OPINION OF THE COURT
This appeal by an employee from a district court order compelling arbitration of her employment discrimination claims requires us to determine whether the entire arbitration agreement between her and her employer was vitiated when the court voided the agreement’s attorney’s fees and arbitration costs provision for offending federal statutes and ruling case law. After making the excisions, the court ordered the discrimination issues to arbitration. We affirm.
I.
At tension here are two important expressions of public policy. We must respect the “liberal federal policy favoring arbitration agreements,”
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
The federal policy encouraging recourse to arbitration requires federal courts to look first to the relevant state law of contracts, here Pennsylvania, in deciding whether an arbitration agreement is valid under the FAA.
First Options of Chi., Inc. v. Kaplan,
In light of the pro-arbitration federal policy and Pennsylvania contract law, we believe that the make-or-break task before us is to decide whether the stricken portion of the employment arbitration agreement constitutes “an essential part of the agreed exchange” of promises. Restatement (SECOND) OF CONTRACTS § 184(1) (1981). We conclude that it does not.
“The essence of the [disputed] contract ... is an agreement to settle ... employment disputes through binding arbitration.”
Gannon v. Circuit City Stores, Inc.,
II.
Appellant Maryann Spinetti began working for Service Corporation International (“SCI”) as a sales counselor on April 10, 1989. On May 29, 1997, SCI presented Spinetti with a document described as a “new personnel policy,” but labeled “Principles of Employment” (“Agreement”). The employer told Spinetti to sign the Agreement in order to acknowledge receipt. After a cursory review, she signed the document, and both parties became bound by it.
Her employment was terminated on or about October 23, 2000. The circumstances underlying the termination are irrelevant to the issue on appeal, but essentially involve allegations that Spinetti engaged in inappropriate conduct including treating staff abusively, throwing an object at a co-worker and using vulgar language. She subsequently filed this lawsuit alleging that SCI terminated her employment because of her age and gender in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., and the ADEA, 29 U.S.C. §§ 621 et seq. SCI moved to dismiss the complaint and compel arbitration.
Before the district court, Spinetti contended that the arbitration agreement was not enforceable because it prevented her from fully and effectively vindicating her ADEA and Title VII rights. She grounded this argument in the Legal Counsel/Costs provision of the arbitration agreement which required: (1) that each party pay its own costs and attorney’s fees, regardless *215 of the outcome of the arbitration; and (2) that each party pay one-half of the compensation to be paid to the arbitrator(s), as well as one-half of any other costs relating to the administration of the arbitration proceeding. Agreeing with Spinetti that these requirements offended ruling case law and federal statutes, the district court severed the attorney’s fee and costs provision from the arbitration agreement. However, the district court also granted SCI’s motion to dismiss, and compelled the parties to proceed to an arbitration which was to be governed by the remaining provisions of the agreement, relevant case law and the statutory guidelines of Title VII and ADEA. Spinetti appeals the district court’s determination and argues that inasmuch as the attorney’s fees and costs provision is deemed contrary to law, the court should have voided the entire arbitration agreement instead of merely trimming its offensive portions.
The district court had jurisdiction pursuant to 28 U.S.C. § 1331, and converted the Appellee’s Motion to Dismiss and Compel Arbitration into a Motion for Summary Judgment. It granted Appellee’s Motion, ordered the parties to proceed with arbitration and instructed the court clerk to mark the case closed. This decision is final within the meaning of FAA, 9 U.S.C. § 16(a)(3), and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
Green Tree,
III.
The Agreement was designed to resolve employment-related disputes between SCI and its employees through arbitration rather than courtroom litigation. With limited exclusions, not applicable here, the Agreement stated that “all disputes relating to any aspect of Employee’s employment with the Company shall be resolved by binding arbitration,” including claims brought by the employee against SCI and claims by SCI against the employee. Agreement from SCI Central Region on Principals of Employment, Form: P44, 1. The Agreement directs that an Arbitrator shall apply the statutes, rules or regulations governing arbitrations in the state in which the employee is or most recently was employed by SCI — in this case, Pennsylvania. Absent such guidance, the Agreement provided, the arbitration proceedings shall be conducted in accordance with the employment arbitration rules of the American Arbitration Association. “In the event of any inconsistency between [the] Agreement and the statutes, rules or regulations to be applied, the terms of the Agreement shall apply.” Id. at 3.
Most notably, the Agreement contains the following provision relating to legal fees and arbitration costs:
¶ 4. Legal Counsel/Costs
Each party may retain legal counsel and shall pay its own costs and attorney’s fees, regardless of the outcome of the arbitration. Each party shall pay one-half of the compensation to be paid to the arbitrator(s), as well as one-half of any other costs relating to the administration of the arbitration proceeding (e.g., room rental, court reporter, etc.)
