This spring a federal court in Louisville approved a new way for Kentucky employers to limit their liability in employment-related lawsuits. The court upheld a prior agreement between an employer and employee where they had agreed to shorten the statute of limitations to one year for any future lawsuit brought by the employee. Since the employee in this case filed her discrimination and wrongful termination claims eighteen months after she was terminated – six months beyond the shorter statute of limitations they had agreed to – the court held that the agreement barred the employee’s claims and dismissed the lawsuit.
This case, Dunn v. Gordon Food Services, Inc., is notable because the normal statute of limitations for employment-related claims in Kentucky is five years. This means that an employee can bring a discrimination claim against his or her prior employer for up to five years after separation of employment. Because five years is a long time for an employer to have to wait to see if a former employee is going to file suit or not, the one-year period approved in Dunn is a significant improvement for employers.
In Dunn, the parties reached their agreement in the employment application. The last page of the application had eleven clauses that each applicant had to agree to before being considered for employment. One of the clauses stated:
LIMITATION ON CLAIMS: I agree that any action or suit against Employer arising out of any employment or termination of employment, including but not limited to claims arising under the State or Federal civil rights statutes, must be brought within one year of the event giving rise to the claim or be forever barred. I waive any statute of limitations to the contrary.
The employee checked the box next to this clause and next to the other ten clauses and signed the agreement. She was hired and went on to work for the company for five years.
In 2008 the company terminated the employee. Eighteen months later, she sued the company for wrongful termination, age and gender discrimination, and creating a hostile work environment.
The company sought to dismiss the employee’s claims since they were brought after the one-year statute of limitations had expired. The employee argued that their agreement was invalid, and that the normal five-year statute of limitations should apply instead. The court rejected the employee’s arguments and enforced the agreement, dismissing all of her claims against the company.
What does this case mean for Kentucky employers? On the one hand, it is strong incentive for employers to begin looking at ways to shorten the statute of limitations for claims brought by their employees. On the other hand, it must be remembered that Dunn was a federal case and is not binding on Kentucky state courts. A Kentucky state court would be free to ignore Dunn and instead apply the statutory five-year limitations period.
In the meantime, Kentucky employers should consider using the holding in Dunn to their advantage. While there is no guarantee that a state court would reach the same conclusion, there is no harm in trying.« Back to news