What kind of employment agreements are enforceable? In filing a claim for a wrong done against you by your ex-employer or to seek for an enforcement of your right against them, you have a time within which you must bring this claim to the court as set out in the statute of limitation. Otherwise, your claim will be time barred and you cannot bring such claim anymore.
Employers try to prove smart by making it a point to use time to their advantage by putting up employment agreements which shortens the time in which an employee could bring any claim either legal or administrative. Hence, the question is, are employment agreements like this which restricts a statute of limitation enforceable?
What does Statutes of Limitation entail?
Generally, a statute of limitation is a law which forbids prosecutors from charging someone with a crime that was committed more than a specified number of years ago. In relation to employment contracts, statutes of limitation require you as an employee to file your claim against an ex-employer within a specific period of time.
Under the Fair Labor Standards Act, the period of limitation for bringing claims is limited to two years.
Enforceable or not?
Often times, employers see a chance to reduce liability against their business when it comes to employment agreements. Hence, they use some of these employment agreements to offset the statute of limitation and shorten its length. However, like every other tool, it has operational manuals and of course, instances where it won’t work.
The enforceability or otherwise of an employment agreement which limits statutes of limitation is in two ways. In some instances, these agreements are considered enforceable while in some instances, they are not enforceable.
In the past, a Michigan district court judge decided on a class action FLSA; the case of Biggs v. Quicken Loans Inc. where he rendered unenforceable an employment agreement which shortened the time frame for within which an employer could bring his claim including a claim under FLSA.
Class of Rights (Substantive/Procedural)
The class of right which such employment agreement seeks to waive is a huge factor in whether or not it would be enforceable. Generally, while procedural rights will almost always be enforceable, employment agreement waivers and limitations in respect of a substantive right (especially the right to a minimum wage) will in most cases be unenforceable.
Location and Jurisdiction
The attitude of courts in various locations and jurisdictions to these agreements also determine whether or not it will be enforceable.
For example, while the courts in some other jurisdictions might be more employee friendly in responding to the status of some of these agreements, Michigan courts have been find through a series of decisions to be more employer friendly when it comes to enforcing contractual limitation periods.
In fact, the Michigan Supreme court makes enforceable any contractual provision which provides for a shortened period of limitation as written. The only exception provided to this is where such provision violates law or public policy. This might not be the case in some other jurisdictions.
The time frame for contract limitation and how reasonable it appears is also a very important factor. In practice, a six month limitation period for employment-related claims have repeatedly been found reasonable and hence, enforceable.
In a nutshell, while employers seek to use these agreements to achieve a reduced liability for their business. It is advisable to know how, where and when to use it as the enforceability is a largely a function of these factors.
Get a Lawyer
Either you are an employer or employee, it is advised that you keep an experienced employment law attorney briefed on the circumstances of your employment agreement. As an employer, an attorney will assist you to totally avoid or reduce the risk of attending employment law claims. While as an employee, you’ll be sure you aren’t signing a document that back you against the wall.