In McMillon v City of Kalamazoo, SC 162680, (Jan. 11, 2023) the Michigan Supreme Court addressed, though did not make a definitive ruling on, the validity of contractually shortened limitation periods in the employment context. The Court suggested in a concurring opinion that, if presented with the issue, it may invalidate the earlier Michigan appellate decisions that an employer may contractually shorten the limitation period to bring a discrimination lawsuit, following a trend set by a number of other states. However, in the case before the Court, the Supreme Court ruled only that the employee did not agree to the shortening of the statute of limitations when she was hired. A document signed a year earlier, for a previous job application, did not apply.
In McMillon, the employee applied for a position with the City of Kalamazoo (“Defendant”) in 2004, but she was not hired. At the time, the employment application contained a provision stating that applicants agreed to file lawsuits arising out of their employment with the City within nine months of the accrual of such claims. The next year, Plaintiff was interviewed and hired by Defendant for a different position with the City. However, Plaintiff was not required to complete a new job application.
In 2019, more than nine months after the factual basis for her claims arose, Plaintiff filed a lawsuit alleging that the Defendant had violated the Elliot-Larsen Civil Rights Act and Persons with Disabilities Civil Rights Act. The Defendant argued that Plaintiff’s lawsuit was not timely, as she had accepted the contractually shortened limitation period as stated in the 2004 employment application. However, the Michigan Supreme Court found that a genuine issue of material fact existed as to whether the Plaintiff agreed to be bound by the terms of her rejected 2004 application during her 2005 hiring process. As a result, the lower Court’s decision granting summary judgment in favor of Defendant was reversed
The Court’s decision left two important questions unanswered: (1) whether employment agreements should be permitted to shorten the time to file lawsuits under civil-rights statutes, and (2) whether Timko v Oakwood Custom Coating, Inc, 244 Mich App 234 (2001), correctly held that limitations clauses contained in employment applications are enforceable. When the Supreme Court answers these questions, it will have a significant impact on both employers and employees.
Please contact an attorney at Demorest Law Firm if you need an assistance with an employment contract. We would be glad to assist you.
