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Employers: Pay Attention to What it Takes for a Retaliation Claim under The Fair Wages and Healthy Families Act (or be ready to pay)

Posted By Cindy Hesch, Thursday, April 12, 2018

 

Employers:  Pay Attention to What it Takes for a Retaliation Claim under The Fair Wages and Healthy Families Act

(or be ready to pay)

When employers were faced with the challenges of complying with The Fair Wages and Healthy Families Act (“the Act”) brought in with the passage of Prop 206 in November 2016, there was a lot at stake. As an employment lawyer, I had to educate my clients on the paid sick time requirements – offering differing options depending upon the composition of the employer’s staff and whether it already had a PTO policy in place. When the response was one of resistance, I had only to describe the possible penalties such as $250/$1,000 for recordkeeping and posting failures. I knew that the process would be difficult for many but hoped that once my clients were able to create, establish, and implement a policy, they would resume course and get back to making money. Ultimately, the retaliation provisions were what I tried to impress upon my owners as needing to be drummed home to their managers.

Under the Act, ‘retaliation’ shall mean denial of any right guaranteed under [the Act] and any threat, discharge, suspension, demotion, reduction of hours, or any other adverse action against an employee for the exercise of any right guaranteed herein including any sanctions against an employee who is the recipient of public benefits for rights guaranteed herein. Retaliation shall also include interference with or punishment for in any manner participating in or assisting an investigation, proceeding or hearing under this article.” (A.R.S. § 23-364 A)

Although already familiar with anti-retaliation policies, the consequences for failing caught everyone’s attention:

G. Any employer who fails to pay the wages or earned paid sick time required under this article shall be required to pay the employee the balance of the wages or earned paid sick time owed, including interest thereon, and an additional amount equal to twice the underpaid wages or earned paid sick time. Any employer who retaliates against an employee or other person in violation of this article shall be required to pay the employee an amount set by the commission or a court sufficient to compensate the employee and deter future violations, but not less than one hundred fifty dollars for each day that the violation continued or until legal judgment is final. The commission and the courts shall have the authority to order payment of such unpaid wages, unpaid earned sick time, other amounts, and civil penalties and to order any other appropriate legal or equitable relief for violations of this article. Civil penalties shall be retained by the agency that recovered them and used to finance activities to enforce this article. A prevailing plaintiff shall be entitled to reasonable attorney’s fees and costs of suit.

 

Although stiff, most of my clients felt they never would be fined as they had no intention of ever violating the law. But then I showed them A.R.S. § 23-364 B:

B. No employer or other person shall discriminate or subject any person to retaliation for asserting any claim or right under this article, for assisting any other person in doing so, or for informing any person about their rights. Taking adverse action against a person within ninety days of a person’s engaging in the foregoing activities shall raise a presumption that such action was retaliation, which may be rebutted by clear and convincing evidence that such action was taken for other permissible reasons.

 

I would be asked, “Does that mean if I express dismay at a request for paid sick time, then allow it, but then transfer the employee with a demotion two months later, I am at risk for a retaliation claim that BY LAW, if I cannot overcome with clear and convincing evidence, my company would be liable for $150 a day for the next three years that it takes to have a lawsuit and trial, and reach a judgment?”

“You might be,” would be my answer, “although this sounds extreme, the potential is there.  And don’t forget, that because you are an ‘individual . . . acting directly or indirectly in the interest of an employer in relation to an employee,’ you are liable personally as well. (A.R.S. § 23-362 B)

While it may be highly unlikely that the Industrial Commission of Arizona is going to pursue employers in these types of circumstances, employees who have received any moderate adverse employment action within 90 days of requesting paid sick time (or even just telling others about their rights) will have access to a pool of plaintiffs lawyers who know that if successful, they are guaranteed a judgment for their attorneys’ fees. (A.R.S. § 23-364 G). If they combine that with contingency agreements that alternatively give them 40% of those accrued daily fines, pay dirt!

The concept that temporal proximity can support a causal link between a protected activity and an adverse employment action is not new.

Setting aside the Act and paid sick time-related claims, just what does it take for an employee to make a claim for retaliation and how does timing enter in? 

The Ninth Circuit Court of Appeals, which presides over federal courts in Arizona, says that to establish causation, an employee must provide evidence – either direct or circumstantial – that the individuals responsible for the adverse employment action knew about the protected activity and intended to retaliate based on it. See Raad v. Fairbanks N. Star Borough Sch. Dist., 323 F.3d 1185, 1197 (9th Cir. 2003). Before June of 2013, a plaintiff could establish the causal element of a retaliation claim by showing merely that the protected activity was a motivating factor in the adverse employment action. In fact, long before Prop 206, the Ninth Circuit had held that such a causal link could be inferred from temporal proximity alone. See Thomas v. City of Beaverton, 379 F.3d 802, 812 (9th Cir. 2004). For example, termination because of a disability could be inferred by timing alone “when adverse employment actions are taken within a reasonable period of time” after the employer learns of the employees disability or after the employee engages in protected activity. Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493, 507 (9th Cir. 2000).

Then, on June 24, 2013, the Supreme Court decided Univ. of Texas Southwestern Med. Ctr. v. Nassar, 133 S.Ct. 2517, 2534 (2013), and – for retaliation in Title VII cases, rejected the previous motivating-factor test for causality in favor of the more demanding “but-for” test. Post-Nassar, knowledge of the protected activity and proximity in time may not establish a causal link, but it remains relevant when inferring “but-for” causation for retaliation.

Thus, while the hurdle for Title VII plaintiffs who assert retaliation claims has been raised higher by the appellate courts, in that they must show the adverse employment action was due solely because of the retaliation, an Arizona employee who has received an adverse employment action within 90 days of “asserting any claim or right under this article, for assisting any other person in doing so, or for informing any person about their rights” may claim retaliation and the employer will have to rebut the claim by “clear and convincing evidence” or face paying at least “one hundred fifty dollars for each day that the violation continued or until legal judgment is final,” PLUS “attorney’s fees and costs of suit.”

The challenge employers can anticipate is that a causal link was created when the adverse action took place within the 90-day period, and the employer can prevail only by proving with clear and convincing evidence that the underlying protected employee conduct was not one of the motivating factors for the adverse action. Failing that, the employer should remedy “the violation” as quickly as it can.

By Pamela L. Kingsley, Tiffany & Bosco, P.A.

 

Pamela L. Kingsley | Shareholder | 602.255.6015

Employment | Commercial and Business Litigation | Appellate

 

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