Can an Employee Handbook Shorten the Time to Sue? What Rayford Changed for Michigan Employers

For years, many Michigan employers put a short deadline for lawsuits into their job applications or handbook acknowledgments. A typical clause requires the employee to file any claim about the job within 180 days or six months, often reducing the three-year period that applies to civil rights claims under Michigan’s Elliott-Larsen Civil Rights Act (ELCRA). Michigan courts usually enforced those clauses as written.

The governing analysis changed on July 31, 2025. In Rayford v. American House Roseville I, LLC, the Michigan Supreme Court held that an adhesive, non-negotiated employment provision shortening the period for civil rights claims must be examined for reasonableness before it is enforced. The decision did not invalidate six-month clauses across the board, but it changed how courts must evaluate them. If you rely on one of these clauses, here is what the Court decided and what it left open.

What happened

Timika Rayford was hired as a certified nursing assistant at a nursing care facility in February 2017. About a week later, she signed an “Employee Handbook Acknowledgement.” It said that “any claim or lawsuit arising out of my employment” had to be filed no more than 180 days after the employment action involved, and that she waived any longer statute of limitations.

She was fired in July 2017. In April 2020, about two years and nine months later, she sued under ELCRA, alleging harassment and retaliation, along with other claims. Her ELCRA claims were filed within the generally applicable three-year period under MCL 600.5805(2), but long after the 180 days in the acknowledgment had run. The trial court dismissed the case on that basis, and the Court of Appeals affirmed. Neither court reached the merits of her claims.

The law before Rayford

Michigan law has long allowed parties to agree to a shorter deadline for lawsuits than the statute provides. For decades, the Michigan Supreme Court required that a shortened deadline be reasonable, and in a 1997 employment case, Herweyer v. Clark Highway Services, it called for “close judicial scrutiny” of employment contracts because employees often have little bargaining power.

In 2005, the Supreme Court changed course in Rory v. Continental Insurance Co., an auto insurance case. Rory held that an unambiguous contractual deadline must be enforced as written unless it violates law or public policy, without any judicial check on reasonableness. Later that year, the Court of Appeals applied Rory to employment applications in Clark v. DaimlerChrysler Corp. Together with an earlier Court of Appeals decision, Timko v. Oakwood Custom Coating (2001), which had found a 180-day period reasonable, these cases led many employers to treat six-month clauses as safe.

What the Michigan Supreme Court held

Shortened deadlines in standard employment forms must be reasonable

The Court stated its holding directly: “We hold that an adhesive boilerplate employment agreement that shortens a limitations period must be examined for reasonableness.” An adhesion contract is a standard form prepared by the stronger party and presented on a take-it-or-leave-it basis. The Court found that Rayford’s handbook acknowledgment fit that description, because a new employee’s practical choice is to sign it or lose the job.

The Court overruled Clark and Timko. The majority limited Rory’s holding to insurance cases and restored reasonableness review for shortened limitations provisions in adhesive employment agreements. Chief Justice Cavanagh joined the majority and also wrote separately. She would have described the result as a narrow employment exception to Rory, rather than calling Rory’s broader statements non-binding commentary (what lawyers call dicta).

The three-part reasonableness test

Courts now apply a test from an earlier Supreme Court case, Camelot Excavating Co. v. St. Paul Fire & Marine Insurance Co. (1981). A shortened period is reasonable only if:

• the employee has sufficient opportunity to investigate and file an action;
• the time is not so short that it effectively eliminates the right to sue; and
• the claim is not barred before the employee can know the loss or damage.

The Court cautioned against a one-size-fits-all approach. While some employees could act within 180 days, it wrote, “‘what is possible’ is not the inquiry. The inquiry is reasonableness.” It listed situations that could make a short window unreasonable for a particular employee, such as needing to find a new job quickly, caring for a sick family member, or saving money to hire a lawyer. It also noted that damages such as emotional distress can take longer to assess than lost wages.

Unconscionability is a separate defense

An employee can also argue that the clause is unconscionable, which requires showing both an unfair process (procedural unconscionability) and an unfair term (substantive unconscionability). The Court of Appeals had rejected Rayford’s argument because she offered no evidence that she lacked other job options. The Supreme Court disagreed: “The ability to quit one’s job is not, in and of itself, a meaningful or realistic alternative.”

What the Court did not decide

The Court did not hold that 180 days is too short. It said plainly, “we do not hold that a six-month limitations period is unreasonable,” because the record had not been developed. It sent the case back to the trial court to decide whether the 180-day period was reasonable and whether it was unconscionable. If the clause fails either test, the full three-year statutory period applies.

The Court also limited its ruling to adhesive agreements. It noted that a negotiated deal is different, giving the example of a chief executive who gives up certain rights while negotiating a severance package. And it said that even a boilerplate clause may survive review: courts “may ultimately rule in favor of the employer based on a finding that the terms, though boilerplate and adhesive in nature, are reasonable.”

Justice Zahra dissented. He would have followed Rory, enforced the 180-day clause, and argued that the majority’s approach unsettles Michigan contract law.

