Employees, employers left ‘dazed and confused’ on marijuana best practices

In the wake of many states passing laws to decriminalize marijuana for medical use and, in some cases, recreational use, organizations need to evaluate all potential effects of following the laws, respecting their employees’ freedoms, and maintaining safe, drug-free workplaces.

A new report from Marsh identifies some of the risks employers face when enacting and enforcing drug-free workplace policies in light of state laws regarding marijuana use. The interplay between federal and state authority must be considered, as well as the potential impact on workers’ compensation, workplace safety and employment practices liability. Recent court cases show that the situation is rarely cut and dried.

“Employers and employees alike are left dazed and confused,” said James M. Shore, discussing the conflicted legal landscape affecting marijuana use and employment. Shore, a partner in the Seattle office of Stoel Rives’s labor and employment section, has frequently represented employers in labor-related cases, including the Washington Supreme Court case of Roe v. TeleTech.

In the case, the court determined that Washington’s medicinal marijuana laws do not require employers to accommodate an employee’s medical marijuana use or negate its drug-free workplace laws. Similar cases are playing out across the nation. Just last week, the Colorado Supreme Court heard arguments in the case of an employee terminated for testing positive for marijuana use. The question before the bench is, can an employer fire a worker for doing something in his free time, and in this case, for medicinal purposes, that is completely legal in the state where he lives?

Good question, as it turns out. Colorado justices will be pondering that question in the coming months, as employers puzzle over the dilemma and say, “Wait, what?”

“Laws regarding employers’ rights to terminate employees for ‘lawful’ activities outside of work hours vary by state,” stated Marsh in its recent briefing on the topic. “Before terminating an employee for violating drug-free workplace policies, employers should observe and document any objective factors that support a good faith belief that an employee was impaired at work and such impairment was not for lawful reasons or medically necessitated.”

Recreational marijuana use is now legal in Colorado, Washington, and Portland, Maine, Marsh noted. Medicinal marijuana use is legal in 23 states, while 11 other states allow its use in clinical trials or for specific medical conditions. No states have any laws allowing specific use in the workplace, but several federal laws and regulations expressly forbid its use in and out of the professional arena, since marijuana continues to be a controlled substance.

In addition, drug-testing is mandated for employees in “safety-sensitive” jobs such as drivers and pilots, per the Omnibus Transportation Employee Testing Act of 1991. Any positive test for such workers is “unacceptable,” according to the U.S. Department of Transportation, regardless of individual state laws.

“Even in those states that have employment protection, if it would cost them a federal contract, they have to ban it,” said Shore.

Employers have a few options. They can implement a zero-tolerance policy on marijuana use and fire employees for any violation. Court cases have typically upheld employers’ ability to do so – district courts in Colorado and Michigan found that medical marijuana laws may not extend to private employment and that violating company policy can still be a firing offense.

However, Marsh advised, “Terminating an employee solely for a positive drug test — without evidence that the employee was actually impaired at work — could give rise to a claim of discrimination based on medical marijuana patient status or based on the underlying disability or illness for which the drug is prescribed.”

Shore told Advisen that courts are unwilling to take a stand on allowing state laws to fully supersede federal bans on marijuana. “They’re not going to create a public policy that protects an employee from discipline for an activity that is illegal under federal law,” he said. “They’re just not comfortable going there.”

For drug-free workplaces in any state, drug testing presents myriad problems. Testing for actual impairment due to marijuana use is, well, untested. Marijuana can stay in a person’s system for extensive periods of time after use, so the test will just indicate that the individual has at some point used the substance.

“The science just isn’t there, fully, to test impairment,” said Shore.

According to Quest Diagnostics, a clinical lab service, marijuana is the drug most commonly detected in workplace drug tests, increasing in 2013, to 1.7% from 1.6% in 2012. Overall positive drug tests reached a new high last year of 3.7%, Quest data showed.

And banning pot on the job may just be a sensible business decision. The National Institute on Drug Abuse reports that marijuana use could develop into work-related problems such as increased absences, tardiness, or accidents. A broad prohibition could prevent various liability issues for employers. An impaired worker could injure customers or other third parties, meaning that the company’s general liability policy would need to respond with coverage, Marsh pointed out. In the case of auto liability, whether an employee was impaired or not at the time of accident would determine coverage.

Marijuana use could present two potential problems for workers’ compensation, Marsh noted. Employees could experience a workplace injury while impaired, leading to the problem of determining whether impairment was the sole cause of the injury as some states require. A few states, one of them being Washington, have set a specific legal limit for impairment at five nanograms per milliliter of blood for tetrahydrocannabinol (THC) content.

“In these cases, coverage could apply even if such use is against company policy,” Marsh said. “That could give rise to a scenario in which the employer may be able to terminate the employee for drug use, but still be obligated to provide coverage for the workers’ compensation claim.”

In addition, several court cases have determined that if medical marijuana is prescribed to an injured employee, insurers and employers must pay for the drug as “a necessary medical expense.” Marijuana is increasingly being recognized as a valid alternative to other, more addictive and expensive drugs frequently used in workers’ compensation cases, such as oxycodone, as a way to manage pain or control nausea.

However, Colorado, Michigan, Montana, Oregon, and Vermont have laws that allow workers’ compensation insurers to deny payments for medical marijuana.

To steer clear of employment practices liability claims, organizations are advised to tread carefully in hiring and firing practices with respect to medical marijuana use.

“Employers should ensure that human resources personnel and others involved in hiring, promotion, and other employment decisions affecting terms and conditions of employment are familiar with applicable federal and state policies regarding the use of marijuana,” Marsh warned. “Unless job-related or required by law, employers should avoid asking job applicants and employees about their prescription drug use as it may elicit information about disabilities — which could potentially violate the Americans with Disabilities Act or state anti-discrimination laws.”

From Shore’s perspective, a comprehensive and well-communicated drug policy is necessary. Businesses with multi-state operations have even more of an imperative to keep up with constantly evolving state laws on marijuana use.

“Employers are going to need to and want to communicate with their employees. Until we have unity on the issue, we’re going to have confusion,” he said.