News and Insights
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Earlier this year, the EEOC’s Phoenix District Office filed suit against Community Care Health Network, Inc., doing business as Matrix Medical Network in Arizona, alleging Matrix violated federal law. The EEOC’s suit alleges Matrix rescinded a job offer to Patricia Pogue after discovering Ms. Pogue was pregnant.
Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978, the (“PDA”), prohibits employment discrimination based on sex, including pregnancy. Acts of pregnancy discrimination may include:
- Firing a pregnant employee;
- Laying off a pregnant employee;
- Refusing to hire a pregnant employee;
- Harassing a pregnant employee;
- Refusing to provide accommodations for a pregnant employee;
- Demoting a pregnant employee;
- Forcing a pregnant employee to change positions or take time off.
The PDA, which applies to employers with 15 or more employees, protects employees who go on leave due to pregnancy, childbirth, or a related medical condition. Employers must hold an employee’s job open on the same basis as it does for other employees who go on leave.
According to the EEOC’s suit, Matrix offered Ms. Pogue a position as credentialing manager. After Ms. Pogue accepted the offer, she informed Matrix she was pregnant and would need maternity leave. Approximately one week later, Matrix asked Ms. Pogue why she did not disclose her pregnancy during the job interview. Matrix then rescinded the job offer.
The EEOC’s suit against Matrix seeks back wages, compensatory, and punitive damages for Ms. Pogue. Further, the EEOC is seeking a permanent injunction enjoining Matrix from engaging in any discriminatory practices based on a person’s sex, including pregnancy.
The EEOC has focused in on PDA discrimination cases during the past couple of years. The EEOC receives, on average, more than 3,500 charges of pregnancy discrimination each year. In 2017, the EEOC settled multiple pregnancy discrimination cases for a total amount of $15 million in monetary damages.
All employers, including medical practices, should institute and carry out policies and practices to prevent pregnancy discrimination in the workplace. Employers that would like more information about pregnancy discrimination, including advice on creating and implementing effective anti-discrimination policies, may contact the attorneys at Milligan Lawless for assistance.
Effective January 1, 2019, Arizona-based small employers will be required to provide continuation of employer-sponsored health plan benefits to qualifying former employees and their covered dependents. Currently, employers who employ at least 20 employees (as calculated by determining the number of employees employed on more than fifty percent of the employer’s typical business days in the previous calendar year) are required to offer continuing group coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (COBRA or “federal COBRA”). Arizona’s new law, referred to as a “mini-COBRA,” will apply to employers with at least one but not more than 20 employees during the preceding calendar year.
Under the law, former employees who elect to continue coverage will receive benefits at the group cost, including the employer’s contribution and administrative fee (capped at five percent of the premium). To be eligible for continued coverage under the new law, employees and their covered dependents must 1) be enrolled in a group medical insurance plan for a minimum of three months, 2) be ineligible for Medicare coverage, and 3) experience a “Qualifying Event” thereafter losing coverage. The law defines a “Qualifying Event” as follows: voluntary or involuntary termination of employment for a reason other than gross misconduct or reduction of hours required to quality for coverage;divorce or separation from the employee; death of the employee; the employee becomes eligible for Medicare coverage; a dependent child ceases to be a dependent child under the insurance plan; a retired former employee and his or her dependents lose coverage within one year before or after the employer files for bankruptcy.
Within 30 days of the occurrence of a Qualifying Event, mandated employers must provide written notification to an employee of his or her right to continue coverage(though the law considers a written notice timely if it is postmarked within 44 days of the Qualifying Event and mailed to the employee’s last known address).In the event that a covered dependent resides at a different address than the employee, the employer must deliver a separate written notice to the dependent. The written notice must inform the employee and his or her dependents of their right to continue coverage, the amount of the full cost of coverage (including the employer’s administrative fee), the process and deadlines for electing continuation of coverage, the dates and times for making payments, and the consequence for failure to pay in a timely manner (i.e., loss of coverage). For those employees and/or dependents receiving mini-COBRA coverage, employers are also required to provide at least 30 days advance notice of any changes to coverage (e.g., rates, plan, benefits,etc.).
