California Court of Appeals Invalidates Contractual Provision Limiting FEHA Time to Sue
In its first published ruling on the subject, a California appeals court has rejected as unreasonable and as against public policy an employer’s attempt to contractually shorten the amount of time an employee has to sue under California’s Fair Employment and Housing Act (FEHA). Pursuant to the FEHA’s statutory requirements, codified at Cal. Gov. Code §§ 12900 to 12996, an employee must exhaust all administrative remedies by filing a charge with the California Department of Fair Employment and Housing (DFEH) prior to filing suit in court. Employees must typically file with the DFEH within one year from the date of the unlawful act and then must file a lawsuit within one year of receiving a right-to-sue letter from the DFEH, which must be issued no more than one year after the charge was filed.
In this case, Ellis v. U.S. Sec. Associates, Case No. A136028, 2014 WL 1229038, –Cal. Rptr. 3d — (Cal. Ct. App. Mar. 20, 2014), the employer, a security company, included a provision in its standard employment application stating, “I understand, agree and acknowledge that any claim or lawsuit relating to my service with [U.S. Security] 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. I waive any statute of limitations to the contrary.” The defendant employer filed a motion for judgment on the pleadings on the grounds that the plaintiff had not filed her lawsuit within the requisite six-month time period set forth in her employment application. Without discussion, the trial court granted the motion.
In reversing the trial court’s order, the Court of Appeal found that the shortened six-month limitations period was not reasonable. First, a six-month limitations period, the Court found, would preclude the employee from having sufficient time “for development and investigation of a case, for assessment, for evaluation—and for the possibility of settlement.” Second, it would “effectively eliminate any meaningful participation by the DFEH,” which the Court noted is many employees’ only remedy for small claims based on modest salaries. Finally, a six-month limitations period would result in “anomalous effects” by creating different limitations periods for different FEHA claims (i.e. one limitations period for the harassment, another for the failure to prevent harassment claim, and yet another for the retaliation claim) and different limitations periods for the employer versus the individual defendant, who was not a party to the employment agreement.
The Ellis case not only makes clear that attempts by employers to limit employees’ time to file FEHA claims will fail, but it also raises important questions about the ability of employers to contractually limit employees’ statutory rights.