Employers in the Sixth Circuit may want to review their employment contracts following a recent decision in which the court ruled that employers cannot contractually shorten the statutory limitations period for Title VII claims—except in the arbitration context.

In Logan v. MGM Grand Detroit Casino, Judge Bush (with Judges Boggs and Gibbons joining) explained that Title VII’s 300-day statute of limitations for discrimination claims is a substantive right granted by Congress that cannot be shortened by a pre-dispute employment contract.  The plaintiff’s contract contained a clause waiving Logan’s right to sue if she waited longer than 6 months following any discriminatory incident to file her claim.

In striking down that clause, the panel’s decision relied on Supreme Court precedent holding that “where statutes that create rights and remedies contain their own limitation periods, the limitation period should be treated as a substantive right.”  The opinion explained that Title VII contains its own statutory period of limitations similar to the Fair Labor Standards Act (FLSA), which the Sixth Circuit had previously held to be unwaivable.  Under longstanding Supreme Court precedent, such substantive employment rights cannot be contractually waived in advance.  The decision distinguished claims under ERISA or Section 1981 because those statutes rely on general limitations periods created by other statutes.

Importantly, the decision also notes that Morrison v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003) (en banc), crafted a different rule for arbitration claims:  a “one-year limitation period to bring a Title VII claim to arbitration is not unduly burdensome, and therefore such a provision is enforceable.”  The Logan court explained that Morrison’s rule has “little, if any, persuasive force” outside of the arbitration context because it was premised on concerns unique to the Federal Arbitration Act.