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Sixth Circuit Applies Federal ADEA Statute of Limitations to Employees’ State Law Discrimination Case

clock faceThe law can be full of twists and turns, with many nuances that may affect the resolution of an issue and, in the process, the ability of an employee to succeed in a discrimination case. In a recent Sixth Circuit Court of Appeals case involving several former employees at Chrysler, we saw this on display. The employees brought state, but not federal, age discrimination claims. However, since the alleged discrimination related to the employees’ retirement plans, the federal statute of limitations applied to their case and yielded a decision that they brought their legal action too late.

The employees who sued in this case were former executives at Chrysler whose employment with the “Big 3” automaker ended in 2007 as the company’s financial fortunes plummeted. All of the executives had participated in the employer’s Supplemental Executive Retirement Plan. Two years after the end of the executive employees’ employment, Chrysler went bankrupt. The plan’s assets became part of the employer’s bankruptcy estate and went to pay off the automaker’s creditors. These executives lost all of their benefits from the plan as a result of this.

In 2010, the executives sued the employer, alleging that Chrysler was liable for age discrimination. The crux of the employees’ discrimination case centered around the way the employer dealt with retirement benefits. For active employees, the company bought out their retirement benefits with securitized annuities. For former and retired employees, Chrysler left them in the plan, leaving them to lose everything in the bankruptcy. By approaching these retirement benefits this way, the employer effectively created a scheme that discriminated based on age.

The problem for the employees, which the employers successfully litigated before the trial court and the Sixth Circuit, was one of timing and which law applied to the employees’ case. The executives filed their lawsuit too late, meaning that the statute of limitations barred them from even pursuing their case, the courts ruled.

In this case, the executives brought their discrimination case under a state law claim, rather than the federal Age Discrimination in Employment Act. Nevertheless, the trial court decided that the federal ADEA’s much shorter statute of limitations (less than one year, as opposed to Michigan’s three-year limitations period) applied to these employees’ case.

Why would the courts use the federal limitations period, rather than the state law’s period, when the plaintiffs specifically made a state law claim and did not make an ADEA one? The reason for this lay in the subject matter of the case:  discrimination in the handling of benefits from a retirement plan. Since the case related to a retirement plan, that triggered the Employee Retirement Income Security Act of 1974. ERISA, a federal law, creates preemption (or a legal barrier) to bringing certain state law claims in a lawsuit. The Sixth Circuit, ruling on the issue for the first time, stated that ERISA, while not preempting all state-law discrimination claims, did block claims that failed to comply with the federal statute of limitations.

The federal statute of limitations for age discrimination (set out in the ADEA) is less than one year. Michigan law sets it at three years. So, while the Chrysler executives’ case was timely under Michigan law, it wasn’t under the ADEA. This scenario, the court stated, meant that ERISA preempted the state-law discrimination claim and justified the trial court’s ruling in favor of the employer.

In Tennessee, this state’s Human Rights Act prohibits discrimination against employees who are 40 or older based upon their age. Under Tennessee law, you have much less time to act than the three-year period generally allowed in Michigan. In this state, you must submit your complaint to the Tennessee Human Rights Commission within 180 days of the date when you believe your employer committed the discrimination. For a federal ADEA claim, you have 300 days to file with the EEOC. So, if you think you’ve suffered discrimination at work, it is essential to act quickly in retaining counsel and pursuing your case.

With discrimination law, as is true of many areas, there can be elements of the law that are nuanced or very counter-intuitive to a layperson. Whether you are an employer or an employee, it is important to have experienced employment counsel on your side who understand all of the subtleties and quirks of the law. The skilled Tennessee age discrimination attorneys at Mays & Kerr have the knowledge and resources to provide you with the advice and advocacy you need in pursuing or defending your discrimination case.

To speak with one of our lawyers about your case, call 1-877-986-5529.

More blog posts:

Full 11th Circuit Scraps Georgia Job Applicant’s Age Discrimination Case: What it Means for Georgia Employers and Employees, Atlanta Employment Attorneys Blog, Oct. 12, 2016

Sixth Circuit Follows “Honest Belief” Rule to Reject Wal-Mart Associate’s Age Discrimination Case, Atlanta Employment Attorneys Blog, Oct. 5, 2016