Employers have used employment agreements to attempt to control the when and where of actions brought by employees. The courts have been receptive to the waiver of the right to sue in court where the forum provided, usually arbitration, is procedurally fair and provides the employee with safeguards. Employers have also attempted to shorten the various statutes of limitations by agreement as well. In Boaz v. FedEx Customer Information Svcs., Inc. [an enhanced version of this opinion is available to lexis.com subscribers], the 6th Circuit refused to to uphold a provision in an employment agreement which required that a claim against the company be brought within six months or within the time prescribed by law, whichever came first. A claim arose under the Fair Labor Standards Act was brought after the six months within the time allowed under the FLSA. FedEx filed a motion for summary judgment because the claim was barred under the employment agreement, and the district court granted it. The 6th Circuit reversed. The court noted that it was well established that an employee could not waive his or her rights under the FLSA. As applied to the plaintiff's claims, the court found the provision invalid because its operation had the effect of depriving the statutory rights. FedEx argued that since the courts had upheld an employee's right of waiving the right to a judicial forum, an employee can waive procedural rights under the FLSA even if substantive rights cannot be waived. While noting that the distinction between procedural and substantive rights is "notoriously elusive," the court stated that the cases allowing the waiver do so only if the alternative forum allows for the effective vindication of the claim. Here, the court stated that the provision does the opposite. In light of the court's decision, employers in Michigan need to review their handbooks and employment contracts to make sure the limitations period with respect to FLSA claims is not shortened from the statutory length of two years for non-willful violations.
For additional Labor and Employment law insights from John Holmquist, visit the Michigan Employment Law Connection.
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