To continue coverage, employees must provide written notification to the employer within 60 days of the date of the employer’s notice. After electing coverage, employees have 45 days to submit the initial premium to the employer. Mini-COBRA coverage terminates upon the earliest of the following events: 18 months following the commencement of coverage; the employee’s failure to timely pay premiums; the date on which the employee or a covered dependent becomes eligible for coverage under Medicare, Medicaid, or any other health benefit plan (with respect only to that person); the date on which an employer terminates coverage under the health benefit plan for all employees (the employee and covered dependents are eligible to participate in a replacement plan); or the date a dependent child would otherwise lose coverage under the terms of the health benefit plan due to age (with respect only to that dependent child). In the event that a covered dependent is deemed disabled at the time of the Qualifying Event, the dependent may be eligible for extended coverage.
Mini-COBRA Broken Down
Continued Coverage: Employees and their covered dependents receive continued employer-sponsored health plan benefits at the group cost.
Mandated Employers: Employers with at least one but no more than 20 employees during the preceding calendar year.
Eligible Employees: Employees must be covered under a group medical insurance plan for a minimum of three months; ineligible for Medicare coverage; experience a Qualifying Event.
Notification Requirements: Employer’s notice required within 30 days of the Qualifying Event. Separate notice required if a covered dependent resides at a different address.
Employer’s Administrative Fee: Capped at five percent.
Election of Coverage: Employees have 60 days from the date of employer’s notice to submit written notice of their desire to continue coverage. Initial premium is due within 45 days of electing coverage.
How Long Does Coverage Last: Generally 18 months, though coverage time may vary under certain circumstances.
Employers who would like more information about Arizona’s mini-COBRA law are encouraged to contact the attorneys at Milligan Lawless for assistance.
If you are a member or manager of an Arizona limited liability company (or professional limited liability company), your obligations may be significantly expanded under a law that begins to take effect as early as August of 2019. This article summarizes the impact of the new law relating to fiduciary duties of members and managers, and provides some thoughts as to how you can understand and manage those obligations.
Fiduciary Duties Defined
A fiduciary, in simple terms, is a person who owes to another person certain duties, such as good faith, trust, special confidence, and candor. In the business context, fiduciary duties help ensure that each officer, director or manager of a business is acting in a manner that is consistent with the company’s objectives and the interests of other owners. Under Arizona law directors and officers of corporations, and members of a partnership have long been deemed to owe fiduciary duties to the corporation or partnership. Until relatively recently, it had been unclear whether managers or members of Arizona LLCs owe fiduciary duties to the company and the other members. There had not been a statute addressing the issue, and Arizona case law had generally been interpreted so as not to impose fiduciary duties on LLC members unless the Operating Agreements imposes such duties on the members.
Imposition of Fiduciary Duties on Members or Managers of LLCs
On April 10, 2018, Arizona Governor Ducey signed the Arizona Limited Liability Company Act (ALLCA). ALLCA will apply to all Arizona LLCs formed after August 31, 2019; on August 31, 2020, Arizona’s current LLC law will expire, and ALLCA will apply to all Arizona LLCs, regardless of their date of formation. One notable change brought about by ALLCA is the imposition of fiduciary duties on members and managers of Arizona LLCs. Under ALLCA, fiduciary duties will be imposed on members and managers if: (1) the LLC does not have a written Operating Agreement, or (2) if the LLC has an Operating Agreement that is silent on the subject of fiduciary duties.
For Members in a Member-Managed LLC
Under ALLCA, members of a member-managed LLC will owe a duty of loyalty and a duty of care to the LLC and to the other members; in addition, the members will be obligated to act in a manner consistent with a contractual obligation of good faith and fair dealing. See A.R.S §29-3409.
