The hidden landmine in Arizona’s earned paid sick time law

Arizona’s new earned paid sick time law goes into effect July 1. While employers scramble to comply with the accrual and notice provisions, one other aspect of the law presents a little-discussed hidden danger. If an employer takes an adverse employment action against an employee within 90 days of the employee using paid sick time, the law presumes that the action was unlawful retaliation. The employer can successfully defend itself only by meeting a stringent evidentiary standard. In effect, the law imposes a “just cause” standard on employers to justify their employment decisions.

Take an example. Employees can earn and use up to 24 or 40 hours of paid sick time per year, depending on the size of their employer. If an employee takes an hour of paid sick time every 90 days, the statute presumes unlawful retaliation if his employer takes an adverse employment action against him at any point in the year. Adverse employment actions include any negative action in the workplace, such as discharge, suspension, discipline, reduction of hours, schedule changes, or a denial of a transfer request, just to name a few. As a result, the law’s “presumption of retaliation” gives every disgruntled employee in Arizona an opportunity to “sue” his employer for any perceived negative action before the Arizona Industrial Commission at taxpayer expense.

If the employee brings a retaliation claim against his employer, the statute requires the employer to present “clear and convincing evidence that such action was taken for other permissible reasons.” That’s a higher evidentiary burden than the “preponderance of evidence” standard employers typically carry in employment law cases. If the employer cannot meet that high burden, the employer must reinstate the employee (if discharged), pay back wages, and pay penalties of at least $150 per day since the “retaliation,” among other potential remedies. The employer must also pay the employee’s attorneys’ fees and costs.

So what should employers do? Employers should develop internal protocols to determine whether an employee took paid sick time or engaged in other protected activity under the law within 90 days before the employer takes an adverse employment action. If the answer is yes, the employer should review the decision under a just-cause standard. Do you know what that standard is and how to apply it in the context of the employment relationship?

Employers should partner with experienced legal counsel to ensure a defensible decision. Better to be pennywise than pound foolish: the time and money spent upfront making the decision could save significant money down the road in legal fees, back wages, and fines. Experienced counsel will help you address questions like whether:

  1. The employer based its decision on a reasonable policy;
  2. The employee knew of the employer’s policy;
  3. The employer conducted an investigation;
  4. The investigation was fair and objective;
  5. The investigation found strong evidence of the employee’s policy violation;
  6. The employer consistently applied the policy; and
  7. The discipline is reasonable compared to the violation.

If all of this sounds like a grievance-handling procedure under a collective bargaining agreement, it is. The Arizona Industrial Commission and employee rights advocates will surely look to the 100-year old “law of the shop” to determine whether an employer’s decision meets the “clear and convincing” standard. Thus, employers should consult with counsel experienced in dealing with the “law of the shop” as they set up procedures to deal with the new law’s “hidden landmine.”

Steptoe Phoenix partner Steve Wheeless and associate Erin Bass, who focus their practices on labor and employment litigation matters.

One thought on “The hidden landmine in Arizona’s earned paid sick time law

  1. What happened to common sense and being responsible for one's own action?

    Well written article that touches on a widely unknown aspect of this beast of a law. This disaster reeks of labor union-speak and sets up employers and the “rights” of paid sick time to be abused. Tread cautiously; the adverse impact of this thing won’t fully be known for 12+ months when the lawsuits start rolling in. Bad juju.

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