Labor & Employment Law Daily Wrap Up, ARBITRATION—E.D. Mich.: Employees, fired for ethics policy violation, must arbitrate race bias and retaliation claims, (Oct 6, 2025)

By Thomas K. Lauletta, J.D.

The arbitration agreement also applied to the Kelly Services employees’ claims under Michigan law.

A federal court in Michigan held that two Black Kelly Services employees were required under the FAA to arbitrate their federal and state law race discrimination and retaliation claims. In so ruling, the court found that the arbitration agreement was valid and enforceable and that procedural unfairness was not proved. Their claims under Michigan’s Elliott-Larsen Civil Rights Act were also required to be arbitrated (Johnson v. Kelly Services, Inc., No. 2:25-CV-10570 (E.D. Mich. Oct. 1, 2025)).

The first employee began working for Kelly Services in June 2002, worked for the company for over 22 years, and last held the position of Senior Service Manager. The second employee began his employment with Kelly in May 2023 and held the position of Account Manager. Both identify as African-American men.

Request. In February 2024, the Mecklenburg County Department of Health contacted the second employee and requested information such as names, addresses, birthdates, and telephone numbers of all Kelly employees who were potentially impacted by a possible tuberculosis outbreak at one of Kelly’s largest customers. The second employee in turn requested the first employee’s assistance.

Locked up? On May 2, Kelly’s HR advisor contacted the first employee and a Caucasian coworker, asking that they send the requests from the health department. The HR advisor also questioned both employees about who from the company’s legal team had authorized them to disclose full birthdates of Kelly employees to the health department. On the same day, the Caucasian worker laughingly asked the second employee, “Are our two black guys gonna get locked up?” The first employee overheard the comment and reported it to his manager.

Termination. On May 8, both employees received an email from HR requesting that they memorialize the Caucasian coworker’s alleged slur. The following day, Kelly terminated both employees for violating its Code of Ethics.

The employees thereafter sued Kelly for discrimination and retaliation under 42 U.S.C. § 1981, Title VII, and the Michigan Elliott-Larsen Civil Rights Act (ELCRA) and Kelly moved to compel arbitration under the FAA. According to Kelly, all employees were subject to its arbitration agreement when starting employment with the company.

First employee’s arbitration agreement. The first employee argued that completion of a training module does not constitute assent to a valid and enforceable arbitration agreement, especially when the agreement is unsigned and there was no notice that completion of a training module would manifest assent to arbitrate. The court disagreed, stating that although he did not physically sign the arbitration agreement, he logged into Kelly’s system with a unique user ID and password and acknowledged the arbitration agreement on November 8, 2022. Under Sixth Circuit precedent, continued employment is sufficient consideration to validate an employment contract that includes an arbitration agreement.

The court therefore found that Kelly carried its burden of showing an arbitration agreement existed between it and the employee and that he presented nothing to create a genuine issue of material fact regarding the existence of that agreement.

Second employee’s arbitration agreement. The parties both agreed that the second employee signed the arbitration agreement upon starting employment. He argued, however, that the agreement lacked procedural fairness because it required him to waive his right to make class action claims, instead requiring him to arbitrate his claims on an individual basis. Again citing Sixth Circuit precedent, the court noted that “employees who do not sign individual arbitration agreements are free to sue collectively, and those who do sign individual arbitration agreements are not.” Because the employee signed an individual arbitration agreement, he waived his right to sue collectively.

ELCRA claims are arbitrable. The court addressed the question of whether the employees’ ELCRA claims would be subject to mandatory arbitration while, according to the employees, the Michigan Supreme Court was “strongly considering striking mandatory arbitration for all claims under ELCRA.” The district court stated that any Michigan Supreme Court decision would not justify a stay of the ELCRA claims because “the FAA preempts state law and policies regarding arbitration.”

The case is No. 2:25-CV-10570.

Judge: McMillion, B.

Attorneys: Jennifer Lossia McManus (Fagan McManus) for Byron Johnson and Brian Taylor. Alex W. Karasik (Duane Morris) for Kelly Services, Inc.

Companies: Kelly Services, Inc.

Cases: Arbitration Discharge StateLawClaims RaceDiscrimination Discrimination Retaliation MichiganNews