Paid Sick Time is Coming. Are You Prepared?

Arizona has joined a handful of states in enacting a mandatory paid sick time law.  Under Arizona Proposition 206, nearly all employers in Arizona will be required to offer employees mandatory “paid sick time” (“PST”) by July 1, 2017.  Unlike Arizona’s minimum wage laws, which exempt “small businesses,” PST requirements apply to all businesses regardless of size.

The amount of required PST accrual varies depending on the number of employees in the employer’s workforce.  For employers with 15 or more employees, employees must accrue a minimum of one hour of earned PST for every 30 hours worked for a maximum of 40 PST hours per year.  Employers with fewer than 15 employees must still offer 1 hour PST for every 30 hours worked, but can cap the accrual and use of PST at 24 hours per year.

Part-time and temporary workers and salaried workers are also covered by the law. Salaried employees are presumed to work 40 hours in each work week for purposes of calculating PST accrual, unless their normal work week is less than 40 hours, in which case their earned PST will accrue based on actual hours worked.

Generally, unused earned PST must be carried forward to the following year consistent with the accrual limits of the Act. Employers may forego this requirement by following the requirements of the applicable statute, which includes paying out any unused PST.  The law does not require, however, that PST to be paid out upon termination of employment so long as an employer maintains clear written policies informing employees that it will not pay out accrued and unused PST upon termination of employment.

Employees can use their PST hours for a variety of reasons, including personal mental or physical illness, injury, or health condition; the mental or physical illness, injury, or health condition of a family member; abuse, stalking, sexual violence, or domestic violence of either the employee or the employee’s family member; and/or, when a public health emergency causes either the employee’s workplace to close, or the employee’s child’s school or daycare to close.

The Act also imposes notice and recordkeeping requirements.  Employers are required to notify employees of their right to paid sick leave in English, Spanish, and any other language “deemed appropriate” by the Industrial Commission of Arizona.  In addition, employers must keep records of an employees’ accrual and use of PST for a period of four years.

Arizona employers should consult counsel to ensure its policies are appropriately updated to comply with new laws.  Employers should also note that the new law makes it unlawful for an employer to retaliate or discriminate against an employee for using accrued PST or exercising his or her rights under the Act.  Critically, if an employer takes any adverse action against an employee within 90 days of a person’s use of PST, the law provides a rebuttable presumption that the action was retaliatory.  Penalties for unlawful retaliation or discrimination are discretionary; however, the minimum penalty imposed will be $150 for each day the violation continued or until judgment is final.

Laura Pasqualone is an attorney at Lewis Roca Rothgerber Christie. LLP. She ‎practices primarily in the areas of employment law and business litigation. She regularly advises ‎employers on compliance with a wide variety of federal, state and local employment laws. Her practice ‎also consists in litigating cases brought under the Fair Labor Standards Act, the Family and Medical ‎Leave Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination ‎in Employment Act. 

The Statute of Frauds: When Your Contract MUST Be in Writing and Signed

JaredSuttonGuest post by Jared Sutton, an associate at Lewis Roca Rothgerber Christie, LLP

In my last post, I discussed why it was important to write down the general terms of all of your agreements to help stop an argument about who said what from costing you money. In this post, I’ll go a step further and talk about some of the circumstances in which you must have a writing that is signed by the other side, for a contract to be enforceable.

This concept is referred to in the law as the “statute of frauds,” and it is codified in Arizona at A.R.S. §§ 44-101 and 47-2201. As its name suggests, the statute of frauds was adopted in an effort to prevent fraud by requiring a person seeking to enforce an alleged agreement to come forward with a written agreement signed by the other party.

Although the concept sounds simple, the law surrounding the statute of frauds is actually quite complex and there are literally thousands of judicial opinions and scholarly articles discussing its vagaries. With that in mind, I won’t pretend to give you a comprehensive understanding of the topic, but after reading this article, you should at least have an idea about when your contract might be subject to the statute of frauds and what you need to do to comply with it.

The most important thing to know is that the statute of frauds only applies to certain kinds of contracts. Some of the most common examples are:

  • The sale of “goods” that are valued at over $500;
  • Contracts that cannot be fully performed within one year of the date of the contract;
  • The sale of real property;
  • A lease that is longer than one year; and
  • Loans for more than $250,000 that are not made primarily for personal, family, or household purposes.

You can find a full list of contracts subject to the statute of frauds in the statute itself. Keep this list in mind the next time you enter into a contract, either personally or for your business. If you can’t remember which contracts are subject to the law, looking it up can remind you of whether it is or tell you if you need to get legal advice to be sure.

