Contractual Limitations Periods STILL Alive and Well... on job Applications!

Normally I write about bad news for employers to keep them current on what not to do. But this time, I’m starting off the new year by turning over a new leaf and writing about Cann v Elite Plastic Products Inc, an unpublished opinion of the Michigan Court of Appeals to remind employers what they must do! You’re welcome.

In this case, the plaintiff argued that the six-month limitations period on the job application was unenforceable because it was a contract of adhesion, unfair, against public policy and unconscionable. You see, this plaintiff was fired, allegedly wrongfully, on Jan. 20, 2017 but he didn’t file his lawsuit until Jan. 16, 2020. But for the six-month limitations period on the employment application, most employment claims could have been brought within three years, and his complaint would have squeaked in just under the wire.

The plaintiff argued that the appellate court should ignore the Michigan Supreme Court’s binding decision by that court’s majority in Rory v Continental Ins Co, 473 Mich 457 (2005) and follow the decision of the dissent. Not a strong argument to make considering, well, quite frankly, the published opinion was binding!

The plaintiff also asked the appellate court to ignore its own published opinion in Clark v DaimlerChrysler Corp, 268 Mich App 138 (2005). There was no doubt that the plaintiff was going to lose. When I read opinion, I was wondering if the end game was to take the issue to the Michigan Supreme Court and ask it to reconsider the issue. Time will tell if that is the strategy.

So, bottom line, employers can still include a six-month contractual limitations period on its employment application and they should! There have been may times over the years that my clients could have had a quick victory had they included such a limitations period. Even union members can be bound by a contractual limitations period to which they agree prior to being hired and joining the union.

The key is to make sure the contractual limitations period language is written correctly, so that it can be enforced by a court. Also key is that it must be on the employment application and not in the employee handbook which generally states “nothing in this handbook creates any contractual obligations” somewhere in its introduction.

If you don’t have a limitations period spelled out on your company’s employment application, consult with an experienced employment attorney today. By tomorrow you may find you're too late!

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