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Sixth Circuit Holds: Contract Provision Shortening Title VII Statutory Limitations Period is Unenforceable

On September 25, 2019, the U.S. Court of Appeals for the Sixth Circuit held in the case of Logan v. MGM Grand Detroit Casino that the enforcement scheme of Title VII and anti-discrimination policy nullify contractual provisions shortening the limitations period provided by Title VII (at least outside of arbitration agreements).
 
Background
 
An MGM casino employee agreed to a six-month limitation period in which to bring claims against MGM as part of her application for employment. After resigning, she sued MGM under Title VII. While the employee sued MGM within the statutory period required by Title VII, the limitation period to which she agreed in her employment application had expired.
 
Title VII provides a detailed enforcement scheme requiring individuals to bring a dispute against an employer before the EEOC for resolution prior to filing suit. The claimant typically must bring this EEOC charge within 180 days of the misconduct, but the time limit is extended to 300 days if a state or local agency has concurrent authority. The EEOC then has exclusive jurisdiction over the charge for 180 days and may issue a right-to-sue letter where appropriate. Once the EEOC resolves the charge and issues a right-to-sue letter, the employee has 90 days to sue the employer.
 
Against this background, the appellate court refused to honor the contractually shortened period. Because the timing of a Title VII claim is complicated, the court reasoned that any alterations to the statutory limitations period may upset the scheme provided by Congress and remove employers’ incentive to cooperate with the EEOC. Additionally, because Title VII creates both rights and remedies, and contains its own limitations period, the Sixth Circuit found that the statutory limitation period is a substantive right which employees generally may not prospectively waive.

Finally, the Sixth Circuit determined that prospective waivers shortening the limitations period would frustrate the uniform application of Title VII. For these reasons, the court concluded that parties may not enforce a contract provision shortening the limitation period of Title VII.

Takeaways for employers

The Sixth Circuit’s decision limits the enforceability of contracts shortening the time in which an employee must bring a discrimination claim in court. However, this decision is limited to cases in which arbitration agreements are not present, so the limitations period may still be contractually shortened to bring a Title VII claim in arbitration.
 
While the limitations period can be shortened in arbitration, any reduction in the limitations period may not be unduly burdensome on the claimant. The Sixth Circuit has previously indicated that a one-year limitation period to bring a Title VII claim to arbitration is not unduly burdensome. Further, Kentucky has a new statute requiring that the limitations period cannot be reduced by more than fifty percent (50%) of the time provided under the applicable law. However, as explained in MGM, the complicated timing scheme under Title VII makes it more difficult to calculate fifty percent of the time provided by law. Accordingly, employers should be aware that this is an important threshold issue to be resolved by some tribunal if they wish to contractually shorten the statute of limitations period to bring a Title VII claim in arbitration. As of now, it is not clear whether that tribunal will be a court or an arbitrator.