I see more and more arbitration agreements that contain their own limitations period (the timeline for bringing a 
dispute in arbitration). Are all of those necessarily enforceable? No.
In Order of United Commercial Travelers of America v. Wolfe, 331 U.S. 586 (1947), the Supreme Court held that contracts may shorten the statute of limitations so long as the period is reasonable. (This blog has previously addressed who hears the limitations argument — courts or arbitrators.) However, there are very few hard-and-fast guidelines that courts offer on what amount of time is reasonable in the arbitration context. Periods as short as ninety days have been found reasonable, while periods as long as two years have been found unreasonable. See, e.g., Letourneau v. FedEx Ground Package Sys., Inc., No. Civ. 03-530-B, 2004 WL 758231, at *1 (D.N.H. Apr. 7, 2004) (upholding ninety-day limitations period); McKee v. AT&T Corp., 191 P.3d 845, 859-60 (Wash. 2008) (invalidating two-year limitations period).
In determining reasonableness, courts look at the unique facts of each case and the relevant policy considerations. Here are three factors that will make it less likely for a court to uphold the contract’s limitation period:
- Unequal bargaining power. Often in the employer-employee context, the court views the employee as the party with weaker bargaining power, less access to counsel and fewer financial resources. For those reasons, whether the limitations period is thirty days or six months, courts are hesitant to enforce these periods when the arbitration...
