Can New Jersey Employers Set Time Limits for Lawsuits?

Under New Jersey’s statute of limitations, workers generally have two years to file an employment lawsuit. However, employers can amend that deadline by contract, as confirmed by a recent decision by the Appellate Division of the New Jersey Superior Court.

The dispute in Rodriguez v. Raymour Furniture Company, Inc. centers on a two-page application form completed by Plaintiff Sergio Rodriguez (Rodriguez) during his hiring process to become a delivery driver for Raymour Furniture Company, Inc. (Raymour). Rodriguez completed the application with the assistance of a friend, as he contends his ability to read or speak English is limited.

The application stated in capital letters: “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.” It also contained the following warning: “Read carefully before signing—if you are hired, the following becomes part of your official employment record and personnel file.”

After several years on the job, Rodriguez was laid off during a company-wide reduction in force (RIF). While Raymour stated that the employment decision was performance-related, Rodriguez subsequently filed a wrongful termination suit, alleging that he was terminated in retaliation for having filed a workers’ compensation claim and was discriminated against based upon disability, in violation of the Law Against Discrimination (LAD).

Raymour sought to dismiss the suit on the basis that the complaint was time-barred under the terms of the application. In response, Rodriguez argued that the shortened limitation period was unconscionable and therefore unenforceable.  The trial court dismissed the suit, noting that parties can validly enter into agreements to limit the time within which lawsuits can be brought “provided that it’s a reasonable limitation, [and] does not violate public policy.”

The Court’s Decision

The Appellate Division affirmed the dismissal. While the panel found the application form was a contract of adhesion, it ultimately concluded that did not make it per se unconscionable and unenforceable. In so ruling, the court highlighted the long line of case law allowing contractual reductions of limitation periods, so long as they are reasonable and not contrary to public policy.

In this case, the court noted that the contract was short and easily understood; further, the clause at issue was conspicuously placed in all capitals, right above the signature line. With regard to Raymour’s bargaining power, the court noted that Rodriguez was “under no compulsion to pursue the application if he was dissatisfied with any of the terms of employment, including the shortened limitation period.”

The court rejected the notion that the deadline was distinguishable from jury waivers and arbitration agreements, which are enforceable in the employment context, because the statutory right being waived eliminates any forum in which to seek a remedy if the contractual limitation period is missed

“This argument presupposes that an individual signing an agreement is not aware of what is in it and therefore would not know when his or her filing deadline would occur,” the opinion states. “An individual who signs an agreement is assumed to have read it and understood its legal effect,” and that is true “even if a language barrier is asserted.”

The Supreme Court of New Jersey will likely have the final say, as Rodriguez has stated he plans to appeal. Please stay tuned for updates.

If you have any questions about the this case or would like to discuss your company’s employment contracts, please contact me, Joel Kreizman, or the Scarinci Hollenbeck Labor and Employment attorney with whom you work.