A state appeals court has rejected a plea from several former nursing home workers to reopen a discrimination case against their employer. But in doing so, it may have increased pressure on Michigan’s top court to do away with employment contracts that limit the time workers have to bring certain lawsuits.
Given the frequent use of arbitration in both employee and resident contracts, what happens next will be watched closely by the skilled nursing sector.
Last week’s ruling in Bradley, Chappell, Hamm and Kemp vs. Fountain Bleu Health and Rehabilitation Center provides an immediate win for the provider. A three-judge panel found a lower court was right to toss the complaints of four African-American women because they didn’t make it to arbitration in the time required by arbitration agreements they each signed when hired.
But the case raises serious concerns about whether workers should be subject to employment contracts that reduce the time frame in which they can allege discrimination to a period less than the federal statute of limitations.
This case adds to the increasing scrutiny of the kinds of arbitration agreements commonly used by nursing homes. Federal courts and regulators have in recent years trimmed the use of such contracts, and earlier this month, legislation was introduced in the US Senate that would codify the existing regulatory prohibition of agreements as a condition of admission into federal law.
The women in the Bradley ruling were fired in 2019 and first brought an employment discrimination lawsuit against Fountain Bleu that August in the US District Court for the Eastern District of Michigan. They alleged race discrimination, harassment, age discrimination, retaliation, and hostile work environment in violation of Michigan’s Elliot Larson Civil Rights and the federal Civil Rights Act of 1964.
The nursing home, owned by Optalis Health & Rehabilitation, asked the court to dismiss that case and compel binding arbitration. It did so by December, and the plaintiffs tried unsuccessfully to have that order overturned.
By the time they made it to arbitration, Fountain Bleu moved to dismiss the claims there too, saying the women’s signed arbitration agreements that placed a six-month limitation on employment discrimination claims, according to court documents.
The women went back to state court for relief, but that effort was also defeated in March and again in the Thursday ruling from the Court of Appeals.
Circumventing accountability?
In their latest efforts, plaintiffs had asked the court to “conclude that arbitration agreements that provide limitations period shorter than the applicable statutory limitations periods are unenforceable because they are contrary to public policy.” The appeals court followed its own precedent, saying that a shortened limitations period “is to be enforced as written unless the provision violates the law or public policy or is otherwise unenforceable under traditional contract defenses, including duress, waiver, estoppel, fraud, or unconscionability.”
In a companion opinion, however, Judge Allie Greenleaf Maldonado said she shared the plaintiffs’ public policy concerns regarding the enforceability of time-limited arbitration agreements.
“In my opinion, empowering employers to circumvent accountability for discriminatory practices by reducing the limitations period for proceeding with civil rights actions as a condition of employment is directly contrary to the purposes of the ElliotLarson Civil Rights Act,” she wrote.
The state’s top court already has an opening to consider such arguments. In November, it heard oral arguments in a similar case involving a senior living facility. There’s been no ruling in that case yet.
“I hope the Supreme Court will use this opportunity to hold that such agreements are unenforceable as contrary to public policy,” Moldanado added.
Optalis did not immediately return a call from McKnight’s Long-Term Care News seeking comment on the lawsuit or its use or a time-restricted arbitration clause.