Beyond identifying the types of contracts that fall within the statute of frauds, you need to remember that a writing isn’t enough; it needs to be signed by the other side to be enforceable. This is a common oversight.

Imagine, for example, that you own a business making and selling jewelry. You found a new supplier for turquoise stones and you make an order for $1,000. Having read this article, you know the order is subject to the statute of frauds because it is for the sale of “goods” (i.e., turquoise stones) and its value is greater than $500. You therefore exchange a purchase order with the supplier that you both sign.

Everyone loves your turquoise jewelry so much, that you end up placing monthly orders with the supplier, exchanging signed copies of the purchase order every time. But after a year or so, your supplier switches to an automated system. Rather than faxing hard copy orders back and forth, your supplier emails you a form with your “standard” order, which has grown to $3,000. There is no line on the order for either of you to sign, but you’ve been working with the supplier for a year now and you got the purchase order in writing, so you just went ahead and paid the supplier $3,000 expecting to receive the shipment of stones. Unbeknownst to you, your supplier was having financial difficulties and declared bankruptcy just after you placed your order. The supplier stopped fulfilling all orders and a bankruptcy trustee took over its operations.

What do you do now? You already paid $3,000 but you never got your stones. And these weren’t just any stones. You could only find these particular cut of stones from this supplier. The most likely option will be to make a claim against the bankruptcy estate to try to get the stones or get your money back, plus whatever damages you might have suffered as a result of the delay.

But guess what? Your claim is going to get denied. If the bankruptcy trustee is on her toes, she’s going to ask you to give her a copy of your signed contract. And you don’t have one. So rather than having a simple claim that should have allowed you to get at least some of your money back right away, you’re going to have to fight with the trustee. You might be able to recover your $3,000 under another legal theory, but its going to take some work, either by you or a lawyer you hire. $3,000, after all, is a lot of money for your business and you’re not willing to just let it go.

Just as in my last posting, the lesson here is that one simple step could have saved you a lot of heartache. Rather than relying on the emailed purchase order, you could have printed it out, signed your name anywhere on the document, faxed it back to your supplier and asked her to sign and return a copy for you. Five minutes of effort, at the very most, and you would have had a great argument to force the trustee to give you your money back or send you the stones you ordered.

So, next time you enter into a contract, ask yourself: Is this a contract that falls within the statute of frauds? And if so, is the contract in writing and signed by the other side?

 

Jared Sutton is in the commercial litigation group in the Phoenix office of Lewis Roca Rothgerber Christie, LLP, which is a proud corporate partner with NAWBO’s Phoenix Chapter.

Write. It. Down.

I’m a commercial litigator. Fighting over contracts is what I do almost every day.

It still amazes me how often I see smart, successful business people making simple mistakes in their transactions that end up costing them thousands of dollars in damages, settlements, and legal fees. Over the next several months, I’ll be offering tips that you can use in your everyday business that will help you avoid these pitfalls.

In this first installment, I’ll start simple: Write. It. Down.

I’m not trying to suggest you need to have a full-blown thirty-page agreement every time you order your monthly supplies from your distributor or hire an IT contractor to spruce up your webpage. But you do absolutely need to write something down with the general details of every agreement you reach as part of your business.

Don’t try make this too complicated. It can literally be two words on a cocktail napkin, or a short email to yourself. It would be better if it included a date and time, as well as all the key details. Even better if it was something (like an email) you sent to the other party, and best yet if they responded and confirmed. But for now, you don’t even have to go that far. You just need to develop the habit of creating something in writing you can point to when a dispute arises (and a dispute will arise), that will support your side of the story.

Now, this isn’t to say that simply writing down, “ordered 10,000 business cards from Jennifer,” will automatically mean you’ll prevail in a lawsuit against Jennifer if there is a dispute over your order. It’s not always that simple. But in every case in which a dispute arises, you will be exponentially better off if you can point to something that was written down at approximately the same time as the agreement and that supports your view.

Many times – especially if the other side doesn’t have anything in writing that they can point to – you can avoid the necessity of lawyers and lawsuits all together. After you tell them you wrote down the agreement when it was made, and it lines up with your story, they’ll usually back down. But if you don’t have anything to defend yourself, it’s their word against yours and they’ll have no incentive to move on.

The bottom line is this simple tip will save you money and heartache in the long run. This issue most frequently arises when the disputed amount is big enough to create a huge burden for you, but not big enough to justify paying a lawyer. Unless you can get out early (which “writing it down” will help you do), you’ll be stuck paying someone money you don’t owe, or paying a lawyer to defend a dispute that is worth less than the legal fees.

