4th Circuit upholds shortened limitations period in arbitration agreement

Over the last several years, employers increasingly have been requiring employees to sign mandatory arbitration agreements as a condition of employment. The trend has been on the uptick due to concerns about the ever-increasing cost of litigation and the potential for runaway juries to award millions of dollars in damages.

An additional benefit of arbitration recently was highlighted by the U.S. 4th Circuit Court of Appeals (whose rulings apply to all Maryland and Virginia employers). The court ruled an employment agreement's requirement that any claim be made within one year was enforceable even though a number of employment-related claims the employee asserted had longer limitations periods.

Facts

Michael Bracy worked as a truck driver for Lancaster Foods LLC. When he was hired, he signed a mandatory arbitration agreement, which required any claim he might make against the company to be filed within one year and be heard by an arbitrator, not by a jury.

After suffering an on-the-job injury, Bracy and Lancaster disagreed about his work restrictions, and ultimately, the company viewed his position as a resignation. He sued the company in state court, asserting various employment claims.