When a Simple HR Misstep Costs $422,000

It started like countless other workplace situations.

An employee calls in sick. A manager gets frustrated. Notes are made in the file, a warning is issued, and life goes on. Except, this time, it didn’t.

Earlier this year, the Arizona Industrial Commission fined Southwest Airlines more than $422,000 after finding the company had retaliated against aircraft mechanics for using their legally earned sick time.

“The Commission determined that the company’s actions constituted retaliation under Arizona’s Earned Paid Sick Time law.” Arizona Industrial Commission

The case was widely reported in Arizona, and while Southwest is appealing, it all came down to one simple fact: the law protects sick time, and the managers didn’t follow it.

The mechanics had used their state-protected sick leave. According to the Commission’s findings, managers responded with disciplinary write-ups and warnings. In Arizona, that’s a direct violation of the Earned Paid Sick Time law and the fines reflected it.

Those in the know are aware that under Arizona’s Fair Wages and Healthy Families Act, employees accrue one hour of paid sick time for every 30 hours worked, up to 40 hours per year for businesses with 15 or more employees, and up to 24 hours for smaller employers. Arizona law specifically forbids using an employee’s sick leave as a reason for discipline. It is unlawful for an employer’s absence control policy to count EPST use toward discipline, discharge, demotion, or any other adverse employment action.

Employers cannot retaliate against employees for using or requesting paid sick leave. That includes actions like write-ups, warnings, demotions, or any negative performance remarks and naturally these are the elements that managers can do unwittingly!

The Hidden Cost of “We Didn’t Know”

Many businesses think, “That wouldn’t happen here, we have policies, and our managers know the rules.” But as this case shows, that’s not always true. I’m sure Southwest believed their managers understood the policies too. The reality is a policy document is only as strong as the people applying it.

If managers aren’t trained, or if policies aren’t updated for current laws, you’re leaving your business exposed.

Legal claims can come from actions you didn’t even realise were unlawful and you don’t have to mean harm to be in breach, lack of awareness is enough. Even with insurance, employers face the cost of investigations, lost time, reputational damage, and possible deductibles or exclusions.

Employment Practices Liability Insurance (EPLI) is like a fire extinguisher; it comes out after the flames are already burning. It doesn’t rewrite your handbook when the law changes or train your managers to avoid risky decisions or help you build a workplace culture that prevents claims in the first place.

In other words: insurance pays for the fire, but it doesn’t stop businesses from catching fire and paying a deductible.

At Lomond Legal we introduce a better way, and this is why we created Rory at Lomond Legal.

We believe employers deserve better than paying premiums for protection that only activates after money is already lost and risk. With our Rory service offering employers pay a fixed all-inclusive monthly price and get prevention built in and if the worst happens, you’re already covered for defence. That means no extra cost for lawsuits, no panic over calling your lawyer and no stressing whether the insurance will cover the claim.

As the Industrial Commission’s action against Southwest Airlines shows, the cost of not getting it right can be staggering and entirely avoidable.

If you’d like to stop your business from becoming the next headline, talk to us about Rory.

We’ll review, train, and protect all for one fixed, predictable cost.

The law is clear. The risks are real. The solution is prevention. If you want to keep your business out of the headlines, talk about Rory. We’ll review, train, and protect, all for one fixed, predictable cost.