Id. at 2. The Agreement has no severability clause and provides that no provision pertaining to arbitration may be modified except by a written agreement signed by both employee and the company.
*216 A.
The district court properly determined that the proviso requiring each party to pay its own attorney’s fees — regardless of the outcome of the arbitration — runs counter to statutory provisions under Title VII and ADEA that permit an award of attorney’s fees and costs to a prevailing party. 42 U.S.C. § 2000e-5(k); 29 U.S.C. §§ 626(b), 216(b);
see also Christiansburg Garment Co. v. EEOC,
B.
The court then embarked on a fact-specific inquiry into whether the arbitration costs facing Spinetti offended the policy mandating that “[t]he arbitration of statutory claims ... be accessible to potential litigants as well as adequate to protect the rights in question so that arbitration, like the judicial resolution of disputes, will further broader social purposes.”
Morrison,
*217
A party seeking to invalidate an arbitration agreement because arbitration would be prohibitively expensive bears the burden of showing this likelihood.
Green Tree,
Spinetti was required to pay an initial, non-refundable filing fee of $500 to the American Arbitration Association, an additional filing fee of $2,750, a case-fifing fee of $1,000, an additional charge of $150 for each day of the hearing and half the cost of an arbitrator. Evidence disclosed that a mid-range arbitrator in Western Pennsylvania charges approximately $250 an hour with a $2,000-per-day minimum.
Although Spinetti was earning $63,000 a year when employed by SCI, she was unemployed for six months following her termination. When she found new employment she says she was earning less than $300 per week while her monthly expenses for food and rent totaled approximately $2,000. To cover the deficit between income and expenses, Spinetti had taken cash advances from her credit cards. On the basis of this record, the district court determined “that Spinetti has adequately demonstrated that the costs associated with arbitrating her claims are prohibitive.” D. Op. at 10.
We make clear what was implicit in the district court’s order to compel arbitration, to-wit, the court intended that the employer pay all costs of arbitration and final responsibility for attorney’s fees should be governed by the appropriate statute — be it either Title VII or ADEA. Logically, within the rubric of a disjunctive “either- or” proposition, no other alternative can be inferred. The disjuncts áre that the employer or employee or both, must pay. Because the court ruled out the employee on the basis that she could not afford to pay,
ergo,
the employer must.
See, e.g., Giordano v. Pep Boys-Manny, Moe & Jack, Inc.,
*217 In considering the ability of plaintiffs to pay arbitration costs under an arbitration agreement, reviewing courts should not consider after-the-fact offers by employers to pay the plaintiff's share of the arbitration costs where the agreement itself provides that the plaintiff is liable, at least potential *218 ly, for arbitration fees and costs. The reason for this rule should be obvious. Our concern is that cost-splitting provisions will deter potential litigants from bringing their statutory claims in the arbitral forum. When the cost-splitting provision is in the arbitration agreement, potential litigants who read the arbitration agreement will discover that they will be liable, potentially, for fees if they bring their claim in the arbitral forum and thus may be deterred from doing so. Because the employer drafted the arbitration agreement, the employer is saddled with the consequences of the provision as drafted. If the provision, as drafted, would deter potential litigants, then it is unenforceable, regardless of whether, in a particular case, the employer agrees to pay a particular litigant’s share of the fees and costs to avoid such a holding. Morrison at 675.
IV.
Congress enacted the FAA “to reverse the. longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts.”
Gilmer,
In
Gilmer,
the Court upheld an arbitration agreement of a claim under the ADEA and stated that the statutory substantive rights are unaffected by the choice of dispute resolution.
Following
Gilmer,
federal courts continually enforced arbitrations of employment-discrimination claims under Title VII as well as under the ADEA.
See, e.g., Gannon,
Finally, in
Circuit City Stores, Inc. v. Adams,
It is against this backdrop of federal arbitration policy that we continue our analysis.
*219 V.
Under the FAA, federal arbitration policy must be implemented in lock-step with a determination of contract validity under state law.
First Options,
[W]e recognize that disputes may arise from time to time, which must be resolved in a fair and efficient manner. In order to ensure equitable, efficient and cost-effective resolution of these matters, employment-related disputes will be resolved by arbitration ...
Form: P44,1.
Having decided that the satellite issues of costs and attorney’s fees may not be the tail wagging the dog, we must now ascertain the policy of Pennsylvania courts in granting partial enforcement of a contract. In the context of restrictive covenants, “[c]ase law empowers Pennsylvania courts to grant partial enforcement of an over-broad covenant either by excising offensive portions of the covenant or by adding language.”
