Sixth Circuit: Employment Contracts FLSA Claims Invalid

Charles W. Miller & Associates

When employees discover that their wages have been illegally withheld, or that their employers have committed other acts that would be illegal under state or federal law, it is often months or years after the injury first occurred. Whether an employee can get relief, and how much, depends upon whether the statute of limitations has run. The statute of limitations acts as a time limit for which an injured party can file a lawsuit from the date of the injury. This time limit may vary by state, type of injury, or statute. In Kentucky, the statute of limitations for labor law claims is five years, while it is two years for Indiana. The statute of limitations may also specify that the clock starts running only after the injured party “should have known” about the injury, rather than when the injury actually occurred. Many employers have sought to circumvent the statute of limitations by placing language in employment contracts that shortens the amount of time employees have to file a claim. They argue that these clauses are valid, as the employee agrees to them when he or she signs the contract. However, this past month, the Sixth Circuit Court of Appeals disagreed.

In Boaz v. FedEx, the Sixth Circuit held that a contract clause mandating that a suit must be filed within six months of the injury was invalid. The case began in 2009 when FedEx employee Margaret Boaz sued her employer for wage and hour and Equal Pay Act violations between 2004 and 2008. Boaz had taken over a higher position with many more responsibilities, but her pay reflected her original low-level status. Boaz argued that she should have been paid what the previous male employee in that position was paid. FedEx, in turn, argued that Boaz’s lawsuit should be dismissed because, under her contract, she had only six months to file from the time the pay disparity last occurred.

The Sixth Circuit rejected this argument, stating that under the federal Fair Labor Standards Act (FLSA), employment claims could not be waived by contract. Since Boaz’s Equal Pay Act claim was an extension of the FLSA, it was still valid. The Sixth Circuit’s decision, though welcome, was a bit perplexing in light of the fact that it had previously ruled that employment contract waivers were permissible. The Sixth Circuit distinguished those decisions by noting that the other cases were based on statutes like Title VII of the Civil Rights Act, which allowed employees to waive their employment law claims. Also, the Sixth Circuit noted that if an employer can waive FLSA claims by contract, the employer gains a competitive advantage.

The Sixth Circuit’s decision helps employees in Kentucky by giving them more power to file wage and hour claims. While it would seem like conventional wisdom that an employee file a claim during the time the disparity occurs, often times, it may take a while for employees to learn that the pay disparity is even illegal — especially when they are discouraged from learning about other employees’ salaries, which is often the case. However, if you think that you have a wage and hour claim and are within the statute of limitations, contact a Kentucky employment law attorney to discuss your rights.

Charles W. Miller & Associates is a plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. Contact us today for a free consultation.

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