Arizona employers must operate under both the state and federal laws that govern a company’s relationship with its employees. These include:
At-Will Employment – In Arizona, employees work “at will”, which means their employment can be terminated for any legal reason. However, those with employment contracts are not considered “at will” employees, and can only be dismissed for reasons outlined in the contract.
Discrimination/Wrongful Termination – Employers are not allowed to discriminate against or terminate employees because of age, race, sex, religion, national origin, pregnancy or disability.
Workplace Safety – although Arizona repealed the state’s Occupational Safety and Health Act in 2000, employers still have to provide a work environment that is free of known hazards that could result in serious injury or death.
Workplace Injury – in Arizona, injured employees receive automatic compensation benefits for on-the-job injuries, which are considered to be the exclusive remedy against the employer, even in the event of employer negligence.
There are many other Arizona employment-related regulations that employers need to follow, including those governing pre- and post-employment behavior.
Employers must also be aware of the difference between an employee and an independent contractor. The IRS has stepped up its enforcement action against business owners that misclassify employees as independent contractors, so it is imperative that you know the difference when it comes to your hiring practices.
In general, the IRS uses these three characteristics in determining employment status:
- Control of behavior – whether a business directs or has control over how the work is done, either through providing instruction, training or by other means of controlling how a person performs work.
- Financial control – whether a business directs or has control over the financial and business aspects of a worker’s job.
- Type of relationship – the perception both the employer and the worker have of the working relationship.
A worker is likely to be classified as an employee if he or she:
- Has specific duties that are dictated by the employer
- Is doing work that the employer controls
- Has received training from the employer for the work being performed
- Only works for one organization
A worker is likely to be considered an independent contractor if he or she:
- Uses a separate business name
- Sends out invoices for his or her work
- Owns the equipment used in performing the work
- Sets his or her own work hours
- Keeps separate financial accounts and business records
- Has employees
- Performs temporary work
- Executes a written contract for the work
Employers can incur significant fines for misclassifying workers, and if the misclassification is found to be willful, the IRS can assess even harsher penalties.
Employment law can be complex. Skilled representation is necessary. Williams Commercial Law Group, L.L.P., is a law firm with decades of experience in commercial litigation, including employee lawsuits, IP infringement, business divorce, aviation, and high stakes litigation. Contact us at (602) 256-9400 and schedule a time to meet with us today.