Bell Fuel Corp. v. Cattolico,
Section 603 of the Restatement (First) of CONTRACTS provides support for Pennsylvania law:
A bargain that is illegal only because of a promise or a provision for a condition, disregard of which will not defeat the primary purpose of the bargain, can be enforced with the omission of the illegal portion by a party to the bargain who is not guilty of serious moral turpitude unless this result is prohibited by statute. Recovery is more readily allowed where there has been part performance of the legal portion of the bargain.
Restatement (First) of Contracts § 603 (1932). (emphasis supplied).
Section 184 of the Restatement (Seo-ond) of Contracts contains the following similar language:
(1) If less than all of an agreement is unenforceable under the rule stated in § 178, a court may nevertheless enforce the rest of the agreement in favor of a party who did not engage in serious misconduct if the performance as to which the agreement is unenforceable is not an essential part of the agreed exchange.
Restatement (Seoond) of Contracts § 184 (1981) (emphasis supplied).
In
Forbes v. Forbes,
Although bottomed on federal law and not state law, our teachings in
Watkins v. Hudson Coal Co.,
The first point has to do with the question whether the formula and the waiver provisions which we have found to be insufficient under the [Fair Labor Standards] Act so completely vitiate the contract for illegality that no reference to arbitration can be made. We think this question must be answered in the negative. The sufficiency of the wage formula and the provision for waiver are entirely separable elements of the contract between the parties. We do not refer to arbitration the question of legality of the formula. That is a question of law which the Court must take responsibility in answering. All we are saying upon this point is that the arbitration provision is not rendered ineffective because the contract contains one clause, setting out the formula, and another clause setting forth a provision for waiver which we deem insufficient under the statute.
Id. at 320.
Pennsylvania law supports the actions of the district court in referring Spinetti’s employment discrimination dispute to arbitration and striking the agreement’s illegal provisions. Under Pennsylvania law, “a court of equity may not only remove an offensive term, but may supply a new, limiting term and enforce the covenant so modified. This unique power to modify the parties’ contract ... arises from the general equity powers of the court.”
Bell Fuel Corp.,
VI.
Not all federal courts have been as hostile to arbitration agreements containing unenforceable clauses as Appellant would have us believe. In Cole, the court denied enforcement to only a portion of a similar arbitration agreement that required the employee to pay all or part of the arbitrator’s fees. The court concluded that such an individual provision would not be enforceable because it:
would undermine Congress’s intent [in enacting anti-discrimination laws by preventing] employees who are seeking to vindicate statutory rights from gaining access to a judicial forum and then requiring] them to pay for the services of an arbitrator when they would never be required to pay for a judge in court.
Cole,
Other courts adopted an even more proactive approach toward agreement preservation. In Gannon, the court held that the FAA’s policy favoring the enforcement of arbitration agreements supported its conclusion that the district court should have severed an unenforceable provision from an otherwise enforceable arbitration agreement. It explained that it would be contrary to federal policy to undermine an entire arbitration agreement based upon a single potentially unenforceable term:
The boundaries of private arbitration agreements in the employment context are currently being set, with the Supreme Court only recently affirming *221 that the FAA extends to arbitration agreements covering employment disputes. In an evolving climate such as this, if we were to hold entire arbitration agreements unenforceable every time a particular term is held invalid, it would discourage parties from forming contracts under the FAA and severely chill parties from structuring their contracts in the most efficient manner for fear that minor terms eventually could be used to undermine the validity of the entire contract. Such an outcome would represent the antithesis of the liberal federal policy favoring arbitration agreements.
Gannon,
Appellant attempts to override this progressive federal policy favoring enforcement of arbitration agreements and the potential severance of offensive provisions by offering two separate arguments: (1) the teaching gleaned from the three opinions in
McCaskill v. SCI Mgmt. Corp.,
A.
We quickly dispose of the attempt to enliven
McCaskill
as an analog. There, Judge Rovner adopted the reasoning stated in the panel’s previous opinion in
McCaskill v. SCI Mgmt. Corp.,
B.
Appellant next contends that those courts that have severed objectionable provisions generally relied upon a specific clause in the arbitration agreement allowing for severability.
See, e.g., Gannon,
VII.
