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July 13, 2016

Employers Cannot Shorten the Statute of Limitations for NJ LAD Claims

On June 15, 2016, the New Jersey Supreme Court, in Rodriguez v. Raymours Furniture Company, Inc., No. A-27-14, 074603, held that parties may not agree to shorten the two-year statute of limitations under the New Jersey Law Against Discrimination (“LAD”). “A private agreement that frustrates the LAD’s public-purpose imperative by shortening the two-year statute of limitations period for private LAD claims cannot be enforced.”

In Rodriguez, the plaintiff, Sergio Rodriguez, applied for a position with the defendant, and signed an employment application containing a contractual provision that required all applicants, if hired, to agree to waive the two-year statute of limitations under the LAD. Rodriguez also agreed that any potential LAD claims against the employer would have to be filed within six months from the date of the adverse employment action.

In July of 2011, Rodriguez filing a lawsuit in the Superior Court of New Jersey against Raymours in which he alleged that his discharge was based on an actual or perceived disability in violation of the LAD. He contended that he was fired two days after returning to his full work duties, and that other employees with less seniority or distinguishing features were retained. The trial court enforced the contractual provision shortening the statute of limitations for LAD claims to six months, and granted summary judgment to Raymours. The trial court found that the contractual provision itself was clear and unambiguous, and that shortening the statute of limitations was not unreasonable nor against public policy. On appeal, the Appellate Division affirmed; despite noting that the employment application was a contract of adhesion, it also found that the contractual provision was clear and unambiguous and was neither unreasonable nor against public policy.

The New Jersey Supreme Court unanimously reversed. The Court reasoned that the broad private right to contract may not contravene the public policy behind a statute like the LAD. The Court opined that the “LAD occupies a privileged place among statutory enactments in New Jersey” and that “it has long been recognized that the LAD seeks unequivocally to ‘eradicate’ discrimination.” As such, the Court found that “[r]estricting the ability of citizens to bring LAD claims is antithetical to that societal aspiration and defeats the public policy goal.” Thus, the Court held that the LAD’s two-year statute of limitations could not be amended by a private agreement. The Court also noted that its decision did not affect contractual provisions where parties agree to submit LAD claims to arbitration or other alternative dispute resolution processes.

Takeaway for Employers

Employers should review, and amend if necessary, any employment applications or agreements that contractually shorten the filing of NJ LAD claims to be less than the two-year statute of limitations period. Employers should also consider other measures to help protect themselves, such as implementing jury trial waivers and/or arbitration provisions.

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If you have any questions regarding the NJ LAD and the New Jersey Supreme Court’s decision, please do not hesitate to contact us.