Federal Court Upholds Employment Application’s Statute of Limitation Provision for Filing Lawsuits

Key Takeaway: Employers can increase protection against § 1981 lawsuits by including a statute of limitations provision in their employment application.

The Fifth Circuit recently remitted a jury award in favor of the plaintiff after finding the plaintiff’s § 1981 claim was time-barred under the terms of her employment application. The plaintiff, a former FedEx employee, had filled out an employment application which contained a provision stating that legal action against FedEx had to be brought within six months. FedEx terminated the plaintiff from employment citing poor performance and failure to meet the terms of her two Performance Improvement Plans. The plaintiff then filed suit alleging discrimination in violation of § 1981 and retaliation, 16 months after her termination.

The Appellate Court disagreed with the plaintiff’s claim that the limitation provision only applied to lawsuits about events arising out of the employment contract, finding that the plaintiff’s interpretation was contrary to the plain language of the contract. The Court also found that the limitation provision’s language was broad enough to encompass retaliation and discrimination claims.

Courts have previously found that contract provisions can limit the statute of limitations for filing a lawsuit, even when the stated time is less than that of the general statute of limitations, as long as the shorter time period is reasonable. Here, it was reasoned that other courts have found the six-month limitation provision for § 1981 claims reasonable because, “unlike Title VII claims, there are no time-consuming procedural requirements that a plaintiff must satisfy before” filing suit.

To stave off potential § 1981 claims, employers have the option of including a similar statute of limitation provision for employment applications. For more information or for any questions drafting a § 1981 statute of limitation provision, please contact Theresa M. Zechman and Lisa Scidurlo.

Please see Harris v. FedEx Corp. Servs., Inc., No. 23-20035, 2024 WL 378285 (5th Cir. Feb. 1, 2024) for the full decision.