Contractual Limits on Limitation Periods: Employers Battle Back

November 21, 2011Articles New Jersey Law Journal

It is well established that, in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitation, provided the shorter period itself shall be a reasonable period.” Order of United Comm. Travelers v. Wolfe, 331 U.S. 586, 608 (1947). New Jersey, like most states, is in accord with this general principal. Eagle Fire Prot. Corp. v. First Indem. of Amer. Ins. Co., 145 N.J. 345, 354 (1996).

Some employers routinely require their employees to enter into such agreements. Surprising? It shouldn’t be. As one court explained: “[G]iven the fact that an individual can agree to give up the right to sue, such as by agreeing to arbitrate, then certainly an individual can agree to limit the period in which to sue.”

Notwithstanding the general practice, can employers in New Jersey lawfully limit employees from taking full advantage of the statutes of limitations in employee-friendly legislation like the Law Against Discrimination (two years) and the Conscientious Employee Protection Act (one year)?

This past August, in an unpublished District of New Jersey decision, Judge Freda L. Wolfson indicated they can.

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