Court Modifies Agreed Rules of Procedure

Several hair stylists initiated legal proceedings against their employer, alleging misclassification as independent contractors, which purportedly resulted in underpayment.

Respondent Lady Jane's Haircuts for Men Holding Co. invoked an arbitration clause within the Independent Contractor Agreement to dismiss the lawsuit in favor of arbitration.  Under that arbitration clause, "arbitration proceedings shall be administered by the [AAA] under its Commercial Arbitration Rules." The AAA's Commercial Arbitration Rules, in turn, "require the parties to split the costs of arbitration." 

The district court agreed with the stylists that the arbitration agreement was unenforceable because it was unconscionably costly and would require them to pay arbitration costs that exceed their yearly income. 

However, the district court  enforced the severability clause in the contract, severing the contract's reference to the Commercial Arbitration Rules, which meant that the AAA arbitration would default to the less costly rules for employment and independent contractor disputes.  With the offending clause out of the way, the court enforced the rest of the arbitration agreement and granted Lady Jane's motion to dismiss. 

The Sixth Circuit affirmed the district court's decision, requiring the stylists to proceed with arbitration under the less costly Employment/Workplace Arbitration Rules.

Gavin v. Lady Janes’s Haircuts for Men, 135 F.4th 461 (6th Cir. 2025).