What happens when an employee brings a wage complaint after the claim period prescribed by her employment agreement expires?

What happened. When “Faith” joined FedEx in 1997, she signed an employment contract that stipulated, “To the extent the law allows an employee to bring legal action against [FedEx], I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event … whichever expires first.”

In 2003, Faith held a position classified as grade 7 under FedEx’s pay system. In January 2004, FedEx eliminated a grade-27 position held by “Neil” and turned some of his responsibilities over to Faith. Faith remained at pay grade 7, however, until December 2004, when she was promoted to a grade-25 position. Her position was later reclassified as grade 23. In June 2008, she accepted a new position that did not encompass any of Neil’s former duties.

In April 2009, Faith sued FedEx claiming unpaid overtime under the Fair Labor Standards Act (FLSA) and underpaid wages under the Equal Pay Act (EPA). FedEx sought summary judgment, arguing that she was an exempt employee, and her complaint fell outside of the claim period provided in her contract. The company won in district court, and Faith appealed.

What the court said. The 6th Circuit Court of Appeals, which covers Kentucky, Michigan, Ohio, and Tennessee, overturned the district court’s ruling, noting, “The Supreme Court held decades ago that an employee is not free to waive her claims under the [FLSA].”

While the courts have upheld limited claim periods under Title VII of the Civil Rights Act, the court noted that “an employer that pays an employee less than minimum wage arguably gains a competitive advantage by doing so,” while “[a]n employer who refuses to hire African Americans or some other racial group does not.” The court concluded that Congress “meant for claims under the Equal Pay Act to be unwaivable as well.”

FedEx argued that the company paid Faith less than Neil not because of his sex but because FedEx reviewed his duties and assigned a lower pay grade to them after he left. The court found evidence casting doubt on this claim, including a memo that “suggested that FedEx was not clear on what [Neil’s] duties had been.”

The company also argued that Faith acknowledged she was exempt from overtime, but the court found that “[a]n employee’s subjective belief that her position was exempt … does not mean the position was exempt as a matter of law.” The case was remanded for trial. Boaz v. FedEx Customer Information Services, Inc., et al., 6th Cir., No. 12-5319 (8/6/2013).

Point to remember. Pay grades should be assigned on the basis of documented, objective criteria included in written job descriptions.