Hospital employee’s agreement to six-month limitations period can’t bar FMLA claim

Refusing to reconsider the denial of a hospital’s motion to dismiss a fired employee’s FMLA claim as untimely under a six-month contractual limitations period, a federal court in Michigan reiterated that the FMLA and its regulations provide a two-year limitations period and forbid an employer from interfering with or restraining any right under the Act, which includes the right to file suit within two years. The court rejected the hospital’s distinction between substantive and procedural rights, which in the employment law context is a distinction without meaning, and rejected the argument that the ruling is inconsistent with precedent enforcing contractual limitations.

Contract.

The employee was a radiology patient representative at a Detroit hospital. When hired she signed a one-page contract providing: “I agree that I shall not commence any action or other legal proceeding relating to my employment or the termination thereof more than six months after the event complained of and I voluntarily waive any statute of limitations to the contrary.”

Termination.

After working at the hospital for nearly 13 years, the employee was involved in a confrontation with a coworker, exchanging profanities in front of patients. She was fired the next day for violating hospital policy. She claimed this was her first violation and she had seen similar altercations between Caucasian employees who were not fired. She also had recently taken FMLA leave, first to care for her mother and then to receive treatment for her grief and anxiety.

All but FMLA claims time-barred.

The employee filed suit a year and a half after her termination, alleging discrimination based on race and disability as well as FMLA violations. In prior proceedings, the court dismissed all but the employee’s FMLA claims under the contractual limitations period. As to the FMLA claims, the contractual limitation could not apply under a line of Eastern District of Michigan cases following Lewis v. Harper Hospital.
Under the Lewis line of cases, courts point to the FMLA and 29 C.F.R. Sec. 825.220(a) and (d), which provide for a two-year limitations period; forbid an employer from interfering with or restraining any right under the Act; and provide that employees cannot waive their FMLA rights. Thus, the FMLA is an exception to the general rule favoring freedom of contract and the concomitant enforcement of contractual limitations periods.

Motion for reconsideration.

Now seeking reconsideration, the hospital argued that: (1) the statutory limitations period is a procedural right and Section 825.220 protects substantive rights; and (2) Supreme Court precedent subsequent to the Lewis line of cases holds that courts must enforce contractual provisions shortening limitations periods unless Congress expressly provides otherwise in the pertinent statute, which the hospital argued was not done in the FMLA.

Substantive versus procedural rights.

Even assuming that the court’s prior opinion failed to address the distinction between substantive and procedural rights, it found that the hospital’s first argument failed on its merits because “in the realm of employment law, where protections to the employees’ ability to exercise their substantive rights are memorialized as they are in Sec. 825.220. ‘It is both unwise and incorrect to divorce procedural from substantive rights in employee rights cases.'” The court again pointed to the Lewis line of cases and noted that the hospital cited to no contrary law supporting its position. Thus, with respect to the FMLA, a reduction in the length of the limitations period impermissibly constitutes a compromise of the employees’ rights.

Ruling not contrary to precedent.

The court also rejected the hospital’s argument that the Lewis line of cases is inconsistent with 70 years of Supreme Court precedent enforcing contracts that shorten limitations periods. The hospital pointed to Heimeshoff v. Hartford Life & Acc. Ins. Co., an ERISA case in which the Court held that “[a]bsent a controlling statute to the contrary” a plan participant may agree to a shorter limitations period. According to the hospital, this meant only a “statute” can justify a departure from a contractually shortened period and Section 825.220 is merely a regulation. To the court though, this too narrowly interpreted Heimeshoff, which did not stand for the proposition that courts mechanically apply the text of the statute. Indeed, the High Court had also relied on safeguards contained within applicable regulations.
In sum, the court here did not view the Lewis line of cases as being inconsistent with Supreme Court precedent. And while the hospital also pointed to a Sixth Circuit case enforcing a contractual shortening of USERRA’s limitations period, the court here could not readily locate a distinction between the FMLA’s procedural and substantive protections as the Sixth Circuit had inferred with respect to USERRA. For all these reasons, the court denied the hospital’s motion to reconsider its conclusion that the six-month contractual limitations period in this case could not bar the employee’s FMLA claim.

SOURCE: White v. Detroit Medical Center (E.D. Mich), No. 15-13829, August 9, 2017.
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