NEW LAW


Table of Contents

  1. The Michigan Supreme Court rules that an arbitration agreement in an employee handbook is unenforceable against an at will employee.
  2. The Michigan Court of Appeals establishes new law regarding arbitration clauses and civil rights employment claims in Rembert v Ryan’s Family Steakhouses, Inc., No. 196542, decided April 9, 1999.
  3. The Michigan Supreme Court ruled against employers holding that when their is an unreasonable short period of limitation in an employment contract the period to be applied is the one set forth in the statute as opposed to the contract.

The Michigan Supreme Court rules that an arbitration agreement in an employee handbook is unenforceable against an at will employee.

The Michigan Supreme Court rules that an arbitration agreement in an employee handbook is unenforceable against an at will employee in the case of Hertebise v Reliable Business Computers, Inc. 452 Mich 405 (1996). The employer had argued that the Plaintiff was bound by an arbitration agreement contained in an employee handbook. This particular handbook also contained a provision providing that the employee was an "at will" employee.

The court went on to find that since the handbook was not an enforceable contract the employee was not bound by the arbitration procedure. Accordingly, an employee under such circumstances can file their civil rights claim in court and is not limited to arbitration. In Michigan an employee is entitled to a trial by jury in civil rights cases. There is usually no jury available in arbitration proceedings.

The court did not decide in this case if a binding arbitration agreement could stop an employee from bringing a future civil rights lawsuit in court.

Employers may possibly avoid this result by following the procedures set forth in Rembert v Ryan’s Family Steakhouses, Inc., Michigan Court of Appeals Case No. 196542, decided April 9, 1999.

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The Michigan Court of Appeals establishes new law regarding arbitration clauses and civil rights employment claims in Rembert v Ryan’s Family Steakhouses, Inc.,

These two quotes from the decision summarize the court’s holding:

"This conflicts panel convened to decide if a predispute agreement to arbitrate statutory employment discrimination claims (arising under the Michigan Elliott-Larsen Civil Rights Act ["ELCRA"] and the Persons With Disabilities Civil Rights Act ["PWDCRA"]) is valid and enforceable. In Rushton v Meijers, 225 Mich App 156; 570 NW2d 308 (1997), this Court held that this kind of predispute agreement is invalid as a matter of public policy. Contrary to Rushton’s holding, the overwhelming majority of federal and other state courts have held that these agreements are enforceable provided that the arbitration procedures are fair and the agreement waives no substantive rights and remedies. We join the majority of courts and hold that so long as no rights or remedies accorded by the statute are waived, and so long as the procedure is fair, employers may contract with their employees to arbitrate statutory civil rights claims."

"Conditions for Enforceable Arbitration Agreement

    We conclude, from the state and federal authorities reviewed thus far, that predispute agreements to arbitrate statutory employment discrimination claims are valid if: (1) the parties have agreed to arbitrate the claims (there must be a valid, binding, contract covering the civil rights claims); (2) the statute itself does not prohibit such agreements; and (3) the arbitration agreement does not waive the substantive rights and remedies of the statute and the arbitration procedures are fair so that the employee may effectively vindicate his statutory rights."

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Michigan contact AAAA Legal Center by Phone or E-Mail

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The Michigan Supreme Court ruled against employers holding that when their is an unreasonable short period of limitation in an employment contract the period to be applied is the one set forth in the statute as opposed to the contract.

This ruling is found in the case of Herweyer v Clark Highway Service, Inc., 455 Mich 14 (1997). In the case the employer asked the employee to sign an employment contract which provided in pertinent part:

"I will not commence any action or suit relating to my employment with the Company (or termination of the employment) more than six (6) months after the termination of my employment, and I agree to waive any statute of limitations to the contrary. I understand that this means that even if the law would give me the right to wait a longer time to make a claim, I am waiving that right, and that any claims not brought within six (6) months after my employment will be barred. I agree to the above terms of employment. I agree that if any of the above commitments by me is ever found to be legally unenforceable as written, the particular agreement concerned shall be limited to allow its enforcement as far as legally possible."

The Supreme Court found that the period of limitations was unreasonably short and that the statutory period of limitations applied. Therefore, the company’s attempts to limit the time for bringing suit against the company to 6 months failed. The company attempted to rely on a savings clause which required the court to set a period if 6 months was too short. The court held that the statutory period applied and ruled against the employer.

If you have a question regarding a legal matter in the state of
Michigan contact AAAA Legal Center by Phone or E-Mail

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Last modified: February 11, 2010