What has happened since

After Rayford, the Supreme Court sent a number of similar cases back to the Court of Appeals for reconsideration, and in 2026 the Court of Appeals returned several of them to the trial courts to apply the new test. Two published Court of Appeals decisions are especially useful for employers.

Arbitration agreements are a separate question, and it is still open. In Johnson v. Best Buy Co. (December 2025), the Court of Appeals held that Rayford’s specific holding concerns provisions shortening the time for civil rights claims, although it used Rayford’s reasonableness analysis when reviewing an arbitration provision in an online job application. It upheld that provision based partly on its mutual application and its use of American Arbitration Association rules.

The Michigan Supreme Court may have the last word. On May 1, 2026, it scheduled oral argument on the employee’s application for leave to appeal in Johnson and asked the parties to brief two questions: whether Rayford’s adhesion-contract analysis applies to the arbitration policy and, if so, whether the Federal Arbitration Act overrides (preempts) that analysis. The Federal Arbitration Act is a federal law that makes arbitration agreements enforceable except on grounds that would invalidate any contract. As of this writing, the Court has not ruled on the application. (For more on arbitration agreements, see our post on when a non-signer can be bound to arbitrate.)

Where a deadline appears can also matter. In Mayberry v. Acrisure Wallstreet Partners, LLC (February 2026), an employee signed a job application with a six-month deadline and later signed an employment agreement with no deadline and an integration clause saying it was the parties’ entire agreement. The court held that the deadline in the application was not part of the employment contract and could not bar the employee’s breach-of-contract claim. The Michigan Supreme Court declined to review the case in August 2026.

Rayford is a published decision of the Michigan Supreme Court and binds Michigan state courts. As of this writing, we have not found a reported decision on whether Rayford’s own 180-day clause was ultimately enforced.

What this means for Michigan employers

If your applications, handbook acknowledgments, or onboarding forms shorten the time to sue:

• Do not assume a six-month or 180-day clause will be enforced as written. Expect a court to ask whether the employee had a realistic opportunity to investigate, hire a lawyer, and file within that window.
• Weigh the benefit against the risk. A clause that is later found unreasonable leaves you with the full statutory period anyway, and litigating its enforceability adds cost.
• Look at all of your onboarding documents together. Under Mayberry, a term appearing only in an earlier application may be excluded when a later employment agreement expressly supersedes prior agreements and prohibits supplementation unless its stated modification requirements are followed. Make sure the documents say what you intend, and that the terms you rely on appear in the document that controls.
• Treat arbitration provisions as a separate and unsettled question. Under Johnson, Rayford does not automatically invalidate employment arbitration agreements, but the Michigan Supreme Court has scheduled argument on whether to take up an appeal raising whether Rayford’s analysis applies to them and whether federal arbitration law overrides it. Draft them with care and watch for that decision. (Separate questions also arise with noncompete agreements.)
• Keep records of when and how each document was presented and signed. Facts about the hiring process can matter under both the reasonableness test and an unconscionability challenge.

Employees should not assume a short deadline in a handbook or application ends their rights. Whether it applies now depends on the facts, so get legal advice promptly rather than waiting.

Frequently asked questions

Can a Michigan employer shorten the time an employee has to sue?

Yes, but not automatically. Under Rayford v. American House Roseville I, LLC (2025), when a shorter deadline for civil rights claims is in a standard, non-negotiated employment form, a court must decide whether it is reasonable before enforcing it. The employee may also challenge it as unconscionable.

Is a 180-day limit in an employee handbook still enforceable in Michigan?

It may be, depending on the facts. The Michigan Supreme Court did not hold that 180 days is too short. It held that courts must evaluate whether the period gave the employee a fair opportunity to investigate and file, and it overruled the earlier cases that had treated such clauses as enforceable without that analysis.

What happens if the shortened deadline is found unreasonable?

Under Rayford, if the clause is unreasonable or unconscionable, the full statutory limitations period applies. For civil rights claims under Michigan’s Elliott-Larsen Civil Rights Act, that is generally three years under MCL 600.5805(2).

Does Rayford affect arbitration agreements with employees?

Not automatically, but the question is open. In Johnson v. Best Buy Co. (2025), the Michigan Court of Appeals held that Rayford’s specific holding concerns clauses shortening the time to bring civil rights claims, and it upheld the arbitration provision before it as reasonable. The Michigan Supreme Court has since scheduled oral argument on whether to hear an appeal in that case and asked for briefing on whether Rayford’s adhesion-contract analysis applies to that arbitration policy and, if so, whether the Federal Arbitration Act overrides it. This area may change.

Related reading: how a business contract attorney can help with employment agreements, employee or independent contractor in Michigan, what the A-Line noncompete case teaches employers, and working with a Grand Blanc business lawyer.

Please note: This article is provided for general educational and informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship between you and the Law Offices of Maynard F. Newman, P.L.L.C. Rayford v. American House Roseville I, LLC is a published decision of the Michigan Supreme Court, but the law may change, and outcomes depend heavily on the specific documents and facts; confirm the current law before relying on any summary. You should consult a qualified Michigan attorney about your own circumstances before acting. This content may also be considered attorney advertising.