Employment - Azlawyers

Arizona’s Sick Leave Law In a Nutshell

During the November, 2016 election, Arizona voters approved an initiative that added sick leave protections to all Arizona employees. These protections go into effect July 1, 2017.

Understanding Arizona’s Sick Leave Law

The new law applies to all employers, irrespective of the number of employees that employer has. The employee may use the sick time for almost any reason, including:

An employee’s mental or physical illness, injury or health condition;
Care of a family member who needs medical diagnosis, care or treatment of a mental or physical illness, or for preventative care;
The closure of any employee’s place of business by order of a public official;
Absence due to medical attention or mental health services as a result of domestic violence, sexual violence, abuse or stalking, or relocating a residence or utilizing legal service related to domestic violence, sexual violence, abuse or stalking.

Employees will accrue sick time at the following rates:

For employers with less than 15 employees, employees accrue a minimum of one hour of paid sick time for every 30 hours worked, up to a maximum of 24 hours per year, unless the employer selects a higher limit
For employers with 15 or more employees, employees accrue a minimum of one hour of paid sick time for every 30 hours worked, up to a maximum of 40 hours per year, unless the employer selects a higher limit
Sick time begins to accrue when hired or on July 1, 2017, whatever is later. An employee may use sick time as it is accrued, but an employer may require the employee to wait until the 90th day after he/she is hired before using the sick time.

Unused paid sick time is carried over to the following year (limited by the 24 or 40 hour maximum per year, as described above). In the alternative, an employer may pay the employee for unused sick time. An employer may pre-pay expected sick time that an employee is expected to accrue at the beginning of the year.

Employers are required to post notices regarding the new sick time law in English and Spanish. The new statute requires the Industrial Commission of Arizona to prepare and provide sample notices that comply with the new law for employers to post.

Additionally, the amount of an employee’s accrued sick time, the amount of earned paid sick time taken through the year, and the amount of pay the employee has received as earned paid sick time must be included with (or on) the employee’s paycheck.

For employers, probably one of the most significant portions of the new statute is that accrued paid sick time is “use it or lose it.” That is, there is no requirement that an employer pay an employee who is leaving the employment of the employer accrued, but unused, sick time.

Background Checks: Minimizing Risks

How to Reject an Employment Application Without Being Sued

How to Reject an Employment Application Without Being Sued
This article will address whether an employer should conduct a background check and, if it chooses to do so, how to avoid potential liability.

When to Run a Background Check

Background checks allow the potential employer the ability to determine whether a job applicant has committed a crime or mishandled their finances. This information is valuable to protect the employerand others (i.e.: third parties). It protects the employer from harm caused by the employee directly upon the employer, for example, a future theft. It protects others from harm by the employee, for instance, a future car accident. When an employee harms a third party, the employer becomes susceptible to a claim of property damage and negligent hiring.

Negligent hiring claims

Negligent hiring claims most often occur 1.) when the employee is in a position of trust, for example, handling other people’s money, 2.) when firearms are involved, for example, a security guard, 3.) when dealing with the public; or 4.) when the employee was driving a vehicle at the time of an accident. For roofing companieswho are considering hiring a particular employee who will be driving on the job, obtaining a report containing the applicant’s driving history is of the utmost importance. Doing so keeps the company vehicle safe and avoids liability from third parties. The easiest way to obtain driving records is to have the applicant sign a Consent To Release Motor Vehicle Record—One Time, form #96-0463, at the time he/she applies for the job. That form allows the employer to obtain the employee’s driving records from Arizona Department of Motor Vehicles.

When hiring an employee who will operate a commercial vehicle, pursuant to rules set forth through the U.S. Department of Transportation, an applicant must be provided a detailed application with specific questions that are set out within the rules.

A criminal background check should be conducted on any potential employee who will be handling money or driving a vehicle. Employers should disclose on its job application that it intends to run a background check on the potential employee.

Running a Credit Report on an Applicant

Employers can run a credit report on the potential employee. The rules surrounding the disclosure of the use of credit reports are governed by the Fair Credit Reporting Act. Before obtaining a standard credit report, the employer must have the applicant sign a document, separate from the application form, authorizing the employer to run one. If an employer requests a more detailed investigative report, that is, one that includes interviews with persons who have personal knowledge of the applicant’s lifestyle, reputation or personal characteristics, the employer must mail a written notice of the request to the applicant within three days of requesting the investigation. The notice must advise the applicant of the nature and scope of the investigation. If the applicant does request the information, the employer has five days to provide the applicant the name of the agency used for the investigation, questions asked of the witnesses, and types of witnesses. The employer is not required to identify the witnesses or the contents of their statements.

