The Sophisticated Employer Blog

Michigan employers have consistently relied on standard employment applications and employee acknowledgment forms to enforce what is generally known as “boilerplate” terms including shortening the statute of limitations period for filing claims and mandatory arbitration provisions.

However, the Michigan Supreme Court recently cautioned against such reliance in its decision in Rayford v. American House Roseville, LLC, --N.W.3d--, 2025 WL 2177754 (July 31, 2025). In Rayford, the plaintiff signed an employment agreement that required claims arising out of her employment to be brought within 180 days after the claim arises. After being terminated in July 2017, the plaintiff filed a lawsuit against her former employer alleging violations of the Elliott-Larsen Civil Rights Act. The trial court and Michigan Court of Appeals affirmed the employer’s motion to dismiss the plaintiff’s claims, citing the contractually shortened period of limitations as enforceable.

The plaintiff subsequently appealed to the Michigan Supreme Court, which held that while employers and employees may still agree to shortened limitations period, those provisions are no longer presumed enforceable, especially in the context of “adhesion contracts.” Instead, the Supreme Court held that these non-negotiated boilerplate terms required close judicial scrutiny and must be examined for reasonableness.

In its ruling, the Supreme Court provided the following reasonableness test when examining non-negotiated boilerplate terms:

• That the claimant have sufficient opportunity to investigate and file an action;
• That the time period not be so short as to practically prevent the right of action; and
• That the right of action not be barred before the loss or damage can be ascertained.

The Supreme Court did not rule on whether the shortened limitation period of 180 days was reasonable. Instead, the case was remanded back to the Macomb Circuit Court for it to examine the reasonableness of the shortened limitation period of 180 days.         

While the Supreme Court did not rule on whether the shortened limitations period was reasonable in Rayford, an upcoming appellate court decision may provide some additional insight for employers on the enforceability of “boilerplate” terms in Applications. On Oct. 2 in Saidizand v. Gojet Airlines, LLC, --N.W.3d --, 2025 WL 2808932 (Oct. 2, 2025), the Supreme Court vacated the judgment and remanded the case back to the appellate court for reconsideration in light of the Rayford decision.

At issue in Saidizand was whether the plaintiff’s claims under the Elliott-Larsen Civil Rights Act were subject to mandatory arbitration as detailed in the mutual arbitration agreement signed by the plaintiff. In Saidizand, as part of the application process, the plaintiff signed the mutual arbitration agreement that required both the plaintiff and GoJet to resolve, exclusively by arbitration, any and all claims, disputes or controversies “arising out of or relating to” his employment with GoJet.

On March 17, 2020, the plaintiff commenced an action in Wayne County Circuit Court alleging claims under the Elliott-Larsen Civil Rights Act. The defendants moved for summary disposition arguing that the plaintiff agreed to be bound by GoJet’s mutual arbitration agreement, which required claims concerning discrimination, harassment and unpaid wages to be arbitrated.

The trial court held that the plaintiff’s wage claim was subject to arbitration but that the Elliott-Larsen claims were not subject to mandatory arbitration. The defendants appealed. The appellate court agreed with the defendants and held that because the plaintiff and GoJet “clearly and unmistakably” agreed that only the arbitrator had authority to determine the plaintiff’s claims, the trial court erred by interpreting the agreement and deciding whether the Elliott-Larsen claims were subject to arbitration. The appellate court reversed the trial court’s decision to deny the defendant’s motion for summary disposition with respect to the Elliott-Larsen claims and remanded the matter to the trial court with instructions to dismiss the matter.

The plaintiff subsequently sought leave to appeal to the Supreme Court, which held the matter in abeyance pending the decision in Rayford. Just months after its decision in Rayford, the Supreme Court remanded Saidizand back to the appellate court, signaling the first opportunity for Michigan courts to provide insight on the reasonableness of “boilerplate” terms such as mandatory arbitration. While the issue in Saidizand is limited to the reasonableness of mandatory arbitration, the appellate court’s ruling on such terms will provide guidance to employers on other “boilerplate” terms such as shortened limitations periods.

Employer Considerations

• Employers should recognize that such “boilerplate” terms are not automatically enforceable. Courts are reviewing these provisions for reasonableness and unconscionability.
• While employers await further clarification from Michigan courts on the enforceability of such provisions, additional steps to ensure that the applicant/employee has read and received notice of “boilerplate” terms may bolster the enforceability of such provisions.

Requiring an employee to initial or sign next to “boilerplate” term paragraphs in the employee acknowledgement form and/or providing the employee a reasonable time, such as seven days, to review the employee acknowledgement form before signing and returning to the employer may provide the necessary framework for establishing the reasonableness of said terms.