A federal court in Michigan upheld an arbitration agreement in an employee handbook but severed a cost-splitting provision that would have required the employee to make a $500 deposit on the ground that it would deter employees from vindicating their statutory rights.

In Mazera v. Varsity Ford Services, LLC, No. 07-12970, 2008 WL 283698 (E.D. Mich. Feb. 1, 2008), Mazera sued Varsity Ford, his former employer, for alleged discrimination. In connection with the suit, Mazera sought a declaration that his claims were not subject to arbitration.

Mazera raised several arguments opposing arbitration. The Court rejected most of his arguments, including his argument that the arbitration agreement in the employee handbook was unenforceable because it was not contained in the original handbook and because he did not sign it. The Court rejected this argument because Varsity Ford reserved the right to revise the handbook and because Mazera signed an acknowledgment of receipt.

The Court found merit to Mazera's argument that the arbitration agreement's cost-splitting provision was unenforceable under Michigan law. The arbitration agreement required Mazera to make a $500 deposit, which the Court found would deter employees from vindicating their statutory rights. However, instead of finding the entire arbitration agreement unenforceable, the Court severed the cost-splitting provision.