Arizona Employment Termination Laws: What You Need to Know

Arizona At-Will Employment Explained

The "at-will" employment doctrine is a basic tenet of Arizona employment law that has been incorporated into the common law of Arizona for many decades. Under this doctrine, unless an employment contract states otherwise, the employment relationship is one that is terminable at the will of either party.
The doctrine creates a rebuttable presumption that the employment may be terminated by either the employee or the employer at any time without cause. Even employees in positions with greater job security, such as executive-level employees, may be terminated without cause; the only difference might be entitlement under an employment contract to severance pay, continuation of benefits, etc . In the absence of an express contractual agreement to the contrary, it is presumed that an employee (and an employer) has a right to terminate the employment relationship at any time.
An employee’s right to resign from employment at any time might be fairly uncontroversial, but an employee’s right to terminate employment without cause is less clear. Certainly, however, an employee’s right to terminate employment without cause needs to be considered at the time of termination, and the decision must be made carefully. It is important, therefore, to be aware of current developments in the law, both judicial and legislative, with regard to employment at-will and the exceptions to the rule.

Terminations for Specific Causes

While the protection against employment termination without cause or for retaliatory reasons only applies to Arizona employment-at-will cases, there are provisions in the law that allow Arizona employers to terminate employees for legal reasons upon termination.
Some of the legal reasons under which Arizona employers may terminate employees include:
Misconduct. Employers may terminate employees when they violate company policies and procedures or break the law. An employee may engage in misconduct if he or she steals money from the company, allows others to fleece the company of funds or property, or otherwise harms the company’s business interests.
Poor performance. An Arizona employer may terminate an employee if the employee is not carrying out the responsibilities of his or her position, or performs poorly in comparison to other employees. For example, those in sales positions who cannot reach quotas or manufacturing employees whose work quality falls below the expected standard may be terminated.
Reduction in workforce. A layoff due to reductions in funding, reduced sales or other reasons justifying personnel downsizing is treated as a legal reason for termination. In this case, the employer will give notice to the affected employee(s) as described in the "Notice of Termination" section below.

Unlawful Reasons for Discharge

Arizona employment law prohibits a number of bases for terminating an employee. For example, employers in Arizona cannot lawfully terminate employees on the basis of their race, color, national origin, religion, sex (including sexual orientation), age, genetic information, or disability. These characteristics are known as "protected classes," and discrimination on any of these bases is unlawful whether the employer is a private company or a government agency. In addition to state-protected classes, Title VII of the Civil Rights Act of 1964 establishes additional federal protected classes based on race, color, national origin, religion, and sex.
Employers are not permitted to retaliate against an employee when the employee engages in a "protected activity." An employee who has engaged in a protected activity has opposed discriminatory practices, filed a charge with the Equal Employment Opportunity Commission, filed a lawsuit, or given testimony in response to an EEOC investigation. That means that employers cannot fire employees because they testify in other employees’ lawsuits or in investigations involving other employees.
Federal laws such as the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA), and state laws, including the Arizona Employment Protection Act, prohibit employers from terminating an employee simply because that employee has a disability (Arizona) or is 40 years old or older (ADEA and Arizona).
Finally, public whistleblower protections come into play in Arizona. For instance, Arizona law prohibits government employers from firing an employee due to the employee’s refusal to participate in a plan to commit an illegal act.

Notice and Final Pay Requirements

Under Arizona state law, employers are required to provide terminated employees with a minimum 72-hour notice prior to their termination. This applies to all employees except those who are employed by a private employer under a federal contract or grant. Notice must be in writing when the employee is being discharged from his or her employment for cause, or when an employee quits without giving notice to the employer. If notice is not provided, the employer must pay the employee his or her wages within three days of termination. Regarding paid vacation, Arizona law does not require vacation pay to be paid out upon an employee’s separation from the company unless the employer has established a policy and practice of paying out earned vacation. If the employer has such a policy and practice, then earned vacation pay typically must be paid out upon separation. Arizona law does not have a requirement that employers provide severance pay to discharged employees. Unless there is a written policy or employment contract that provides for a severance package, the employer is not obligated to provide this benefit. Employees are legally entitled to receive their final paycheck upon termination, and this is commonly the employee’s last paycheck. By state law, the final paycheck must be either paid immediately or mailed to the employee by the date of separation if the employee has given at least three days’ notice before separating. For employers that cannot meet these deadlines, they must be prepared to pay wages to the terminated employee along with any damages, penalties or forfeitures that accrue from the failure to follow this law.

