Company’s Shortened Contractual Period To Assert Claim Invalidates Arbitration Provision

The New Jersey appellate division recently invalidated an company’s attempt to compel arbitration of claims brought by a former employee. In Guc v. Raymours Furniture Company, Inc., the court was presented with a contractual provision that required the employee to commence an arbitration of her employment related claims within 180 days. Because the contractual time limit was shorter than that provided by New Jersey law, the court, relying on judicial precedent, found it to be unenforceable.

Moreover, the court rejected the company’s argument that the arbitration should nonetheless proceed, with the time limitation being severed from the contract. Reviewing the agreement in its entirety, the court held that the company “chose to link and intertwine the time-limitation concept with the agreement to arbitrate. To sever the time-limitation provisions would require a rewriting of the contract…” Accordingly, the court refused to compel arbitration, leaving the company to judicially defend the employee’s claims.

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