Contractual Limitations Periods STILL Alive and Well!
Posted by chapteradmin on Jan. 5, 2022 / Legal Updates / Subscribe 0
By: Claudia D. Orr, Plunkett Cooney
Normally I write about bad news for employers to keep them current on what not to do. But this time, I’m starting off the new year by turning over a new leaf and writing about Cann v Elite Plastic Products Inc, an unpublished opinion of the Michigan Court of Appeals to remind employers what they must do! You’re welcome.
In this case, the plaintiff argued that the six-month limitations period on the job application was unenforceable because it was a contract of adhesion, unfair, against public policy and unconscionable. You see, this plaintiff was fired, allegedly wrongfully, on Jan 20, 2017 but he didn’t file his lawsuit until Jan 16, 2020. But for the six-month limitations period on the employment application, most employment claims could have been brought within three years and his complaint would have squeaked in just under the wire.
The plaintiff argued that the appellate court should ignore the Michigan Supreme Court’s binding decision by that court’s majority in Rory v Continental Ins Co, 473 Mich 457 (2005), and follow the decision of the dissent. Not a strong argument to make considering, well quite frankly, the published opinion was binding!
The plaintiff also asked the appellate court to ignore its own published opinion in Clark v DaimlerChrysler Corp, 268 Mich App 138 (2005). There was no doubt that the plaintiff was going to lose. When I read opinion, I was wondering if the end game was to take the issue to the Michigan Supreme Court and ask it to reconsider the issue. Time will tell if that is the strategy.
So, bottom line, an employer can still include a six-month contractual limitations period on its employment application and it should! There have been may times over the years that my clients could have had a quick victory if they had such a limitations period. Even union members can be bound by a contractual limitations period to which they agree prior to being hired and joining the union.
The key is to make sure the contractual limitations period language is written correctly so that it can be enforced by a court. Also key is it must be on the employment application and not in the employee handbook which generally states “nothing in this handbook creates any contractual obligations” somewhere in its introduction.
If you don’t have a limitations period spelled out on your company’s employment application, consult with an experienced employment attorney today. By tomorrow you may find you are too late!
This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at [email protected] or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.
Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. January 2022.
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