Although the end of Arizona's 2018 legislative session was dominated by education funding debates in light of the #Red4Ed movement, the legislature did manage to pass a few bills which will impact employers starting throughout the remainder of 2018.

State Level COBRA

On April 10, 2018, Governor Ducey signed Senate Bill 1217, which provides employees with state-level benefits similar to those provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

Under the new law, employees who experience a qualifying event are allowed to continue their health care benefits coverage for themselves and any qualified dependents at their own cost. It also requires employers to provide notices to employees of their continuation rights at the time of a qualifying event. The law takes effect December 31, 2018.

Limitation on Employer Liability for Ex-Offenders

On April 5, 2018, Governor Ducey signed House Bill 2311, which provides liability protection to employers who hire employees or independent contractors who have been convicted of criminal offenses. Specifically, the bill exempts employers from liability for the acts of their employees based on the employer hiring an employee or contracting with an independent contractor "who has previously been convicted of a criminal offense." The term "criminal offense" excludes "violent offenses and sexual offenses," so prior convictions for those offenses can still form the basis for employer liability. 

The law also prohibits claimants from introducing "the fact that the employee or independent contractor was previously convicted of a criminal offense before the employee's employment or independent contractor's contractual obligation began with the employer" into evidence in a negligent hiring action, with the same exclusion from the definition of criminal offense for violent or sexual offenses.

Negligent supervision claims are expressly preserved under the new law, and an employee's or independent contractor's past criminal record may be introduced into evidence in support of such claims. However, the conviction evidence must be excluded unless the employer "knew of the conviction or was grossly negligent in not knowing of the conviction and the conviction was directly related to the nature of the employee's or independent contractor's work and the conduct that gave rise to the alleged injury that is the basis of the cause of action."

The law also provides specific exceptions where past criminal convictions can be a basis for employer liability for certain claims for misuse of monies or property or claims or misappropriation of monies if the employee had previously been convicted of related offenses. 

Military Leave

On April 3, 2018, Governor Ducey signed House Bill 2421, which extends leave and reemployment rights for members of the military to employees who work in Arizona but are members of the National Guards of other states.

Previously, as the law was written, the protections were only available to members of the Arizona National Guard.

Unemployment Compensation

Senate Bill 1398 discontinues unemployment benefits for individuals who do not accept an offer of employment after the first 4 weeks of receiving unemployment compensation benefits, provided the job offered pays at least 120 percent of the individual's weekly unemployment benefit.

Exceptions still apply if the job is one that fills a striking worker's position, is "substantially less favorable to the individual than those prevailing for similar work in the locality," or requires the employee to join a union or refrain from joining a union. 

Return-to-Work Program

State law currently allows for the continuation of unemployment benefits while a recipient of such benefits is in "training with the approval of the [Arizona Department of Economic Security (DES)]." The new statute under Senate Bill 1398 provides a framework for providing "a structured, supervised training opportunity to individuals [receiving unemployment compensation] through employers that volunteer to participate in the program."

Participants in such training will be accorded workers' compensation coverage from DES in the event they suffer any injuries during training. While individual participation in a return-to-work training program is voluntary, participation is subject to a number of requirements and restrictions for both the individuals and the employers.

Expansion of Workers' Compensation

House Bill 2047 expands mandatory workers' compensation coverage to all working members of limited liability companies (LLCs) with less than 50 percent membership interest in the LLC, as well as to working shareholders of corporations who own less than 50 percent of the beneficial interest in the corporation.

If the individual's membership interest or beneficial interest is 50 percent or more, then workers' compensation coverage may be extended "on the written acceptance, by endorsement, of an application for coverage" by the working member or working shareholder "at the discretion of the insurance carrier" for the LLC or corporation.

The law takes effect on July 1, 2019.

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