An employee's ability to sue your organization expires at different times under various employment laws. For example, in most states, employees can file sexual harassment lawsuits within 300 days of the incident. One problem with those varying limits: You can't be sure how long to keep the records necessary to defending yourself against a claim.
But can you establish your own, separate statute of limitations? What if you could strike an agreement with employees that sets a single, definite time limit (say, six months after the incident) for filing lawsuits? You can, at least in the 6th Circuit, according to a new court ruling. If employees agree, either before or during employment, to a reasonable time limit, that pact can be enforced.
If you do decide to mandate different lawsuit-filing limits on your application or employment contracts, go overboard to highlight the provision, making sure the employee reads and fully understands the consequences. Recent case: A factory worker signed a section on her job application that said: "I agree that any claim or lawsuit related to my service with [the employer] or any of its subsidiaries 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." Above that paragraph ran the words, in bold and capital letters, "READ CAREFULLY BEFORE SIGNING."
She later filed a sex-harassment lawsuit against the company that related to an incident that occurred a year earlier. But a court tossed out her case, citing the six-month time limitation she had agreed upon in the employment application. A federal appeals court upheld the decision. (Thurman v. DaimlerChrysler Inc., No. 02-2474, 6th Cir., 2005)
Note: This case offers a good potential lawsuit-prevention tool for employers in the 6th Circuit, which covers Kentucky, Michigan, Ohio and Tennessee. And it's also good news for employers in other states if further circuits follow this court's lead. Only time will tell how aggressive a stance other circuits will take on the issue. Bottom line: Before going forward with any similar rewriting of your statute-of-limitations policy, talk with your employment attorney.