For Managers in a Manager-Managed LLC
Similarly, a manager of a manager-managed LLC will owe the LLC and the members essentially the same duties of loyalty and care as the members in member-managed LLCs owe to the company and to one another. A manager must also discharge his or her duties and obligations under the ALLCA in a manner that is consistent with the obligation of good faith and fair dealing. In a manager-managed LLC, the members will not owe fiduciary duties to one another solely because they are members of the LLC; the existence and scope of any fiduciary duties of a member in a manager-managed LLC will depend on the extent to which the member controls or participates in the management of the company.
Eliminating or Altering Fiduciary Duties in the Operating Agreement
An Arizona LLC can depart from certain ALLCA provisions in the LLC’s Operating Agreement, and with the exception of a few items, the LLC’s Operating Agreement will supersede the provisions of the ALLCA. A.R.S. §29-3105; See A.R.S. §29-3409(F) and A.R.S. §29-3409(N). This means that certain of the duties imposed under the statute can be expanded, limited or eliminated by the Operating Agreement. The Operating Agreement cannot, however, eliminate the managers’ or members’ contractual obligation of good faith and fair dealing, or the duty to refrain from willful or intentional misconduct.
To ensure that any fiduciary duties imposed on you as a member or manager of an Arizona LLC are aligned with your interests as a member or manager, you should consider whether you want to be bound by the provisions of ALLCA relating to fiduciary duties. If you want to modify or eliminate those duties, to the extent permissible under ALLCA, please contact us or another legal adviser.
This article is made available for informational purposes only and is not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.
 Arizona law recognizes an implied covenant of good faith and fair dealing in every contract; this covenant obligates parties to a contract to act in good faith, and in a manner that is consistent with fair dealing.
The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations to qualified individuals with a disability, unless doing so would trigger significant operational difficulties or expenses for the employer. Employees on leave for a disability may request reasonable accommodations in order to return to work. The employee may make the request, or the request may be outlined in a doctor’s note releasing the employee to return to work with certain restrictions.
When an employer becomes aware of an employee’s need for a possible accommodation, it is the duty of the employer to discuss the accommodation needs with the employee. Employers run afoul of the ADA when they impose “100% healed or recovered” policies. These policies refer to a practice mandating an employee be released to work without any restrictions before she may return to work. For example, if an employee is on medical leave for a surgery to address a disability and the employee’s physician releases her to work with a 20-pound lifting restriction, the employer cannot refuse to allow the employee to return to work with the lifting restriction if the employee’s essential functions do not require lifting 20 pounds. To do so would violate the ADA.
In May 2016, the Equal Employment Opportunity Commission (EEOC) issued guidance entitled “Employer-Provided Leave and the Americans with Disabilities Act.” Since issuing that guidance, the EEOC has been targeting employers with 100% Healed Policies. Recently, the EEOC set its sights on Corizon Health Inc., and Corizon LLC, (Corizon), nationwide health care companies that operate in Phoenix, Arizona.
On September 19, 2018, the EEOC filed suit against Corizon in the District of Arizona. The EEOC suit alleges Corizon violated federal law by discriminating against employees with a 100% healed policy. The EEOC states Corizon required employees with disabilities to be 100% healed or to be without any medical restrictions before they were allowed to return to work. The EEOC states this practice is a clear violation of the ADA.
The EEOC’s Phoenix Office, in filing this suit, has made clear it is committed to challenging 100% healed policies. Elizabeth Cadle, District Director of the EEOC’s Phoenix District Office, stated in a press release,
“Employers should never have 100% return to work policies that require employees to have no medical restrictions. That policy tells employees that the company will not provide reasonable accommodations for employees with medical restrictions.”
What does this mean for Arizona employers?
