Q:  An applicant signs an employment application which provides, in large capitalized type placed right above the signature line, that by signing the application he is agreeing that any claims against the employer must be brought within 6 months of the action that is the subject of the claim and agreeing to waive any statute of limitations to the contrary. The applicant is hired. Three years later, he is promoted to a different position after signing a new application which does not contain this language. He is later terminated as part of a company-wide layoff. Is the employee’s suit for discrimination, brought 9 months after termination, time-barred?

A:  In Rodriguez v. Raymours Furniture Co., Inc., the employee argued that the waiver of the statute of limitations (2 years under the New Jersey Law Against Discrimination) and shortening of the period to 6 months are not enforceable because he had no ability to negotiate for a lesser restriction and as such the waiver and shortened deadline are unconscionable. He further claimed that the waiver is against public policy. He also argued “novation” - that because the second employment application contained no such waiver, it replaced and superseded the waiver contained in the first application. 

*Surprisingly, the New Jersey trial court rejected these arguments and held in favor of the employer. The New Jersey Appellate Division affirmed.  While it agreed that the terms of the application were non-negotiable and therefor constituted a “contract of adhesion”, the Court pointed out that mere inequality in bargaining power is not a sufficient reason to find an agreement unenforceable, particularly where a waiver is set forth conspicuously in oversized, capitalized lettering, just above the applicant’s signature line, the terminology is clear and uncomplicated, and the applicant is put under no pressure to sign the application.  The Appellate Division also held that a contract may validly limit the time for bringing an action to a period less than that prescribed by statute, provided that the shorter period itself is reasonable. It found that six months is a reasonable amount of time within which to bring employment claims. 

The Appellate Division also noted that a novation is never presumed. There must be a clear and definite intention expressed in the new contract that its purpose is to supersede and eliminate a prior contract. Here, the second employment application contained no such language. The initial application was for a new hire, specifying certain terms of employment if hired, including at-will status and the shortened limitation period. The second application was merely a means of obtaining further information from the employee relevant to the new position to which he was being promoted. 

This pro-employer decision (not the norm for New Jersey's pro-employee court) means that New Jersey employers may now have an effective, legal means of shortening the statute of limitations on employment claims!

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