On August 6, 2013, the Sixth Circuit Court of Appeals (the federal jurisdiction that includes Michigan) ruled that provisions in employment agreements that shorten the statute of limitations period in which employees are permitted to file claims under the Fair Labor Standards Act (FLSA) and Equal Pay Act (EPA) are invalid.
Specifically, in Boaz v FedEx Customer Information Services, Inc. (PDF), the employee claimed that she was paid less for performing the same duties as a male employee and that FedEx failed to pay her overtime.
In response to the complaint, FedEx sought to rely on its employment agreement in defending the claims, which provided, “To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.” Based on this provision, the district court dismissed the employee’s claims because the last alleged illegal activity occurred more than six months prior to the filing of the lawsuit.
On appeal, the Court reversed the decision to dismiss the employment lawsuit. It reasoned that U.S. Supreme Court decisions provide that employees may not prospectively or retrospectively waive their FLSA rights to minimum wages, overtime or liquidated damages. While the express terms of FedEx’s contract only limited the time period in which an employee could bring such claims, the Court made the jump that as applied to the employee’s claim, the six-month limitation period acted as a waiver of her FLSA rights and was therefore invalid.
The Sixth Circuit also reinstated the EPA claim applying the same reasoning it used to reinstate the FLSA claim.
The Take Away For Employers
Michigan employers should take the Boaz v FedEx decision as a sign to review their current employment agreements to assess their current contractual limitation periods and update them as may be required or to otherwise improve contractual protections that may be available to the employer.
But the bottom line is that Michigan employers cannot rely on employment agreements to shorten the statute of limitations provisions provided for in the FLSA and EPA. The FedEx decision, however, should not affect decisions enforcing limitation periods in employment agreements as applied to other claims.
For more information about federal and Michigan employment law compliance and employment agreements, contact Jason M. Shinn. Mr. Shinn is an employment attorney who has been addressing state and federal employment legal issues since 2001.