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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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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