Employers Can't Shorten Time to Sue Under New Jersey Law

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By Kevin McGowan

June 15 — New Jersey employers can't contractually shorten the time within which an employee or applicant can sue under the state's anti-discrimination law, the New Jersey Supreme Court ruled ( Rodriguez v. Raymours Furniture Co., 2016 BL 190248, N.J., No. 07463, 6/15/16 ).

A six-month limitations period contained in an employment application used by Raymours Furniture Co. is unenforceable as a matter of public policy, the state's top court said June 15, reversing a lower court decision. A fired driver alleging disability discrimination by Raymours could proceed because he sued within the two-year limitations period that applies to the New Jersey Law Against Discrimination, the court said.

Raymours's attempt contractually to shorten the limitations period can't be squared with public policies underlying the anti-discrimination law, the court said. A “private agreement that frustrates” the state bias law's “public-purpose imperative by shortening the two-year limitations period” for discrimination claims “cannot be enforced,” Justice Jaynee LaVecchia wrote for a 6-0 court.

Attorneys representing workers applauded the decision, while management lawyers said the ruling enables employees to delay filing bias claims.

The court appropriately stopped regulated employers from “rewriting the legislation” that protects workers from discrimination, said plaintiffs' lawyer Nancy Erika Smith of Smith Mullen in Montclair, N.J.

Both in the workplace and consumer contexts, businesses are trying to enforce “adhesion contracts” that deprive individuals of their legal rights, Smith told Bloomberg BNA June 15.

The decision is “yet another judicial setback” for New Jersey employers “burdened with frivolous employment discrimination claims” that “too often” are filed just before the two-year limitations period expires, said Mark Kluger, of Kluger Healey LLC in Florham Park, N.J.

Plaintiffs' lawyers use the “lengthy” limitations period to “gain an advantage” in discrimination cases because after two years have elapsed, “documents have disappeared, key witnesses have left the company, and the memories of the decision-makers, managers and other witnesses have faded,” Kluger said in a June 15 statement.

Waiver Violates Public Policy

Raymours's application required the applicant, if hired, to agree to bring any employment-related claim against the employer within six months of the challenged employment action. It provided that the applicant waived any statute of limitations to the contrary.

When fired employee Sergio Rodriguez sued alleging disability discrimination, a state trial court dismissed his claim because he filed the lawsuit seven months after his discharge. The New Jersey Appellate Division affirmed, holding the contract's six-month limitations period was enforceable.

But the Supreme Court said the Law Against Discrimination “plays a uniquely important role” in “fulfilling the public imperative” of eradicating unlawful bias. Lawsuits filed under the statute advance the public interest in eliminating bias, as well as the private interests of the workers involved, the court said.

“A shortened time frame for instituting legal action or losing that ability” to sue “hampers enforcement of the public interest,” the court said.

The state Supreme Court in 1993 decided that the two-year statute of limitations for personal injury claims applies to the LAD, which contains no express limitations period.

The New Jersey legislature has “registered its tacit approval” of the two-year period, the court said. Over the past 23 years, the legislature has amended the LAD many times with no change to the court-sanctioned limitations period, the court said.

Permitting an aggrieved worker either to file an administrative claim with the state's Division on Civil Rights or to sue “furthers important public policies,” the court said. Enforcement of the Raymours contract would abridge those interests by limiting workers' rights to go to court with their discrimination claims, the court said.

Although freedom to contract is an important value, the public interest overrides that right when a contract curtails workers' ability to assist in eradicating unlawful discrimination, the court said.

Victory for Workers

The decision is consistent with a “majority of jurisdictions” nationwide that hold a “regulated community” can't set the time limitations for employment or consumer claims, said plaintiffs' lawyer Smith, who submitted an amicus brief for the New Jersey Association of Justice.

The court's ruling is “a big win” for workers, said Bennet Zurofsky, a plaintiffs' attorney in Newark.

Raymours is “an especially aggressive company” that pushed the envelope on limiting employees' access to courts and juries, Zurofsky told Bloomberg BNA June 15.

Contract provisions aimed at shortening the limitations period aren't that widespread, said Zurofsky, who filed an amicus brief for the National Employment Lawyers Association.

Mandatory arbitration agreements are more common and courts have shown a “real lack of sensitivity” regarding the effects of such contractual provisions on workers' rights, he said.

“Too many employers are doing all they can” to avoid their legal obligations to workers, Zurofsky said.

The last part of the court's decision perhaps is the most significant, as the justices make clear Raymours's attempt to shorten the limitations period also was “unconscionable,” he said.

Employers Have Alternatives

The decision's impact depends in part on whether an employer operates in several states, said Martin Aron of Jackson Lewis in Morristown, N.J.

Many jurisdictions other than New Jersey do enforce contracts that shorten the relevant limitations periods for employment-related claims, he told Bloomberg BNA June 15.

Employers also can use other techniques, such as contractual jury waivers and arbitration agreements, that remain enforceable, said Aron, who submitted an amicus brief for the Academy of New Jersey Management Attorneys.

The decision underscores the need for employers to “create and maintain detailed documentation” describing their specific reasons for adverse employment decisions, Kluger said in his statement.

“Unfortunately, unless the legislature acts, employers in New Jersey are now stuck waiting two years to learn whether an adverse employment action will turn into a lawsuit,” Kluger said.

Krumholz Dillon represented Rodriguez. Ballard Spahr LLP represented Raymours.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com