Defending Against Wrongful Terminations

Although Arizona is an employment-at-will state, most employees faced with termination may believe they have been wrongfully terminated. Wrongful termination is not a separate cause of action. It is a term used to describe when an employee is terminated after refusing to do something illegal or unethical for their employer. Examples include being asked to lie for a boss, being asked to sign false documents, and being asked to destroy evidence of wrongdoing. In addition, some Arizona wrongful termination claims arise under the public policy exception. This exception applies to employees whose employer terminates them after they refuse to violate Arizona or federal law.
It has long been established that employees cannot be required to proceed through grievance procedures as a prerequisite to pursuing a potential wrongful discharge claim. Wrongful discharge claims in Arizona generally must be filed in Superior Court and may not be filed through the Industrial Commission of Arizona.
Arizona law requires all claims be brought within one year of the alleged wrongful termination. However , in cases involving an agency charged to enforce certain statutes, like the National Labor Relations Act and OSHA, an individual can file a charge with that agency, which is known as dual-filing. The time to file a charge with either a state or federal agency is shorter than one year. If a charge is filed with an applicable agency, an individual has ninety days to file their lawsuit with the Superior Court.
To qualify as a viable wrongful termination claim, the employee must show: There is no question that procedural requirements are not only important but absolutely essential. It can be fatal to the success of a wrongful termination claim if the employee does not correctly follow the procedural requirements.

Severance Agreements and Negotiating Them

Severance agreements are mutually beneficial contracts that provide an employee with compensation and benefits in the event of a termination. Often, employers who terminate an employee offer a severance package, and the employee accepts the agreement in lieu of any lawsuit or litigation over the employment termination. For instance, you can’t just include a general release of any and all claims or else it could be deemed invalid. But if you specifically mention an age discrimination claim under the Age Discrimination in Employment Act (ADEA) and mention that the employee has a specific amount of time to consider the agreement, then you have a valid general release. In Arizona, the Montgomery v. Arizona Beverages decision found that a general release that included claims not yet known did not invalidate the contract. But while that case is still good law in Arizona, some other states have narrowed their precedent. So apply the clear precedent that we have in Arizona.
Many releases will specifically cite the ADEA, but shouldn’t list the ADA or Title VII for sexual harassment. That doesn’t mean there are no claims out there. But it means that listing them makes the claim under those other statutes less likely. You must also observe general guidelines on time period, including allowing at least 21 days to consider the agreement, although a person can waive that time period or sign it on the spot. It can’t include a noncompete agreement, because it’s void in Arizona. It can include a nondisclosure of confidential information guarantee, as well as a non-disparagement agreement. Both sides usually agree to these. The employee even agrees to pay all of his or her attorneys’ fees, which is a meaningful deterrent.

Finding a Lawyer

Though a number of employment termination disputes can be handled without the help of a lawyer, in some cases, it may be a good idea to consult with an attorney to ensure all bases are covered. If you’re concerned that your Arizona employment termination is not as "at will" as your employer may be leading you to believe and that you’ve been fired for unlawful reasons, you may want to consult with an Arizona employment law attorney who will review the facts of your particular case and advise you on the next steps to take. For employers concerned about recent termination issues , speaking to an experienced employment lawyer may help you determine if any legal violations were made that can leave your company exposed to liability. When searching for a reliable employment lawyer in Arizona, you can start by asking your friends, family members and co-workers if they can recommend an attorney. In addition, you can schedule initial consultations with a number of lawyers you have located online or in print advertisements. A lot of Arizona employment lawyers will offer free initial consultations, but if there is a fee, that should be stated clearly and upfront. It’s important to interview a number of attorneys before selecting one to represent you, as each Arizona lawyer you meet with has a unique style and perspective on how to best handle employment law matters.