If you are an Arizona employer with a 100% healed policy, you should contact legal counsel immediately to discuss policy revisions. While the ADA does not require employers to return every employee to work after medical leave, the law may prohibit automatic denials based on broad 100% healed requirements. Employers should consult with legal counsel to ensure their policies support a case-by-case analysis of employee accommodation requests. If you have a 100% healed policy, or have questions or concerns about your current accommodation and equal employment policies, contact the Milligan Lawless attorney with whom you usually work.
In the wake of the #MeToo movement, the United States Equal Employment Opportunity Commission (EEOC) has sent a message to employers that cracking down on workplace sexual harassment continues to be an enforcement priority. Immediately following a meeting last June that reconvened the EEOC’s Select Task Force on the Study of Harassment in the Workplace, the agency announced the filing of seven separate lawsuits against employers throughout the country over allegations of sexual harassment and other forms of misconduct.
The EEOC’s actions demonstrate the need for employers to take proactive measures toward eliminating and preventing sexual harassment within their workforce.
What is Sexual Harassment?
Sexual harassment is broadly defined as
- unwelcome sexual advances, requests for sexual favors, or visual, verbal, or physical conduct of a sexual nature,
- when such conduct explicitly or implicitly affects the terms and conditions of an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating or hostile work environment.
Sexual harassment can take myriad forms, including all of the following: commenting on an individual’s body or sexual attractiveness; requesting sexual favors; transmitting or displaying sexually explicit emails, texts, or images; telling obscene jokes; making offensive gestures; and engaging in unwanted touching.
Sexual harassment is considered a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964.
Sexual harassment also represents significant economic costs to employers in the form of increased absenteeism, reduced productivity, higher staff turnover, and the financial/reputational damage of high-profile payouts.
A Proactive Approach
The EEOC has made clear that employers are charged with exercising reasonable care to identify and correct sexual harassment in the workplace. To that end, employers should consider these practical steps:
Adopt a Written Anti-Harassment Policy
An employer can help minimize its exposure by adopting and communicating a strong, written anti-harassment policy. The EEOC advises that the policy should, at a minimum, include the following elements:
- A clear statement that harassment is not tolerated
- The definition of sexual harassment
- A clearly described complaint process that provides more than one avenue through which employees can report complaints – an employee’s direct supervisor should not be the only person to whom a complaint may be raised
- Assurance that the employer protects the confidentiality of complaints to the extent possible and does not retaliate against employees who report complaints
- Assurance that the employer will promptly and thoroughly investigate complaints and take immediate corrective and appropriate action when it has determined that harassment has occurred
Employers should include the policy in their employee handbooks and distribute to all employees.
Provide Effective Training
Employers should provide sexual harassment training to all levels of employees. Employers should also consider providing additional and separate training to management.
The EEOC states that anti-harassment training is most effective when it is, among other things:
- Championed by senior management
- Repeated and reinforced regularly
- Provided in a clear, easy to understand style and format
- Provided in all languages commonly used by employees
- Tailored to the specific workplace and workforce
- Conducted by qualified, live, interactive trainers or, if live training is not available, designed to encourage active participation
- Routinely evaluated by participants and revised if necessary
Conduct Appropriate Investigations & Take Effective Remedial Action
When an employee reports a complaint of sexual harassment, employers can help protect themselves by promptly investigating the claim. As soon as an employer learns of a complaint, it should determine whether a fact-finding investigation is necessary and how it will be conducted. To the extent possible, investigations should be kept confidential.
In the event that an employer determines that harassment has occurred, it must undertake immediate and appropriate corrective measures. Corrective measures should be designed to stop the harassment, correct its effects on the complainant, and ensure that the harassment does not recur.
Employers should keep in mind that corrective measures that adversely affect or penalize the complainant could constitute unlawful retaliation.
Consult with Legal Counsel for Additional Information
Employers that would like more information about workplace sexual harassment, including advice on creating and implementing effective anti-harassment policies, may contact the attorneys at Milligan Lawless for assistance.