The federal statutes prohibiting employment discrimination, such as Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (ADEA), establish specific periods during which employees must act to timely pursue a claim. In a recent decision, the U.S. 4th Circuit Court of Appeals (which encompasses Maryland, North Carolina, South Carolina, Virginia, and West Virginia) considered whether an employer and employee could lawfully enter into an agreement that shortens the time in which an employee must file such a claim. The court concluded that such agreements aren’t permissible and are contrary to the statutory framework governing discrimination claims.
Employee Signed ‘Limitations Agreement’
The case involved a terminated employee suing her employer for discrimination. At the start of her employment, she had signed a “limitations agreement” in which she agreed she would file any claim relating to her employment within 180 calendar days after the occurrence of the event or decision to which her claim related. The agreement went on to provide that the 180-day period would be considered tolled during any period in which the employee filed a discrimination charge but that the period would run during any window of time before the employee filed a charge or after the charge had been closed.
The employee was terminated in November 2022 and filed a discrimination charge with the Equal Employment Opportunity Commission (EEOC) the following February. The charge remained pending for several months. She received her right-to-sue letter in September 2023 and filed her lawsuit in December 2023.
Her former employer asked the court to dismiss the claims on the grounds that 196 days had passed before the lawsuit was filed (106 days between the date of termination and the filing of the charge and 90 days between the issuance of the right-to-sue letter and the filing of the lawsuit). The trial court, relying on the terms of the limitations agreement, concluded that the former employee’s claims hadn’t been timely filed and entered judgment in favor of the employer.
Limitations Agreement Unenforceable
On appeal, the 4th Circuit considered whether the limitations agreement was contrary to Title VII and the ADEA’s enforcement mechanisms. The court observed that the timing rules strike a “delicate balance” between competing policy goals and that the time periods set by the antidiscrimination statutes would be reduced if the agreement were given effect. The court also expressed concern for a scenario in which an employee files a claim that would be timely under the statutory language, only to then be confronted with an agreement signed by the employee many years earlier as part of the hiring process under which the employee had consented to those time periods’ being shortened.
Ultimately, the court concluded that an employer and employee “may not prospectively render untimely a lawsuit that would otherwise be timely under Title VII or the ADEA.” Thomas v. EoTech, LLC.
Bottom Line
The decision confirms employers operating in the 4th Circuit’s jurisdiction may not shorten the time period in which employees may pursue claims under the federal antidiscrimination statutes. If you have such agreements, you’ll no longer be able to use an untimely filing defense for the types of claims addressed by the court’s decision. Please reach out to Whiteford’s labor and employment department for any questions or assistance in compliance.
David M. Stevens is an attorney with Whiteford, Taylor & Preston, L.L.P., in Columbia, Maryland, and can be reached at dstevens@whitefordlaw.com.