Invalid Contract Can’t Prevent $615,000 Judgment

In recent years, employers’ attorneys have been recommending “limitations on claims” provisions in employment contracts and employee handbooks. These provisions usually state that employees must bring all claims they may have against their employer within six months or a year of discovering a problem. These provisions are designed to limit employees to a shorter period for filing claims than required by statute-of-limitations laws.

Robert Half International (RHI), a Pleasanton-based staffing firm, recently tried using a provision like this in workers’ employment contracts.

How To Survive an Employee Lawsuit: 10 Tips for Success

With lawsuits against employers becoming ever more common—and jury verdicts skyrocketing—your risk of getting sued has increased dramatically even if you’ve done all the right things. Learn how to protect yourself with our free White Paper, How To Survive an Employee Lawsuit: 10 Tips for Success.

Six former employees who worked for RHI as “account executives” sued the company, alleging that they were misclassified as exempt employees and were improperly denied commissions, meal periods, and accurate wage statements.

RHI argued that the employees’ claims were barred by the limitations on claims provision in their employment contracts, which required employees to bring any complaint for employment law violations within six months of becoming aware of the problem.

But both the trial court and the appeals court ruled that the three-year statute of limitations applicable to wage and hour claims under California law is grounded in fundamental state public policy and cannot be waived. The court upheld a $615,000 award to the employees for back overtime wages, commissions, missed meal period premiums, and penalties.

We’ll have more on this decision, and what it means for California employers, in an upcoming issue of California Employer Advisor.

Leave a Reply

Your email address will not be published. Required fields are marked *