Employees normally have three years to file a lawsuit for discrimination under Michigan law. The Statute of Limitations for a breach of contract case is six years. However, Michigan courts will uphold agreements to shorten the period of limitations for employment disputes. A recent Michigan Supreme Court opinion held that an agreement to shorten the period of limitations will be enforced unless the agreement violates law or public policy. Consequently, employers may wish to shorten their period of exposure to lawsuits by shortening the limitations period for disputes arising out of the employment context. The Courts have approved shortening the Statute of Limitations period to as little as six months.
Employers should consider inserting a provision for a shortened limitations period in all employment agreements. This can also be accomplished by adding the necessary language to the employment application or an employee handbook. Employers will then be able to dismiss more claims as untimely at the pleading stage and ultimately save the business significant litigation expenses.
