Does your company effectively limit an employee’s right to sue? Michigan employers have the right to restrict the time an employee can bring wrongful employment practice claims under Michigan law. This may be accomplished through the use of a simple Limitation of Actions clause. The typical Limitation of Actions term states:

LIMITATION OF ACTIONS
By accepting and continuing employment with ABC Company each employee agrees not to commence any claim, complaint, action, or suit relating to their employment with ABC Company more than one hundred eighty-two (182) calendar days after the event giving rise to the claim, complaint, action, or suit; or later than the applicable limitations period established by statute, whichever is less.

Employers should understand a few things about the use of this restriction.

Depending upon the law a wrongful employment practice is brought under, an employee is typically given a longer period of time to bring a legal complaint against an employer. This time period can be anywhere from one to three years or more.

To reduce the time period for Michigan employment lawsuits to be brought, the employer and employee have to formally agree to this shortened the length of time. It cannot just be a policy statement. Further, consideration for the agreement must be given. Courts generally recognize the offer of employment as adequate consideration to seal the deal.  The Limitation of Actions term should not be shorter than 180 days from the wrongful employment action.

It is not advisable to place the limitation of actions term in an employee handbook. Employers should check their employee handbooks to make sure this term is not part of the handbook. Most employee handbooks include a contractual disclaimer stating policies in the handbook cannot be construed as any type of contract; which would void the contract term. Remember, the limitation of actions term has to be formally agreed to.

If it is in a handbook, a limitation of actions term is often found in the “About this Handbook/Purpose of this Handbook” statements. The contract disclaimer statement is typically at the front of the handbook. Another handbook statement that may include the contractual disclaimer negating the limitation of actions term is at the back of the handbook in the employee acknowledgement statement. The Acknowledgment statement is the one the employee typically signs off on saying they read and understand the policies in the handbook.  If your handbook has this disclaimer, you should not use the handbook to set up the Limitation of Action term.

It is recommended that employers put this statement on their employment application or as a separate agreement that is signed going into employment.

The Limitation of Actions disclaimer will most likely not help if the wrongful employment practice lawsuit is brought under federal law. Federal agencies such as the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB) have taken the position that they will not recognize this term and will take claims pursuant to the respective statute’s (Title VII and NLRA) limitations periods. Further the Sixth Circuit Court of Appeals also has ruled it will not recognize such limits to bringing employment causes of action.

So why bother? For employers in Michigan this term effectively limits many Michigan wrongful employment causes of action when the employee sits on their rights to long. The use of the limitation of actions clause was successfully used by an employer in a ruling just last month. In the case of Dzurka v. MidMichigan Medical Center – Midland (No. 343162 1/22/2019), the Michigan Court of Appeals upheld the use of a shortened limitations period provision that was included in the employer’s employment application form that the employee signed.

In this case, the Plaintiff sued the employer on a Family and Medical Leave Act claim that the lower court found did not have merit. The Plaintiff then sued in state court alleging retaliatory discharge for reporting concerns about improper operating room practices that allegedly jeopardized patient safety. However, she made this legal complaint 756 days after her discharge and 36 days after the federal court dismissed her claim. She filed her federal claims 185 days after her discharge.  The defendant-employer pointed to its Limitations on Claims provision in its employment application. The Michigan Appeals Court found the limitations on claims term in the employment application sufficiently clear and that it was agreed to by both parties with sufficient consideration. The Appeals Court ruled in favor of the employer and dismissed the case.

It is recommended employers and their HR professionals check into the use of this obscure term of employment.  It may save the organization big time.

Additional ASE Resources
ASE Handbook Development - If you need assistance pulling your limitation of actions term from your handbook or would like yours reviewed, please contact Mike Burns.

Source: Patricia Dzurka v MidMichigan Medical Center – Midland No 343162 January 22, 2019