News Notes: Employment Contracts Can Shorten Time to Sue

Provisions in an employment contract between Western & Southern Life Insurance Co. and its sales agents stated that agents had only six months from the date of discharge to file a lawsuit for wrongful termination, even though California law may provide up to four years to sue for breach of contract. The employment agreement also required employees to give advance notice of their claim to the company 10 days before filing suit. Several employees who were terminated sued Western & Southern more than six months after being discharged and/or failed to give the company advance notice. They contended that the contract provisions were unenforceable. The Ninth Circuit Court of Appeals has now ruled that an employment contract can shorten the time for filing a lawsuit. But the court also found that the ten-day-notice provision was enforceable under California law. That’s because it was one-sided, didn’t serve a useful purpose—it was too short a time period in which to investigate and try to settle the dispute—and it had the effect of maximizing employer advantage and depriving employees of their right to sue.