAD.

The Supreme Court reversed, holding that the LAD is “a law designed for equal parts public and private purposes,” and thus deserved to be treated differently than other private contractual agreements that “limit private claims by shortening the generally applicable statute of limitations.” Focusing of the public purpose of the LAD, the court noted that “responsible employers are partners in the public interest work of eradicating discrimination.” As a result, “[r]estricting the ability of citizens to bring LAD claims is antithetical to that societal aspiration and defeats the public policy goal.”

The Supreme Court noted that it applied the two-year statute of limitations period to LAD claims in 1993 in Montells v. Haynes, 133 N.J. 282 (1993), and that the legislature has signaled its approval for that limitations period by not acting to modify it in more than 20 years. The court further opined that the shortened limitations period discouraged litigants from using the DCR process, which is designed to more swiftly address complaints of discrimination and supports the strongly favored utilization of alternate dispute resolution procedures, and diminishes the role of the DCR to address discrimination, despite the legislature’s intentions otherwise.

The court acknowledged that its holding did not preclude an individual from contractually agreeing to submit his or her statutory LAD claim to an alternative dispute process, like arbitration, which often contains a truncated time period to bring a claim. However, where, as here, the time period is so reduced as to effectively foreclose a litigant from seeking a remedy at the DCR, a remedy which “must remain accessible and vibrant,” then it interferes with the public interest in eradicating discrimination. The court’s primary focus was on the accessibility of the DCR. This suggests that so long as an arbitration agreement does not prevent an employee from pursing a complaint with the DCR, it may contain a limitations period of fewer than two years. This leaves open the possibility that employers may still be able to shorten the time in which an employee may pursue claims in an alternative dispute resolution forum, so long as the agreement at issue does not alter the time in which an employee may pursue a complaint with the DCR. We anticipate this issue may be litigated in the future.

The decision is important for employers in determining what mechanisms remain available to limit the filing period for discrimination claims under the LAD. Employers should seek guidance from experienced legal counsel to ensure its policies, employee handbook, and other documentation conform to these new legal requirements, and to determine what defenses may be available when facing claims of discrimination and retaliation.

For more information on the potential impact of this decision on your organization, contact:

 

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