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The Hidden Danger in Prop 206

Posted By Cindy Hesch, Thursday, June 15, 2017

The Hidden Danger in Prop 206

By Erin Norris Bass, Associate, Steptoe & Johnson LLP

As employers hustle to comply with the Prop 206 paid sick time provisions before they take effect July 1, 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 a range of negative actions in the workplace, such as discharge, suspension, discipline, reduction of hours, schedule changes, or a denial of a transfer request.  As a result, the law’s “presumption of retaliation” gives every disgruntled employee in Arizona an opportunity to bring a charge against 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, asking 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.

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.

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