Earlier this week, the New Jersey Supreme Court ruled that private parties cannot agree to shorten the two year statute of limitations that applies to the New Jersey Law Against Discrimination (“LAD”).
The case was filed by Sergio Rodriguez. When Mr. Rodriguez applied for a job as a Helper for Raymours Furniture Company (better known as Raymour & Flanigan), he signed a job application. The application contained a provision requiring him to bring any legal claims relating to his employment within 6 months after the action that becomes the subject of the lawsuit, and waiving any statute of limitations to the contrary.
Ramours hired Mr. Rodriguez. In April 2010, he injured his knee at work. He filed a workers’ compensation claim and received benefits. After undergoing knee surgery and physical therapy, he was cleared to return to work starting on September 14, 2010. Mr. Rodriguez initially was on light duty for two weeks. Raymours fired him on October 1, 2010, two days after he returned to full duty work.
Approximately 7 months later, Mr. Rodriguez filed a lawsuit alleging Raymours’ decision to fire him constituted disability discrimination in violation of the LAD, and retaliation for filing a workers’ compensation claim in violation of the Workers’ Compensation Act. The trial Court dismissed his case on the basis that he agreed to limit the statute of limitations to 6 months and did not file his claim until more than 6 months after Raymours fired him.
On appeal, New Jersey’s Appellate Division affirmed the lower court’s ruling. You can read my article about the Appellate Division’s decision: New Jersey Court Upholds Contract Shortening Deadline to File Discrimination Lawsuit.
On June 15, 2016, in Rodriguez v. Raymours Furniture Co., Inc., the New Jersey Supreme Court reversed the Appellate Division’s ruling. It relied heavily on the fact that in addition to protecting individuals from discrimination, the LAD serves the public goal of trying to eradicate discrimination from New Jersey. The Court also relied on the fact that it can take time before a victim of discrimination realizes his or her legal rights were violated and then to contact an employment lawyer. It further recognized that employees who sign agreements shortening their statute of limitations often do not realize or remember they did so. As a result, shortening the statute of limitations would “lead to the dismissal of otherwise meritorious LAD claims” who mistakenly rely on the two year statute of limitations. Likewise, the Court indicated that an agreement shortening the statute of limitations could force a lawyer to file a lawsuit prematurely, before he or she has an opportunity to conduct a more thorough investigation that might have revealed the case lacks merit.
In addition, the Court relied on the fact that the LAD permits individuals to file claims with the New Jersey Division on Civil Rights (“DCR”) within 6 months after the act of discrimination. It explained that when the DCR does not act quickly enough, an individual can withdraw his or her claim and file a lawsuit as long as they are still within the 2 year statute of limitations. An agreement shortening the statute of limitations to 6 months effectively would eliminate this option.
As an alternative basis for its ruling, the Court held that the waiver provision Mr. Rodriguez signed was unconscionable. It recognized that the employment application was not something Mr. Rodriguez could negotiate, but instead was a contract of adhesion since it was offered to him on a take-it-or leave it basis. It then concluded the fact that the agreement was a contract of adhesion, combined with the fact that the agreement is harmful to the public interest advanced by the LAD, establishes that it is unconscionable and therefore unenforceable.
In a footnote, the Court also found that the statute of limitations waiver is inapplicable to Mr. Rodriguez’s worker’s compensation retaliation claim “to the extent . . . [it] is derivative of his LAD action.”