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Invalid Waivers in Employment Agreements

            Employers Should Double Check Employment Agreements and Applications for Invalid Waivers

                                                                                   Zana Tomich

A recent Sixth Circuit Court of Appeals opinion, Boaz v. FedEx Customer Information Services, reversed a federal district court ruling that upheld a contractual limitations provision in an employment agreement that barred an employee's claims under the Fair Labor Standards Act (“FLSA”) and Equal Pay Act.  A statute of limitations is the period of time within which a plaintiff must bring a claim against a defendant.  Limiting an employee's statute of limitations in an employment agreement or employment application has become somewhat of a common practice. In Boaz, the Court found that such waivers would nullify the Act’s purpose of achieving a uniform national policy of guaranteeing compensation for all work or employment engaged by employees covered by the Act. The Court held that the employees may not prospectively or retrospectively waive their FLSA rights to minimum wages, overtime, or liquidated damages. The Court found that the under six-month limitations period in the Plaintiff’s employment agreement was invalid.

The Court acknowledged the Defendant’s argument that other courts have enforced agreements that shorten an employee’s limitations period for claims arising under statutes other than the FLSA or Equal Pay Act, such as Title VII (i.e. discrimination claims), but found that rational did not apply here. The Court found that employees can waive their claims under Title VII, but an employer that pays an employee less than minimum wage arguably gains a competitive advantage by doing so.  An employer who refuses to hire African-Americans or some other racial group does not. 

Therefore, from the court’s discussion, it appears waivers of Title VII and non-FLSA, Equal Pay act claims would remain valid. 

If your Company needs assistance in navigating this area of the law, call on the attorneys at Dalton & Tomich, PLC, who have the employment law experience necessary to assist you.

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