§ 6.3.3 Statute of Limitations. Claims for infliction of emotional distress have historically been governed by the two-year statute of limitations for "injuries done to the person of another."10 However, the passage of the Arizona Employment Protection Act (the "AEPA")11 in 1996 has engendered some uncertainty.
In addition to addressing implied contracts limiting the employment-at-will doctrine and claims for wrongful termination in violation of public policy,12 the AEPA also added claims for "breach of an oral or written employment contract" and "wrongful termination" to Arizona's one year statute of limitations.13 Specifically, A.R.S. § 12-541 now states:
There shall be commenced and prosecuted within one year after the cause of action accrues, and not afterward, the following actions:
. . . .
3. For breach of an oral or written employment contract including contract actions based on employee handbooks or policy manuals that do not specify a time period in which to bring an action.
4. For damages for wrongful termination.
. . . .
This has led to confusion regarding which employment or employment-related contracts fall within the scope of the one-year limitation. In 2007, attorneys Thomas M. Rogers and David F. Gomez postulated in an article in the Arizona Attorney that only "employment contracts" that alter or limit an employer's right to terminate at-will are subject to the one-year limitations period.14 In their view, the employment relationship encompasses several agreements, only one of which may deal with the termination of employment. In other words, there is no such thing as a single "employment contract" with many provisions. Rather, the relationship is comprised of a bundle of employment-related agreements that are independent, separate and distinct from one another.
Rogers and Gomez argued that A.R.S. § 12-541(3) applies to only that agreement in the bundle of employment-related agreements dealing with termination of employment. They reasoned that A.R.S. § 12-541(3) came into being as a result of the AEPA, and the term "employment contract" is ambiguous because it is not defined in A.R.S. § 12-541 or the AEPA. However, the AEPA was designed to legislatively reverse the erosion of the common law doctrine of employment at-will generated by Wagenseller v. Scottsdale Memorial Hospital15 and its progeny. Thus, the term "employment contract" should be interpreted in light of the general purpose of the AEPA. As a consequence, each of the other employment-related agreements should be subject to a separate limitations period. In this regard, Rogers and Gomez suggested that "[i]t is not unusual for two or more possible limitations periods to apply to claims arising out of the same factual situation."
In 2008, the Arizona Court of Appeals decided Redhair v. Kinerk,16 in which it cited and rejected the Rogers and Gomez analysis of A.R.S. § 12-541(3).17 The court found no ambiguity in the term "employment contract" and held that the one-year limitations period governed the plaintiff's claim for breach of employment contract.18 The court reasoned that "employment contract" means "a contract between an employer and employee in which the terms and conditions of employment are stated."19 This includes "all contracts defining specific responsibilities of the employer to the employee."20 In other words, it encompasses any agreement related to "the nature, conditions, or duration" of employment.21 The court also pointed out that Arizona's "legislature has repeatedly determined that employment claims should be governed by relatively short statutes of limitation."22
More recently, a federal district judge cited Redhair in holding that an ERISA plan contract fell within the definition of "employment contract" and therefore the one-year limitation applied to claims brought under the plan.23 The judge interpreted Redhair to mean that the one-year limitation "appl[ies] to almost all disputes between an employer and employee."24
In short, Arizona's appellate courts have not yet determined the appropriate limitations period for infliction of emotional distress in the employment context.25 If and when the issue is decided, however, the one-year limitation under A.R.S. § 12-541(3) may be held to apply.26 Accordingly, the prudent...