Both parties and the Amicus have unloaded upon us a veritable barrage of cases from jurisdictions other than Pennsylvania and this Court. In citing these cases, they have not furnished much assistance in several respects. They have (1) not explained what was the primary object of the arbitration, (2) set forth the determinative state law governing the severance of portions of a contract, and (3) discussed the various provisions of the Restatement of Contracts. What the parties actually did reminds us of the admonition of Judge Cardozo:
[T]he work of deciding cases in accordance with precedents ... is a process of search, comparison, and little more. Some judges seldom get beyond that process in any case. Their notion of their duty is to match the colors of the case at hand against the colors of many sample eases spread out upon their desk. The sample nearest in shade supplies the applicable rule. But, of course, no system of living law can be evolved by such a process, and no judge of a high court, worthy of his office, views the function of his place so narrowly. If that were all there was to our calling, there would be little of intellectual interest about it. 4
An examination of the cases relied upon by the Appellant and Amicus indicates that they emphasized only the results of the cases. For the most part, these cases either demonstrated that the illegal provisions constituted the essential or primary purposes of arbitration (a situation not before us) or failed to adhere to, or even to discuss, the ineluctable approach to the severability of contract provisions — a consideration of relevant state law regarding severability of parts of a contract. Instead, the sample nearest to the result they desired — denying arbitrability — was offered as “the applicable rule” without discussing the fact-driven, relevant controlling legal precepts.
For example, the following cases involved circumstances where the illegal provisions constituted the primary or essential purpose of the arbitration:
Graham Oil,
VIII.
Moving beyond specific case law, we turn to the argument of the Amicus, the Equal Employment Opportunity Commission (“EEOC”), that the employer should not have the benefit of a sanitized arbitration procedure stripped of the improper attorney’s fees and arbitration costs clauses.
The EEOC primarily argues that the presence of agreements, like that of SCI, would operate as a disincentive to vindicate employee rights under the relatively inexpensive arbitration procedure. The specters of advancing four-figure arbitration costs and the payment of one half of attorney’s fees, like those present here, it argues, would have a daunting, discouraging and intimidating effect on an employee standing on the lower rungs of the economic ladder, and, therefore, the entire arbitration agreement should be voided.
There is some surface appeal to this contention, but it does not survive thoughtful analysis. To accept the EEOC’s position is to throw the baby out with the bath water. It would compel the impecunious employee to resort to the courts ■ — • the only alternative to arbitration in dispute adjudication. To go to court would then require the employee to hire a lawyer, to endure the costs and delays of discovery and to incur all the expenses of litigation. To accept the EEOC’s submission would be to deny the employee the real benefits of arbitration — “benefits] that may be of particular importance in employment litigation, which often involves smaller sums of money than disputes concerning commercial contracts.”
Adams,
Second, the relief urged by the EEOC and the Appellant would fly in the face of the federal pro-arbitration policy, as heretofore set forth in detail.
Third, although we laud the Amicus’ desire to dissuade, disincline and deter employers from inserting these illegal provisions in their employment contracts that place financially impaired employees at a great disadvantage, the increasing awareness by claimants’ counsel of their sever-ability will at least ensure that employees who inquire about remedies will be given appropriate advice by counsel. Moreover, in a situation where an employer had deliberately misled an employee about the unavailability to the employee of federally provided remedies, sanctions such as punitive damages might be available.
* * * * í|í *
We have considered all contentions raised by the parties, but in light of the view we take in this ease, no further discussion is necessary.
The judgment of the district court as interpreted by us will be affirmed.
Notes
. Appellees submit an alternative basis for affirming the district court's decision. They argue that the arbitrator, and not the court, should have been first to consider Spinetti's challenge to the attorney's fee provision. A cross-appeal on this issue was not filed. Although an appellee can seek affirmance for reasons other than those given by the district court, this particular contention — arguing that the court did not have jurisdiction over the basic issue on appeal — is a frontal attack on the decision, necessitating a cross-appeal to join the issue.
Nevertheless, two glaring flaws adulterate Appellee's argument. First, SCI contends that our holding in
Great Western Mortgage Corp. v. Peacock,
. Again, Appellee challenges this determination by the district court, and again, because SCI did not cross-appeal, the issue is not properly before us. Nevertheless, we offer some observations. The district court’s case-specific analysis and subsequent determination that Spinetti lacked the ability to bear the costs of arbitration was adequate under the teaching of Green Tree. Moreover, SCI's offer to pay the costs of arbitration upon proof that compelling Spinetti to pay her costs would be prohibitively expensive is an after-the-fact offer and will be treated as such. The Court of Appeals for the Sixth Circuit cogently explained:
. Moreover, it is difficult to attribute much potency to a case in which there were three separate opinions, and we decline to conclude that there is any persuasive value to it because a claim of "severabfility] ... [was] not even raised.”
McCaskill,
. Benjamin N. Cardozo, The Nature of the Judicial Process 20-21 (1921).