If the credit reporting agency provides information within the public record, for example, lawsuits, criminal records, and driving records, the credit reporting agency must report to the applicant that that information was provided to the employer. Otherwise, the credit reporting agency has no obligation to advise the applicant what information the credit reporting agency disclosed.

If the employer takes adverse action based upon what is in the credit report, the employer must provide oral, written or electronic notice of the adverse action. In addition, the employer must provide other information to the applicant. The notice requirements include contact information for the credit reporting agency, a notice that the credit reporting agency did not make any decision on hiring and that it cannot explain why the adverse action was taken, a notice of the applicant’s right to obtain a free copy of the report from the credit reporting agency and another notice of the right to dispute the information in the report. An employer faces exposure to actual damages, in some cases, punitive damages, attorney’s fees and costs, and even exposure to criminal liability for those who fail to comply with the Fair Credit Reporting Act. In spite of this exposure, credit reports should be run in the hiring situations described above. With a little care, including obtaining authority to run the reports when running a basic report, the employer can avoid potential liability.

Covenants Not to Compete Are Tough to Enforce

Covenants not to compete instill terror in employees. As written, covenants not to compete can force an employee to stop working in his or her profession for months or years.

Covenants not to compete instill terror in employees. As written, covenants not to competecan force an employee to stop working in his or her profession for months or years. Basic principles of law, and common sense, teach that contracts between parties should be enforced. Most contracts are enforced as written. However, courts look at some contractual provisions with skepticism, including covenants not to compete.

A covenant is a promise. A covenant not to compete is a promise in an employment agreementthat states that, if that employee ever stops working for the employer, he/she will not compete against the employer.

If there is doubt, a court will not enforce a covenant not to compete

Covenants not to compete are “strictly construed” against the employer. This means that if there is any doubt as to whether a court will enforce it, a court will not enforce it.

Is the covenant not to compete reasonable?

A court will not enforce a covenant not to compete if it is not reasonable. This means that a court will not enforce a covenant not to compete if 1.) the restraint is greater than necessary to protect the employer’s legitimate interest or 2.) if the hardship to the employee outweighs the employer’s legitimate interest. An employer has a legitimate interest in keeping its customer base and customer sources. It also has a valid interest in protecting its trade secrets. On the other hand, an employer has no legitimate interest in simply keeping the employee from working simply because the employer can.

When deciding whether a restraint is greater than necessary to protect its interest. Courts look to the length of time and the geographic scope of the restraint. As for the length of time of the covenant, the time should be no longer than necessary to hire a new employee and for that new hire to demonstrate his/her effectiveness to customers. Thus, covenants that are three years long are often found to be too long. In the roofing context, if it would take three months to replace and train a salesman/estimator, a three month restriction may be reasonable.

Geography and covenants not to compete

As for the geographic scope, the geographic areas need to be limited. A geographic radius of 5 miles from the employer’s office may be reasonable, but 50 miles may not be reasonable. Whether the radius in the covenant is reasonable depends upon the type of business.

Even if the restraint is reasonable, courts will balance the harm that enforcing the covenant would place on the employee with the employer’s interest in keeping its customers and trade secrets. Courts are very reluctant to keep ex-employees from making a living and will err on the side of protecting the employee.

Provisions that may cause harm to the public

Courts are also not as likely to enforce a provisionthat causes harm to the public, for example, one that keeps a surgeon from performing surgeries. Courts have found that this particular skill is needed by the public and it should not be unduly constrained.

Finally, covenants not to compete are more likely to be upheld when the sale of a business is involved.

In all, covenants not to compete should not instill terror in employees. While a properly drafted covenant not to compete can be found to be enforceable, they are rarely written narrowly enoughthat a court would find a particular covenant enforceable.

