• Kentucky Employers Permitted to Shorten Statute of Limitations by Contract
  • November 22, 2013 | Author: Katie Cassidy Tranter
  • Law Firm: Dressman Benzinger LaVelle psc - Cincinnati Office
  • Employers often enter into agreements with employees to shorten the time limit provided by statute for employees to file state law claims against the employer.  A recent federal court decision from the Eastern District of Kentucky, Shupe v. Asplundh Corporation, indicates that courts will uphold these types of agreements so long as they agreements meet certain requirements and the employee's consent is knowing and voluntary.

    In Shupe, an employee brought suit against her former employer for sex and age discrimination under the Kentucky Civil Rights Act (KCRA).  At the time she was hired, the employee signed a document titled "LIMITATION ON TIME TO FILE CLAIMS OR LAWSUITS," in which she consented to file any lawsuit against her employer "no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit."  She signed in exchange for her at-will employment and as a condition of her employment.

    Notably, the document carried the following language in bold and large type: "IMPORTANT NOTICE (in two places), "READ CAREFULLY BEFORE SIGNING," and "PLEASE READ."

    The employee filed suit almost a year after ending her employment with the employer.  As such, the issue in the case was whether the employee's suit was time-barred because of the waiver described above.  The employee argued that she did not knowingly and voluntarily execute the waiver.  She acknowledged that she signed the document, but told the court she did not remember the document, was not allowed to review it with an attorney, and was not provided a copy after signing.

    The court upheld the agreement, finding the employee's suit to be time-barred.  The court noted that Kentucky law permits parties to contract for a limitations period shorter than the time period provided by the statute so long as the agreed-upon period is reasonable and the waiver is knowing and voluntary.  The language in the agreement must be clear in both content and form.  The fact that an employee may not have read an agreement generally does not provide an opportunity to avoid its terms.

    However, as the Sixth Circuit decided in Alonso v. Huron Valley Ambulance, Inc., an agreement will not be upheld where it includes a waiver of substantive rights (such as foregoing the judicial process in favor of a grievance process) that is buried in employment documents containing unclear language and other policies and procedures.

    The Shupe decision is significant for employers who wish to contractually shorten the statute of limitations for an employee to file a state law claim.  It indicates that courts are open to such a limit so long as certain requirements are met.  The agreement should be contained in a separate document with large, bold type indicating its importance.  The contents of the waiver should be clear, and the waiver must be supported by something of value, such as wages and employment.  It also should not concern an employee's substantive rights.  Finally, it is important to note that employers are not permitted to shorten the limitations period for filing a claim with the Equal Employment Opportunity Commission.