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Courts Diverge on Contracts That Shorten Time for #MeToo Claims

May 6, 2021, 9:30 AM

An Ohio police officer’s years-long sexual harassment case ended before she could argue it in court, thanks to a contractual six-month statute of limitations—a scenario that’s garnered attention in the wake of the #MeToo movement and a broader push by states to give workers more time to sue.

The Ohio Supreme Court last month declined to review the case, which could have tested the limits of when businesses can use employment contracts to shorten the time workers have to file harassment and discrimination lawsuits.

State courts, as well as federal appeals courts, have taken different directions on the issue. Some have blessed contracts that shrink limitations periods, and worker advocates say this could allow more employers to shield themselves from potential discrimination litigation.

Historically, shortened statutes of limitation were written into insurance contracts, and the U.S. Supreme Court upheld those clauses for years. But recently, a handful of courts have begun to say such limits aren’t allowed for employment discrimination cases.

“For virtually all the federal statutes that are employment-related statutes, shortened statute of limitations aren’t valid. It’s a matter of state courts catching up,” said Stephen Gard, a law professor at Cleveland-Marshall College of Law. “These provisions are a trap for the unwary.”

In contrast to Ohio, New Jersey’s high court nixed a shortened period for filing an employment discrimination claim in the case of a driver who alleged disability bias, as did a California appeals court in a former security worker’s sex discrimination and retaliation case.

While state courts grapple with that issue, there’s been a legislative push for change after widespread attention focused on persistent harassment in the workplace.

Several states in recent years, including California, Connecticut, Maryland, and Oregon, have extended their statutes of limitations to as long as five years for all discrimination claims. Others like New York have done so for sexual harassment claims only. Similar proposals have been filed in several state legislatures this year, as has a federal bill.

“There was a recognition that the statute of limitations for bringing an anti-discrimination claim is incredibly short,” said Andrea Johnson, director of state policy at the National Women’s Law Center. She said the statute of limitations particularly affects low-wage and marginalized workers. “If you have been fired or left your job because of harassment, the first priority is going to be finding a new job.”

Contractual Shortening ‘Rare’

Before April, Ohio had a six-year filing period for discrimination lawsuits. It also didn’t require workers to first file bias charges with a state agency before suing their employers.

A six-year statute of limitations for employment discrimination isn’t common, as most are two to three years, said Caroline Berdzik, a partner at Goldberg Segalla, who represents employers. She added that shortening that period in an employment contract is also unusual, given that a statute of limitations is typically sacrosanct.

“It’s pretty rare that you would be able to truncate the period and narrow the statute of limitations,” she said. “Whether someone can agree to that, in my experience that’s a difficult hill to climb.”

But that’s what happened in the case of police officer Amanda Fayak, who sued University Hospitals Health Systems in 2017 under the Ohio Civil Rights Law for sexual harassment on the job.

The Ohio Supreme Court last month declined to take up her case, which had been dismissed below because she brought the suit outside a six-month filing period that she agreed to in a contract.

Ohio has for decades allowed employers to contractually shorten the time an employee has to sue for sex-based or other workplace discrimination. Courts in Arkansas, Michigan, New York, Texas, and others have also found similar contractual limitations to be reasonable, according to the lower appeals court that heard Fayak’s case.

Dissenting from the state supreme court majority, Justice Michael P. Donnelly argued that the justices should have reviewed the case because it “presents an issue of great public interest.”

But a new state law that took effect in April could blunt the impact of the court’s decision not to address the contractual issue. The largely employer-friendly law shortened the statute of limitations for discrimination claims to two years, and requires the filing of agency charges before workers can bring a lawsuit.

These changes could mean Ohio employers would no longer try to shorten the statute of limitations by contract, said Gard of Cleveland-Marshall College of Law, who represented Fayak in Ohio state court.

Sixth Circuit

The U.S. Court of Appeals for the Sixth Circuit,whose precedent is controlling in Ohio’s federal courts, has rejected employer attempts to contractually reduce the amount of time a worker has to sue for age and disability discrimination, following similar precedent for federal race and sex bias claims under Title VII of the 1964 Civil Rights Act.

The court in January revived a former Fresh Products worker’s discrimination lawsuit after a federal judge said her disability and age bias claims were too late under a contract she signed. The appeals court determined that her claims were timely under the federal law, but not under state law.

Prior Sixth Circuit judicial panels have approved a shortened limitations period for race discrimination claims under Section 1981 of the 1866 Civil Right Act in 2004, while striking them down for the Fair Labor Standards Act and the Equal Pay Act in 2013, and Title VII in 2019.

Early Reporting Crucial

Only seven states give more than 300 days to file a discrimination charge with a civil rights agency, according to BeBrave, an advocacy group that tracks state statute of limitations.

There are several active proposals to lengthen the time to file discrimination claims, including in Minnesota, New Jersey, Texas, Vermont, and West Virginia. In Texas, the extension would only be for sexual harassment claims, but the others would cover all forms of discrimination.

The length of time to file a claim would be expanded to three years in most of these proposals, except in Minnesota where it would be for 10 years and Vermont where it would grow to six years. Texas’s bill would set a 300-day filing period to file a state agency complaint.

This is an issue important to employers because early reporting and investigation of alleged discrimination is important to proper resolution, said Lindsay Ditlow, an attorney with McDermott Will & Emery, who represents companies.

“All employers want to encourage early reporting,” Ditlow said. “Sometimes these short statute of limitations can accomplish that.”

She said each state will create a different standard, and the #MeToo movement created a dynamic where a lot of women were coming forward and had never raised the issue.

“There is a balance these days that needs to take place,” she said. “Like anything where the law might be in flux, I would advise how such a company policy could be perceived. There are pros and cons to shorten and expand statutes of limitations.”

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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