Courts Are Divided on Whether Employers and Employees Can Contractually Agree to Shorter Limitations Periods

Last month, as we discussed in our December 2020 E-Update, the U.S. Court of Appeals for the Fourth Circuit issued a case holding that employers and employees can contractually agree to shorten the statute of limitations (i.e. the time within which a claim must be filed) for statutory employment claims, such as discrimination. But this month, the Sixth Circuit reached the opposite conclusion.

In Thompson v. Fresh Products, LLC, the Sixth Circuit reaffirmed its long-standing position that statutes of limitations set forth in federal discrimination laws, such as Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, are substantive rights that cannot be waived. Thus, a circuit split exists on this issue, and whether employers may rely on a contractual agreement to shorten limitations period will depend on the circuit in which the employer is located – with many circuits yet to weigh in. This split may ultimately need to be resolved by the Supreme Court. Employers considering such a contractual provision should consult with counsel regarding its enforceability in the applicable jurisdiction.