Dana E. Feinstein, Reed Smith Summer Associate, contributed to this blog post.  

Employers in New Jersey should be aware that a recent New Jersey Supreme Court decision invalidated a contractual provision that shortened the statute of limitations for bringing a claim for discrimination under the Law Against Discrimination (“LAD”). On June 15, 2016, the New Jersey Supreme Court overturned the lower court’s decision and held that employers cannot impose a contractual limit on the two-year time period allotted to an employee to file a claim of employment discrimination under LAD. See Rodriguez v. Raymours Furniture Co., 2016 N.J. LEXIS 566 (June 15, 2016).

Sergio Rodriguez, a non-native English speaker from Argentina, signed an employment application when applying for a job at Raymour & Flanigan Furniture Stores. The application stated in bold and capitalized letters that the undersigned agreed “that any claim or lawsuit relating to [his] service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit” and that he would waive any conflicting statute of limitations. This contractual six-month limit was far shorter than LAD’s two-year statute of limitations.

Rodriguez later suffered a work-related knee injury. Shortly after Rodriguez recovered from his surgery and returned to work, Raymour & Flanigan laid him off. Rodriguez filed a complaint alleging employment discrimination in New Jersey Superior Court within the two-year statute of limitations under LAD, but after the six-month contractual period in which to file a claim had passed. Rodriguez claimed that he had not understood the relevant portion of the employment application because he is a non-native English speaker and his friend had read the application to him. The trial court granted summary judgment to Raymour & Flanigan, finding that the bold and capitalized provision in the employment application was “clear and unambiguous” and “neither unreasonable nor against public policy.” The Appellate Division affirmed the trial court’s grant of summary judgment to Raymour & Flanigan.

The New Jersey Supreme Court reversed and held that Raymour & Flanigan’s provision that had the effect of shortening the time to file a lawsuit suit under the LAD violated public policy. The Court reasoned that this shortened time period undermined the legislature’s public policy intent and the decision stressed the importance of fairness and uniformity of opportunity for employees throughout the state to pursue LAD claims.

Broader Implications

In light of this decision, employers should steer clear of shortening an employee’s time for bringing LAD claims. However, the decision has broader implications. Although the decision did not turn on Rodriguez’s contention that he did not understand the terms of the application, the court, nevertheless, engaged in a lengthy discussion of when contracts of adhesion (i.e., contracts where employees can not bargain over their terms such as employment applications) are unenforceable because of unconscionability. The court listed such factors as “age, literacy, lack of sophistication, hidden or unduly complex contract terms, bargaining tactics and the particular setting existing during the contract formation process” as things courts should take into consideration when analyzing unconscionability. Raymours Furniture Co., 2016 N.J. LEXIS, at * 42.

Therefore, it is important that employers ensure that its employees understand all of the legal terms of an employment contract. As an example, employers with a large non-native workforce should consider including the legal terms in their employees’ native languages, in addition to English.