What Rayford v. American House Means for Workers and Employers
The Michigan Supreme Court has recently issued a major decision that reshapes how courts will treat employment contracts that shorten the time workers have to file lawsuits.
In Rayford v. American House Roseville I, LLC, decided on July 31, 2025, the Court held that employers cannot rely on boilerplate contracts to strip workers of their right to bring legal claims under civil rights laws — at least, not without courts first carefully reviewing whether those limits are reasonable and fair.
This is a potentially game-changing decision for both employees and employers across the state.
The Case
Timika Rayford, a certified nursing assistant, was hired in 2017 and signed an “Employee Handbook Acknowledgment” with a 180-day limitations clause. This provision required her to file any claim related to her employment within six months — a significant cut from Michigan’s standard 3-year statute of limitations for civil rights claims under the Elliott-Larsen Civil Rights Act (ELCRA).1
Rayford later reported inappropriate conduct by management and was allegedly retaliated against and wrongfully terminated. She filed suit in 2020 — well within the statutory three years, but outside the 180-day window set by her employment paperwork.
Both the trial court and Court of Appeals dismissed her case based on the contract language.
But the Michigan Supreme Court reversed, holding that such shortened limitations clauses in adhesive employment contracts must be reviewed for reasonableness and fairness, not enforced automatically.
Key Legal Takeaways
- 180-Day Limitation Periods Are Not Automatically EnforceableThe Court ruled that standard-form employment contracts—especially those offered on a “take it or leave it” basis—do not automatically override statutory protections like the right to sue under civil rights laws.
- Clark and Timko (Court of Appeals Precedent) Overruled The Court explicitly overruled two decades of Michigan precedent that allowed employers to unilaterally shorten limitations periods in employment cases, even for discrimination claims. This reopens the door for employees whose cases were prematurely dismissed.
- Rory Limited to Insurance ContractsIn 2005 the Michigan Supreme Court enforced contractual shortening of statutes of limitations in Rory v. Continental Insurance. Since that time Michigan courts have been discouraged from second-guessing clear contract language. But the Court clarified that Rory applies only in the insurance context, not employment law.
- Adhesion Contracts Must Be ScrutinizedThe Court reaffirmed that adhesion contracts—those where one party has all the bargaining power — should be closely scrutinized. Shortened time limits must be:
- Reasonable, using the Camelot test2; and
- Not unconscionable, meaning not shockingly one-sided or forced on someone without meaningful choice.
What This Means for Employers
If you’re an employer in Michigan:
- Review your employment agreements immediately.
- Do they include a shortened statute of limitations?
- Were they presented without negotiation?
- Understand that even a clearly worded clause may now be unenforceable if deemed unreasonable or unfair.
- Work with counsel to ensure compliance with the Court’s new standard and prepare for potential challenges to existing agreements.
What This Means for Employees
If you’re a worker who signed a contract with a 180-day (or similar) deadline to sue:
- Don’t assume you’re out of time.
- Courts must now evaluate whether that deadline was reasonable under your
circumstances. - If you were terminated or discriminated against and missed the 180-day deadline — but are still within the three-year limit — you may still have a case.
Final Thoughts
Prior to the Rayford decision, employees who neglected to enforce their rights for any reason were denied access to the courts. This decision is a strong affirmation of employee rights in Michigan, especially in the context of workplace discrimination and retaliation.
We believe this will mainly benefit employees who were unaware of their claim due to delayed effects or who could not investigate or file within the contract’s time limit. On the other hand, if the alleged unlawful act, complete with its effects, and time to file comfortably occur within the time limit, then courts probably will enforce the time limit. Certainly, a plaintiff should not interpret this ruling as a reason to simply ignore a contractual time limit.
Whether you’re an employer seeking to update your contracts or a worker wondering if you still have a claim, this ruling changes the legal landscape — and it’s critical to understand your rights and obligations moving forward. For more information about employment law, visit our Employment Law section.
1 These clauses are largely boilerplate within any relatively sophisticated employer’s contracts or policies. While some within the bar regarded them as tacitly unfair, they were largely held as contractually enforceable. Federal courts have used an elaborate form of the Camelot test (see infra) in determining the applicability of shortened statues of limitations for a number of years. See Logan v. MGM Grand Detroit, 310 F.Supp.3d 881 (Fed. Dist. Crt., E.D. Mich. 2018).
2 A court applying the Camelot test would ask: 1) Did the employee not have a realistic time to consult a lawyer, gather evidence, and file suit in that time?; 2) Is 180 days so short that employees are effectively prevented from bringing civil rights claims?; 3) Could the issue (like workplace retaliation or wage underpayment) be discovered only after the 180-day clock started? If the answer to any of these is yes, the clause may be unenforceable.
