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November 2018

NEW Legislation for Arizona Employers - 2018 Legal Updates

As we reach the end of 2018, it is important for employers to review their current policies to confirm they are complying with any new laws. In 2018, the Arizona legislature passed a number of bills impacting Arizona employers that the governor signed into law. The following are the topmost laws for employers to note:  

Mini-COBRA: Senate Bill 1217 amends A.R.S. § 20-2330 to create a “mini-COBRA” law for Arizona. Under the new law, eligible employees of “small employers” are entitled to continued health insurance coverage after certain qualifying events. Qualifying events can include both voluntary and involuntary termination of employment.  The continuation coverage also extends to the eligible employees’ qualified dependents. The statute defines “small employers” to mean employers with at least one but not more than 20 employees. The law is effective December 31, 2018. 

Workers’ Compensation: Lawmakers also amended Arizona workers’ compensation law to expand the definition of who is deemed to be an “employee” covered by the workers’ compensation laws. With the changes, working members of limited liability companies (LLC) who own less than 50 percent of the membership interest in the LLC, as well as working shareholders of a corporation who own less than 50 percent of the beneficial interest of the corporation, are considered employees. The law also provides that working member of LLCs who own 50 percent or more of the membership interest in the LLC and working shareholders who own 50 percent or more of the beneficial interest in the corporation may be deemed an employee entitled to workers’ compensation benefits in certain circumstances.  

Military Duty Leave: The Arizona governor signed an expansion of employment protections available to members of the National Guard and the U.S. armed forces reserves. House Bill 2421 updates A.R.S. § 26-168 to specify that members of the National Guard not just from Arizona, but from any state, are entitled to protected leave.

Independent Contractor and Employee Classifications:  Arizona lawmakers also clarified that certain medical and health care professionals who contract with medical practice groups or hospitals are not defined as employees under Arizona law. The law provides specific criteria employers must meet to rely on this classification. Likewise, home care services providers who contract with individuals to furnish nonmedical therapeutic and restorative health-related or life assistance services (except behavioral health services) are not classified as employees under Arizona law.

Employees and Independent Contractors with Criminal Convictions: House Bill 2311 limits employers’ liability for hiring an employee or contracting with an independent contractor who previously has been convicted of criminal offenses, not including violent offenses and sexual offenses. The law provides that under specified conditions, the employee’s or independent contractor’s pre-employment/pre-contract criminal conviction may not be introduced into evidence in a negligent hiring action. 

The law sets forth additional exceptions to the limitation on employer liability. Specifically, the protections provided to an employer do not apply in a cause of action based on any of the following:

  • The misuse of monies or property of a person other than the employer by an employee or independent contractor if, on the date that the employee was hired or the independent contractor entered into a contract with the employer, the employee or independent contractor had been convicted of a crime that included fraud or the misuse of monies or property as an element of the crime, and it was foreseeable that the position would involve discharging a fiduciary responsibility in the management of monies or property.
  • The misappropriation of monies by an independent contractor or employee if the person was hired or contracted as an attorney, and on the date the employment or contract began, the employee or independent contractor previously had been convicted of an offense that includes fraud or the misuse of monies or property as an element of the offense.
  • A violent offense or the improper use of excessive force by an employee or independent contractor if the employee was hired or the independent contractor entered into a contract with the employer as a law enforcement officer or security guard.

Workforce Training: With Senate Bill 1398, the Arizona legislature created a framework for a new workforce training program for individuals receiving unemployment insurance assistance. The program may offer compensated and uncompensated training opportunities to individuals. Under the Department of Economic Security (DES) program, employers can volunteer to offer workforce training and apprenticeships to eligible participants. To participate in the program, employers are required to:

  • Have employees in Arizona;
  • Have at least one full-time employment position available in Arizona;
  • Provide training opportunities that benefit an individual who participates in the program and notify DES when the employer offers an individual a training opportunity under the program;
  • Sign a written agreement with each individual who participates in the program that sets forth the terms of the training;
  • Agree that the employer’s current employees will not be displaced or lose any promotion rights due to an individual’s participation in the program; and
  • Provide any additional information that relates to the job training that DES requests.

To qualify to participate in the program, the individual must:

  • Be at least 18 years old and registered with DES;
  • Be currently receiving or be eligible to receive unemployment compensation benefits;
  • Be willing to develop new skills or work experience;
  • Continue to seek work unless otherwise exempt;
  • Certify to DES that the individual understands that participating in the program does not guarantee the individual any future employment or expectations of being hired by the employer;
  • Attend a mandatory program orientation that DES conducts; and
  • Provide any information that DES requests.

It is important for employers to keep abreast of these new legal developments. For questions regarding any of the new or updated laws and changes, please contact the Employment Law practice group at Gordon Rees Scully Mansukhani.


Employment Law

Kami M. Hoskins



Employment Law