Last month, the Sixth Circuit Court of Appeals in Margaret Boaz v. FedEx Customer Information Services, No. 12-5319 (6th Cir., August 6, 2013), held that a six (6) month time limitation in an employment agreement constitutes an invalid waiver of the employees Fair Labor Standards Act (FLSA) claims and, even more importantly, their Equal Pay Act (EPA) claims.
In Boaz, the Plaintiff, Margaret Boaz, began her employment with FedEx in 1997. Upon being hired, she signed an employment agreement with FedEx which contained the following language: To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or six (6) months from the date of the event forming the basis of my lawsuit, whichever expires first.
In 2004, after the Company conducted lay-offs and position consolidations, Plaintiff received additional work duties from a higher compensated position which was previously held by a male. Boaz conducted those duties until 2008. Later in 2009, Plaintiff filed her lawsuit under FLSA and EPA arguing FedEx paid her less than male employees for the same work and failed to pay her overtime compensation. FedEx moved for summary judgment arguing her claims were untimely under her employment agreement because the last allegedly illegal activity, which was the issuance of a June 30, 2008 paycheck, occurred more than six (6) months before she filed suit. The District Court agreed and found that the limitation was enforceable.
The Sixth Circuit disagreed looking to the Supreme Courts decision in Jewell Ridge Coal Corp. v. Local No. 6167, United Mine Workers of Am., 325 U.S. 161, 67 (1945), where the court held an employment agreement cannot be utilized to deprive employees of their statutory [FLSA] rights. The Sixth Circuit also cited the Supreme Courts rationale that such limitations are prohibited to prevent employers from gaining an advantage over their competitors. Therefore holding that the six (6) month limitation could not bar Boazs FLSA claims.
The Sixth Circuit likewise held Plaintiffs EPA claims could not be barred by the six (6) month limitation. The Court came to this conclusion by looking to Congresss intentions. The Sixth Circuit held that because the EPA is merely an amendment to the FLSA, it presumed that Congress meant for claims under the EPA to be unwaivable as well. Lastly, using the Supreme Courts rationale, the Sixth Circuit held that an employer who pays women less than a lawful wage might gain the same competitive advantage as an employer who pays less than minimum wage. Therefore, the Sixth Circuit held that Boazs EPA claims could not be waived and the six (6) month limitation in her employment agreement was invalid.
This case solidifies the Supreme Courts long standing position that employees cannot waive their right to wages and damages under the FLSA. However, this case adds an additional consideration for employers that employees many not be able to waive claims for wages and damages under the EPA either.
Certainly this ruling will have major ramifications for employers in the Sixth Circuit (which governs Michigan, Ohio and Tennessee). However, all employers should look out for other circuits to possibly follow suit. McMahon Bergers St. Louis Employment law attorneys will continue to monitor how this ruling will affect all employers. If you are interested in how your company can navigate employment agreements with limitations on employees state and federal law claims, please contact the St. Louis Employment Law Attorneys of McMahon Berger P.C.