Paid Sick Time: A Sea Change In At-Will Employment?

By now, most Arizona employers are aware they must grant Paid Sick Time (“PST”) to employees starting on July 1st. Many employers are also aware of at least some the problems and ambiguities contained in the new PST statutes. (My upcoming posts will address those). But most employers don’t yet realize that the retaliation provisions in Proposition 206 will affect a fundamental shift in at-will employment, in the ability of employees to pursue wrongful termination claims, and in the ability of employers to defend against them.

Arizona is an “at-will” state, meaning employers have generally been free to terminate employees at any time, and for any reason. Under this “at-will” rule employers have had substantial flexibility in terminating employees who underperform or violate workplace rules, even when the employer has lacked good documentation or other evidence demonstrating that these problems actually existed.

Arizona’s “at-will” rule has been subject to the limitation that employees cannot be terminated for a reason prohibited by law (such as reporting sexual harassment, making a workers’ compensation claim, etc.). See, e.g., A.R.S. §23-1501. But even when employers have terminated employees who engaged in protected activity, employers still retained a fair opportunity to defend against retaliation claims. So long as the employers had halfway decent documentation or other evidence that the workplace or performance problems existed, the employers have not been unduly hobbled in arguing the employee was terminated for legitimate reasons.

But as of July 1, 2017, this landscape will dramatically change. Under Proposition 206, if an employer takes any adverse action against an employee within 90 days of asserting any PST claim or right, this raises a presumption that the adverse action was unlawful retaliation. See A.R.S. §23-364(B). Thus, an employee merely has to prove that she/he asserted a PST claim or right (such as taking just an hour of PST) within 90 days prior to the adverse action, and the statutory scheme presumes the employer engaged in wrongful retaliation.

At that point, the burden is then placed on the employer to try and beat the presumption by affirmatively disproving that the adverse action was retaliatory. Id. Even worse, the employer is required to put forward clear and convincing evidence—a much higher standard than normal (preponderance of evidence)—that the adverse action was taken for a legitimate reason. Id.

Thus, to combat claims of PST retaliation, employers will now need a substantial amount of supporting documentation and other evidence to prove the employee was terminated for his/her performance or other problems, and to therefore disprove the claim of PST retaliation. This is especially true given many (if not most) employees will likely have taken some amount of PST during any prior 90-day period, so employees who are disciplined or terminated will most often fall within these statutory protections and be entitled to a presumption of PST retaliation.

Given the employee-friendly nature of the new PST statutes, it’s easy to foresee that PST retaliation claims will quickly overtake other types of employment termination and retaliation claims, representing a major shift in the types of claims pursued, and the ability of employers to fairly and adequately defend against them.

Thus, I cannot over-emphasize the importance of employers timely and adequately documenting employee performance or other problems, and gathering all supporting evidence, as part of the disciplinary process. Even with substantial evidence in hand, employers are going to face significant challenges under the PST statutes when it comes to disciplining or terminating employees. But if employers don’t timely address, document and gather evidence regarding performance problems, they are going to learn—the hard way—about the significant teeth embedded in the new PST statutes.

Important Disclaimer: The foregoing is not legal advice and does not create an attorney-client relationship. Also, given the PST statutes are new and not yet tested, it remains to be seen whether the courts and/or agencies will apply and enforce the PST requirements in the ways discussed above.