Using Independent Contractors Can Be Risky Business

Contractors should be cognizant of the Arizona Registrar of Contractor’s Policy Statement regarding hiring independent contractors

Arizona Registrar of Contractors Independent Contractor

The October 5, 2010 hailstorm in Maricopa Countybrought roofing opportunities for roofers who had the ability to handle an onslaught of work. Many roofing companies hired workers as independent contractors to assist with the temporary surge in need. Until now, the Registrar has not weighed in on whether this practice could cause a contractor to be disciplined. The Registrar’s silence has empowered many roofers to hire independents contractors to perform roofing work.

Substantive Policy Statement regarding independent contractors

In response to inquiries after the 2010 hailstorm, in a Substantive Policy Statementissued May 17, 2013, the Registrar has attempted to clarify its position regarding independent contractors. Unfortunately, the policy is unclear and contradictory. However, it appears that the Registrar is saying that contractors may hire independent contractors, and utilize temporary employment agencies, to perform job duties that do not include acts related to a contracting trade. So, contractors are free to utilize clerical workers, accountants, office managers, or other workers for duties that do not include the act of contracting. On the other hand, if a contractor needs an extra worker to perform the skilled labor in which the contractor is licensed, the contractor needs to utilize an independent contractor who is licensed in the trade he is to perform or hire that worker as an employee.

The Policy Statement points out that there is a gray area between a worker who is truly an independent contractor and one who is an employee but being called an independent contractor. In general, the more control the employer has over the worker’s job duties, and how the worker performs his/her job, the more likely that worker will be deemed an independent contractor by a court or the IRS.

In the event a court or government agency determines that a contractor violated laws or regulations, the Registrar can discipline the contractor. The Policy Statement provides examples of such laws and regulations including

Failure to comply with social security statutes and rules
Failure to provide worker’s compensation coverage or to comply with unemployment benefits coverage
Failure to pay income, withholding, or any other required tax
Aiding and abetting an unlicensed contractor, or entering into a contract with an unlicensed contractor to perform work for which a license is required

The most likely violation that may get the attention of the Registrar would be the aiding and abetting allegation, or entering into a contract with an unlicensed contractor.

To date, the Registrar has not actively begun to enforce the thrust of the Policy Statement. It took two and one half years after the hailstorm of 2010 for the Registrar to issue its Policy Statement. However, contractors should be cognizant of the Policy Statement and abide by it now and, particularly, when the next hail storm hits.

Refusing to Hire a Convict Can Lead to a Discrimination Charge

When hiring personnel, it makes sense to avoid applicants with criminal histories. An applicant with a criminal history may be more likely to act in ways that could cause trouble for your company. So it may be a surprise to find that companies cannot have policies that automatically exclude persons with criminal histories.

refusing to hire a convict discrimination criminal record

How could this be? The Department of Laborand the EEOC have opined that policies that exclude all individuals based on criminal records and that do not consider the nature and age of the offense may violate federal laws. According to the Department of Labor and the EEOC, this is because the policy may have an adverse impact on certain racial or ethnic groups.

The three-factor test to avoid a discrimination suit

If an employer’s policy of not hiring applicants who have been convicted of crimeshas a negative impact on a racial or ethnic group, the company may still avoid a claim of racial discrimination by the EEOC. To avoid such a claim, the employer should be able to show that the policy is related to the job and is a business necessity. It can do this by following guidelines published by the EEOC. However, these guidelines are all but impossible to comply with. Alternatively, the employer can analyze how the policy relates to the job and whether the policy is a business necessity by using a three factor test. The three factors are

the nature and gravity of the offense;
the amount of time that has passed from the offense or sentence; and
the nature of the job the applicant is seeking.

The EEOC has produced a list of “best practices” to follow in avoiding liability for discrimination. They include

making sure any policy requires independent assessment of the applicant;
narrowing the policy to
1. the essential job requirements and circumstances of the jobs themselves;
2. the specific offense, or types of offenses, that may demonstrate they are unfit for the job; and
3. an appropriate duration between the offense and when the applicant is being considered

not asking for a criminal history, or limiting the questions to convictions that would be job-related to the particular position consistent with business necessity; and
keeping the applican’ts criminal history confidential.

It seems unimaginable that the EEOC would charge a roofer in Arizona with discrimination based upon race or ethnic groups because the most of the roofing workforce is some type of ethnic minority and many have criminal records. However, government workers are unpredictable. You never know when a government enforcement worker will decide to try to make a name for him or herself by bringing a discrimination claim based upon a blanket policy of not hiring convicted applicants. A wise businessman should at least consider implementing a policy that addresses the three factors listed above.