In Thomas v. EOTech, LLC, the court aligned with Sixth Circuit jurisprudence in holding that judicial enforcement of such agreements would “disrupt the relevant statutes’ carefully integrated and uniform remedial schemes.” For employers with provisions in employment agreements shortening the statutes of limitations for such claims, this decision is a warning to review those documents and reassess the risk of litigation.
Quick Hits
- Agreements that prospectively shorten the statutory filing periods for Title VII or ADEA claims are unenforceable.
- According to the Fourth Circuit, such agreements disrupt the balance of competing interests under Title VII and the ADEA, including society’s interest in preventing and redressing discrimination, employers’ interest in avoiding stale claims, and Congressional interest in a uniform and nationwide enforcement system.
- Maryland law may permit contractual shortening of limitations periods; however, such agreements may turn on whether they are reasonable.
Legal Framework
Under both Title VII and ADEA, an employee who believes his or her rights have been violated cannot simply file a lawsuit. Instead, Congress created an “intricate remedial scheme” requiring employees first to file a charge with the U.S. Equal Employment Opportunity Commission (EEOC). Such a charge must be filed within 300 days of the alleged discriminatory act if a state (for claims under ADEA and Title VII) or local (for claims under Title VII only) fair employment practices agency enforces a law prohibiting discrimination on the same basis; if not, the period is 180 days.
The EEOC then conducts an investigation. If the EEOC finds that discrimination has occurred, it will seek to resolve the matter through conciliation. If conciliation fails, the EEOC may bring suit on the employee’s behalf, or it may instead issue a dismissal of the charge and a “Notice of Right to Sue.” If the EEOC determines that it cannot confirm discrimination, or perhaps at the request of the employee (typically if more than 180 days have passed since the filing of the EEOC charge), the agency will dismiss the matter and issue the Notice of Right to Sue. After receipt of the notice, the employee then has 90 days to file suit in federal court.
This means employees always have a total of at least 270 days, and more typically 390 days, under the federal scheme to complete both the EEOC charge filing and the federal court lawsuit filing steps, not counting the time the charge is sitting before the EEOC.
Factual Background
In the current case, an employee signed a pre-employment document containing a “Limitations Agreement” that shortened the time she would have to sue her employer for any disputes “relating to [her] employment” to 180 calendar days. The agreement provided that this 180-day period would be paused while an administrative charge was pending before the EEOC.
The employee filed a charge of discrimination with the EEOC and the Maryland Commission on Civil Rights 106 days after her employment termination. After receiving a right-to-sue letter, she filed suit in federal district court 90 days later, alleging violations of Title VII, the ADEA, and the Maryland Fair Employment Practices Act (MFEPA). The employer argued that the complaint was untimely under the Limitations Agreement because 196 countable days had elapsed. The district court granted summary judgment in favor of the employer on all claims.
The Court’s Analysis
The Fourth Circuit threw out the district court’s summary judgment ruling for the employer on the Title VII and ADEA claims, rejecting the Limitations Agreement as unenforceable. The court’s key rulings included:
- The timing rules strike a “delicate balance” of interests. According to the court, in establishing these limitations periods, Congress weighed various interests, including society’s interest in preventing unlawful discrimination and employers’ interests in avoiding the defense of stale claims.
- Contractual shortening of Title VII and ADEA limitations periods is impermissible. Even with tolling during EEOC proceedings, the Limitations Agreement gave the employee only 180 days to both file a charge and then a lawsuit—at least 90 days less than federal law provides. The agreement “cannot function without reducing” either the time to file a charge or the time to sue, and either outcome “would do violence to the carefully integrated remedial schemes Congress enacted.”
- Shortened charge-filing deadlines undermine system navigability. The remedial scheme contemplates that “laypersons, rather than lawyers,” will initiate the process. Enforcing contracts that shorten these periods would require employees to “remember whether they ever signed a document purporting to limit how long they had to file a charge with the EEOC, locate the relevant document, and figure out for themselves” how it modifies what federal statutes say.
- Shortened suit-filing deadlines disrupt Congress’s remedial design. Although the employer argued that employees could hire lawyers to prepare lawsuits while charges are pending, the court rejected this as inconsistent with Congress’s preference “to avoid private lawsuits if possible.” Requiring employees to prepare lawsuits before the EEOC completes its determination process undermines the focus on “cooperation and voluntary cooperation” in achieving equal employment opportunity.
- Shortened deadlines could distort EEOC decision-making. If the EEOC knows an employee has limited time to file a private suit, it might feel compelled to prioritize that employee’s case over others with stronger merit. The court found “no evidence Congress meant for the EEOC to have to weigh such tradeoffs.”
- Shortened limitations periods may be permissible under Maryland law. Under Maryland law, parties may modify limitations periods if there is no controlling statute to the contrary, the period is reasonable, and no defenses like fraud or duress apply. The employee failed to address the required “totality of the circumstances” test for reasonableness determinations, and the court therefore upheld the dismissal of her MFEPA claim. The court cautioned, however, that it was not addressing whether an employee in a similar situation “could have made a winning argument.”
Key Takeaways for Employers
As this decision carries significant implications for employer policies and practices, the following points may prove pragmatic and instructive, especially in the Fourth and Sixth Circuits:
- Review employment agreements. Any agreement purporting to shorten the time employees have to bring Title VII or ADEA claims is now unenforceable in the Fourth Circuit (and the Sixth Circuit). Employers should consider auditing offer letters, employment agreements, and onboarding documents for such provisions and consult with counsel about whether to revise or remove them.
- Understand the federal-state distinction. While contractual limitations periods are unenforceable for federal claims, they may still be enforceable for state-law claims, depending on the jurisdiction’s law.
- Expect potential circuit expansion. With both the Fourth and Sixth Circuits now aligned on this issue, it is possible that other circuits may follow suit. Multistate employers may wish to consider applying a uniform national approach that does not rely on contractual limitations periods for federal antidiscrimination claims.
- Reassess litigation strategy. Employers defending discrimination claims on the basis of contractual limitations provisions may wish to prepare for the possibility that claims previously thought to be time-barred may proceed.
Ogletree Deakins will continue to monitor developments and will provide updates on the Employment Law, Multistate, and State Developments blogs as additional information becomes available.
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