So, the message is simple: just write it down.

Jared SuttonJared Sutton is in the commercial litigation group in the Phoenix office of Lewis Roca Rothgerber, LLP, which is a proud corporate partner with NAWBO’s Phoenix Chapter.

When Can You Legally Use Others’ Work?

RuthCarterThis week we’re pleased to present a guest post highlighting critical information that business owners should know about fair use laws, written by Ruth Carter, licensed Arizona attorney and owner of Carter Law Firm.

Fair Use vs Copyright Infringement

I regularly get questions about when you’re allowed to use other people’s work without getting into trouble. Unfortunately, there is no black-and-white mathematical equation you can use to answer these questions. Each situation needs to be evaluated on its facts.

Thankfully lawmakers realized that creativity rarely exists in a vacuum and they wanted to encourage people to build on existing works in transformative and creative ways. The copyright laws give each copyright owner the exclusive right to copy, distribute, display, perform, and make derivative works. However, there is also a section of the copyright laws regarding “fair use.”

In a fair use situation, the artist acknowledges that they are copying another’s work but doing so in such a way that is permissible. One thing to remember about fair use is that it’s a defense, not a permission slip. You can always be sued by the copyright holder whose work you used and you will have to demonstrate to the court that what you did should not be regarded as copyright infringement. Some of the questions the court might ask are:

  • How did you transform the original work?
  • Are you making money off of what you did?
  • If someone was looking to buy the original artist’s work, would they accept what you created as an acceptable substitute?

Of course, if you want to avoid being accused of copyright infringement, you can always contact the copyright holder and ask for permission to use their work. It’s rare that anyone says “No” when I ask. In regards to finding images to use on my website, I frequently use images that come with a Creative Commons license. I always look for images that come with permission to modify and commercialize the original.

If you regularly encounter fair use situations, you may want to check out the recent post I did on fair use and fan fiction/art for Phoenix Comicon. It contains a handy mnemonic device for the fair use factors that court will apply in a fair use lawsuit.

This post should only be used for informational purposes. It does not constitute legal advice, and it does not create an attorney-client relationship with anyone. If you need legal advice, please consult an attorney in your community.

 

Now it’s your turn to show off your expertise!

Got a piece of helpful advice for your fellow NAWBO members? Submit a guest post! Email Sara Korn for guest posting guidelines, suggestions, and submissions.

 

 

 

 

Nuts and Bolts of Non-Compete Agreements

Lori-BrownOver this past year I have had several clients who either were the employee who had left a job and came to me because they had signed a non-compete agreement with their former employer or were the employer wanting to enforce a non-compete against an employee who left.  Employees are typically concerned that the non-compete agreement they signed during their employment is going to prevent them from getting new jobs.  And employers are concerned that an employee is going to get a job with a competitor and cause a loss of business.  These concerns are valid as non-compete agreements may be enforceable in Arizona depending on the facts of each case.

Courts analyze the enforceability of non-competes by looking mostly at the reasonableness of three main features of the provision: its duration; its geographic scope; and the activity it restricts.  For instance, a non-compete might say that an employee cannot compete with her former employer for six months which is more likely to be enforced by a court than a five year limitation.  Next, a non-compete might say that an employee cannot compete with the former employer within five miles of the former employer’s office which is more likely to be enforced by a court than if the non-compete says that the employee cannot work anywhere in the United States (and therefore the employee needs to move to another country to find work!).  Finally, a non-compete that says for example that a pulmonologist cannot practice pulmonology for a certain time limit and in an certain area is more likely to be enforced than a non-compete that says the person cannot practice medicine in Arizona for the next year (and therefore that doctor has to enter a whole new field if he wants to stay in Arizona).

To know when the courts will or won’t enforce a non-compete agreement is not easy.  Many clients think that a form used in one business will work for another – but that’s not the case.  Because so much depends on the facts of each situation, if you are ever presented with a non-compete agreement or are an employer thinking about having an employee sign a non-compete agreement, you should strongly consider having an experienced employment lawyer review the agreement with you to determine the agreement’s strength and enforceability.  Otherwise, you could end up in an unwanted lawsuit.  At Hymson Goldstein & Pantiliat, PLLC, we have several lawyers well-versed and experienced in employment law and non-compete agreements who have argued appeals on this issue that can help you understand and avoid the pitfalls of such an agreement.

Lori Brown
Lbrown@hgplaw.com