Sixth Circuit Holds Employment Agreement Cannot Shorten FLSA or EPA Claim Period
Labor & Employment Alert
Date: August 08, 2013
On August 6, 2013, the U.S. Court of Appeals for the Sixth Circuit declared that an employment agreement cannot limit the period during which an employee might make a claim under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. or Equal Pay Act (EPA), 29 U.S.C. § 206(d). Boaz v. FedEx Customer Info. Servs., Inc., 6th Cir., No. 12-5319 (August 6, 2013). The FLSA mandates that employers pay a federally established minimum wage as well as overtime to certain types of employees. The statute of limitations for a claim under the FLSA is two years for non-willful violations and three years for willful ones. The EPA protects employees from gender discrimination based upon pay and benefits.
Boaz began working for FedEx in 1997. Her employment agreement stated, “To the extent the law allows an employee to bring legal action against Federal Express Corporation I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit whichever expires first.” Boaz alleged that during the period from January 2004 through June 2008, FedEx violated the EPA by paying her less than a male employee for the same activities, and also that FedEx failed to pay her overtime compensation as required by the FLSA. She filed her lawsuit in April 2009.
Boaz accrued a FLSA and EPA claim each time FedEx issued her an allegedly illegal paycheck. She filed her lawsuit more than six months but less than three years after her last paycheck, putting her outside a contractual limitation but within the statutory one.
FedEx moved for summary judgment before the U.S. District Court, arguing that Boaz’s claims were untimely under her employment agreement because the last alleged illegal activity, the issuance of her June 30, 2008 paycheck, occurred more than six months before she filed suit. The U.S. District Court agreed and granted summary judgment for FedEx on that basis. Boaz appealed to the Sixth Circuit.
The Sixth Circuit reversed the District Court, holding the provision in Boaz’s employment agreement that reduced the statutory period for bringing a FLSA claim to six months to be an invalid waiver of her FLSA rights. Shortly after the FLSA was enacted, the Supreme Court expressed concern that an employer could circumvent the Act’s requirements by having its employees waive their FLSA rights. As a result, the Supreme Court held that employees may not, either prospectively or retrospectively, waive their FLSA rights to minimum wages, overtime or liquidated damages. The Sixth Circuit held that an employment agreement’s shortening of the period for when a claim under the FLSA might be made is an invalid waiver of one’s rights.
The Sixth Circuit rejected FedEx’s argument that because courts have enforced agreements that shorten an employee’s limitation period for claims arising under statutes other than the FLSA, including Title VII (i.e., racial discrimination), that same result was required with respect to FLSA claims. The Sixth Circuit found that argument meritless for two reasons. First, employees can waive their claims under Title VII, and second, an employer that pays an employee wages that do not comply with the FLSA arguably gains a competitive advantage over its competitors, which is not present where an employer violates Title VII. Thus, the rationale for prohibiting waiver of FLSA claims is not present for Title VII claims.
The Sixth Circuit also held that Boaz’s employment agreement cannot operate to reduce the statute of limitation period for her claim under the EPA because the EPA is an amendment to the FLSA. Therefore, the same rationale for holding that an employment agreement cannot operate to reduce the statutory period for bringing a FLSA claim equally applied to the EPA.
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