Procedures For Terminating the Agreement
Arizona has no statutory provisions regarding procedures for terminating an employment agreement. Unless an employment contract with a specific term applies, the employment relationship is at-will and may be terminated at any time. An employment contract or collective bargaining agreement may specify termination procedures.
Arizona has no statutory provisions regarding procedures for instant dismissal of an employee. Unless an employment contract with a specific term applies, the employment relationship is at-will and may be terminated at any time. An employment contract or collective bargaining agreement may contain notice requirements. However, under Arizona law, employees terminated by the employer must receive their final paycheck within seven working days of their last day, or by the end of the next pay period, whichever is sooner (A.R.S. § 23-353 (A)).
Under Arizona law, employees who resign must receive their final paycheck no later than the next regular payday after they resigned (A.R.S. § 23-353 (B)).
Termination On Notice
Arizona has no statutory provisions regarding termination on notice. An employment contract or collective bargaining agreement may contain notice requirements.
Termination By Reason Of The Employee's Age
The Arizona Civil Rights Act prohibits discrimination in employment on the basis of age (40 or older), which would include termination for reason of an employee’s age. This provision applies to employers with 15 or more employees (A.R.S. § 41-1401 et seq.). Federal law may also apply.
Automatic Termination In Cases Of Force Majeure
Arizona has no statutory provisions regarding termination in cases of force majeure.
While Arizona has no layoff notice requirements of its own, state agencies assist in enforcing the requirements of the federal Worker Adjustment and Retraining Notification Act (WARN).
Also, when two (2) or more employees are terminated on the same day or within a short period of time for the same reason, such as with a reduction in force, the OWBPA requires employers to include specific language in any severance agreement offered to employees if at least one of them is 40 or older, and a waiver of rights is included. Specifically, the employees that are 40 or older must be given up to 45 days to consider the severance agreement (instead of 21 days), and the employer must provide specific information related to the “decisional unit” of the company affected by the terminations (including ages and positions).
Termination By Parties’ Agreement
In Arizona, the parties are free to terminate the employment relationship on any grounds they desire, except for unlawful reasons proscribed by federal, state, or local law.
Directors Or Other Senior Officers
Arizona has no statutory provisions regarding termination of directors and senior officers. An employment contract may apply and contain termination procedures. The termination of employment does not automatically terminate board membership. Separate steps, generally set out in the bylaws or articles of incorporation/organization, are required to terminate board membership.
Special Rules For Categories Of Employee
Arizona has no statutory provisions regarding the termination of certain categories of employees. However, termination decisions must not violate the anti-discrimination provisions of the Arizona Civil Rights Act or the anti-retaliation provisions of Arizona’s Employment Protection Act.
Specific Rules For Companies in Financial Difficulties
Arizona has no statutory provisions regarding companies in financial difficulty. Federal bankruptcy law, the Employee Retirement Income Security Act, the Worker Adjustment and Retraining Notification Act, and other federal laws may apply.
Restricting Future Activities
Contracts in restraint of trade are unlawful in Arizona. Restrictive covenants limiting individuals in the exercise or pursuit of their occupations are in restraint of trade and are also unlawful. However, reasonable non-competition and non-solicitation agreements are permitted between employers and employees in order to protect (1) confidential or trade secret business information; or (2) customer or supplier relationships, goodwill, or loyalty. The agreement must be reasonable in both duration and geographic scope and must be supported by consideration (at-will employment, including continued employment, constitutes sufficient consideration under Arizona law). Enforceability of restrictive covenants is determined on a case-by-case basis. Agreements that prohibit an employee from soliciting employees of a former employer, or that prohibit disclosure of confidential information, are generally enforceable. In Arizona, if a court finds that an agreement is too broad, the court does not have the power to modify the agreement to the extent necessary to make it reasonable unless the parties to the agreement have already set out alternative temporal or geographic limitations among which the court can choose—i.e., step-down provisions.
Whistleblowers in Arizona are protected under Arizona’s Employment Protection Act and common law. Federal law may also apply.
Special Rules For Garden Leave
Arizona has no special rules for garden leave.
Arizona has no statutory provisions regarding or requiring severance payments. Severance payments are not required unless the employer and the employee have a contract providing for severance. There are specific rules governing the validity of a release provided in exchange for severance payments.
Special Tax Provisions And Severance Payments
In Arizona, severance payments are taxed in the same way as other wages. Federal law may also apply.
Allowances Payable To Employees After Termination
Arizona law provides that employees may be entitled to unemployment benefits after termination of employment so long as they meet certain requirements (A.R.S. § 23-601 et seq.).
Time Limits For Claims Following Termination
Statutes of limitations vary under Arizona law depending upon the nature of the claim.
Damages for wrongful termination: Under Arizona law, an action for damages for wrongful termination must be brought within one year after the cause of action accrues (A.R.S. § 12-541(4)).