The Sophisticated Employer Blog

Following a recent federal court ruling, and despite a potential adverse ruling anticipated soon by the Michigan Court of Appeals on claims brought in Michigan state courts, employers can confidently rely upon mandatory arbitration provisions for discrimination claims brought by their employees in federal court.

In Byron Johnson and Brian Taylor v. Kelley Services, Inc., Case No. 2:25-cv-10570-BRM-DRG (E.D. Mich. Oct. 1, 2025), the federal district court granted the defendant’s motion to compel arbitration holding that the plaintiffs’ Michigan Elliott-Larsen Civil Rights Act (ELCRA) and Title VII claims were subject to mandatory arbitration because the Federal Arbitration Act (FAA) preempted any Michigan authority striking mandatory arbitration claims under ELCRA.

In Johnson, the plaintiffs brought a discrimination and retaliation lawsuit against their former employer, Kelly Services, alleging violations of Title VII of the Civil Rights Act and ELCRA. Kelly Services moved the court to compel arbitration consistent with the “Dispute Resolution and Mutual Agreement to Binding Arbitration” agreed upon by the plaintiffs when they began their employment with Kelly Services.

The plaintiffs argued that the district court should stay the case pending the outcome of the appeals in Rayford v. Am. House Roseville, I, LLC 991 N.W.2d 199 (2023) and Saidizand v. GoJet Airlines, LLC, 991 N.W.2d 208 (Mich. 2023). At issue in the Rayford and Saidizand appeals is whether “boilerplate” terms such as mandatory arbitration provisions of statutory discrimination claims in employment agreements were reasonable and enforceable.

The district court rejected the plaintiffs’ request, holding that “it is well-settled that the FAA ‘preempts state laws and policies regarding arbitration.’” The district court held that regardless of the Michigan Supreme Court’s rulings in Rayford and Saidizand, the FAA preempted state law and policies regarding arbitration. Thus, even if the Michigan Supreme Court considered striking mandatory arbitration for all claims under the Elliott-Larsen Civil Rights Act, the FAA would preempt that decision, and plaintiffs would be compelled to arbitrate their Elliott-Larsen claims.

Accordingly, the district court denied the plaintiffs’ request to stay a decision on the defendant’s motion to compel arbitration pending the resolution of Rayford and Saidizand, as either decision “would be inconsequential to whether the ELCRA claims must be arbitrated.”

The district court’s opinion provides insights for employers on how federal courts will review the enforceability of arbitration clauses typically found in employee acknowledgement forms/employment agreements. As many employers add mandatory arbitration provisions of all claims, including statutory discrimination claims, within their employment agreement/acknowledgement forms, the district court’s opinion reinforces an employer’s reliance on the enforceability of arbitration clauses in employment agreements for pending actions in federal courts.

However, Michigan employers should be cautious about claims brought in state court. Indeed, the crux of the district court’s ruling in Johnson was the federal preemption of state law, which rendered any Michigan Supreme Court decision inconsequential to actions pending in federal court.

It is important to note that this ruling does not address whether a Michigan state court, reviewing only state law claims (such as a discrimination claim under the ELCRA or the Persons with Disabilities Civil Rights Act), could enforce a mandatory arbitration provision. Employers will have to await the Michigan Court of Appeals’ opinion in Saidizand for additional guidance on these types of claims.