Employment Law: Agreement to Shorten Statute

Ellis v. U.S. Security Associates, (First District, March 20, 2014) 2014 WL 1229038, 14 Cal. Daily Op. Serv. 3098, 2014 Daily Journal D.A.R. 3098, 2014 Daily Journal D.A.R. 3588    

A security guard who resigned from her job after being sexually harassed by her supervisor, filed a timely complaint with the California Department of Fair Employment and Housing (DFEH). Upon receiving a right-to-sue letter, she filed a complaint asserting claims for sex discrimination and sexual harassment in violation of Government Code § 12940, failure to maintain an environment free from harassment (§ 12940(k)), retaliation in violation of § 12940(h), intentional infliction of emotional distress, and negligent hiring, supervision, and retention. 

The employer moved for judgment on the pleadings, based on the plaintiff’s signed application for employment which provided that she agreed “any claim or lawsuit … must be filed no more than six (6) months after the date of the employment action,” and waived “any statute of limitations to the contrary.”   The trial court granted the motion and dismissed the complaint, apparently concluding that the shortened limitation provision was enforceable.  However, the court of appeal reversed, holding that the six-month limitation provision in the application for employment was unreasonable and against public policy, and therefore unenforceable:

[T]he court was apparently relying on the rule that parties may agree to shorten the limitations period. … Various cases in various contexts recognize this rule, all of them emphasizing that the shortened limitation must be reasonable. As Witkin puts it, such provisions will be upheld if the shorter period is “reasonable, i.e. if it gives sufficient time for the effective pursuit of the judicial remedy.” …

[T]he outside limit to sue under FEHA is as long as three years—and necessarily somewhat more than two. That period, the Legislature has determined, will provide an effective remedy (§ 12920). Six months does not. It does not provide “sufficient time for the effective pursuit of the judicial remedy.” It violates the public policy in section 12920. It is too short.

. . .
If one year was “unduly short” for personal injury actions in general, a fortiori is a six month limitation provision “unduly short” in a FEHA case, which requires that the employee first report the claimed misconduct to the DFEH and await its action before any suit is ripe, necessarily delaying the filing of the complaint…When the Legislature extended the statute of limitations for personal injuries from one to two years, it also found that “[m]any such matters would be resolved without the need to resort to litigation if California’s statute of limitations permitted such actions to be filed within two years….”   Or, as the Legislature also found: “Extending the statute of limitations will reduce litigation in these cases as well, because [victims] will have the opportunity to fully evaluate and use other alternatives, rather than being forced to litigate prematurely.” (Ibid.) In other words, a longer period allows a victim time for development and investigation of a case, for assessment, for evaluation—and for the possibility of settlement. The six-month limitation provision here precludes that….

The shortened limitation provision here would be against public policy in the further respect that it would have anomalous effects. That is, since the provision runs six months from the “date of the employment action” on which the employee’s suit is based, it would mean different limitation periods for different FEHA claims. As applied here, for example, one date would run from the time Haynes harassed Ellis, another when her claim that U.S. Security failed to prevent harassment finally accrued, and yet another when she was retaliated against. This is not how FEHA is designed to operate, with all claims timely if filed within one year from the right-to-sue letter.