United States: It's High Time To Update Your Marijuana Policies

The legalization of recreational use of marijuana in several states, including California, has left many employment policies vague and confused. This article offers insights to questions every employer should be asking in light of legalization.

California's Rollout of Legal Marijuana

California voters passed the Adult Use of Marijuana Act ("Prop 64") on November 8, 2016, legalizing recreational marijuana use. However, the California Bureau of Cannabis Control only began accepting, processing, and issuing licenses to commercial marijuana dispensaries as of January 1, 2018. As of April 2018, the Bureau has granted over 5,000 licenses for a variety of commercial uses, including retail sales and distribution.

Prop 64 legalizes the use and cultivation of marijuana for adults 21 years of age or older, reduces criminal penalties for specific marijuana-related offenses for adults and juveniles, and authorizes resentencing or dismissal and sealing of prior, eligible marijuana-related convictions. It also includes provisions on regulation, licensing, and taxation of legalized use. Given California's size and wealth, the legalization has broad implications for businesses.

I Know It's Legal in California, But What is Going on With Federal Law?

Although legal under state law, marijuana use, cultivation and possession remains illegal under federal law. Under the Federal Controlled Substances Act, marijuana remains an illegal Schedule I drug, along with MDMA, LSD, and heroin. 21 U.S.C. §812(c). While the Obama administration chose not to interfere with state legalization efforts, the current U.S. Justice Department—under Attorney General Jeff Sessions—announced a complete reversal of that policy last January, announcing that it will enforce all federal drug laws.  Just this month, however, the Trump administration unilaterally announced that it is now abandoning the Justice Department's new enforcement policy. Justice Department officials, on the other hand, have declined to comment on the White House's reversal of its policy—further complicating the marijuana legalization quagmire.

Can We Still Have a Drug & Alcohol Free Workplace?

California employers can prohibit employees from using, or being under the influence of, marijuana while conducting company business—full stop. Prop 64 expressly recognizes California employers' right to "enact and enforce workplace policies pertaining to marijuana." In particular, employers can "maintain a drug and alcohol free workplace" and have "policies prohibiting the use of marijuana by employees and prospective employees."

What is the Difference Between On Duty and Off Duty Marijuana Prohibitions?

In addition to implementing a drug and alcohol free workplace, Prop 64 also allows employers to prohibit employees' use of marijuana off-duty. Specifically, the legalization of marijuana does not restrict or preempt "[t]he rights and obligations of public and private employers to maintain a drug and alcohol free workplace...or affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees, or prevent employers from complying with state or federal law." Indeed, employers that are federal government contractors or are otherwise receiving federal funding must ensure compliance with all federal laws, including federal laws that prohibit the possession and use of marijuana, even when "medically prescribed."

Adding to the potential confusion for employers is Labor Code Section 96, which protects employees engaging in lawful conduct—occurring during nonworking hours and away from the employer's place of business—from adverse employment actions. Prop 64 does not address Labor Code Section 96, and it is therefore uncertain whether Labor Code Section 96 could be used to trump Prop 64's authorization to regulate off-duty marijuana use for certain employees. Given this uncertainty, many California employers have begun to re-evaluate their position and treat marijuana usage in the same way as alcohol consumption—i.e. prohibit consumption while on-duty, but do not regulate employee's off-duty conduct.

Do Our Policies Clearly Reflect Our Position on Marijuana?

Clearly written policies that discuss a company's position on marijuana use is critically important. Vague policies do not mention marijuana—instead they refer to "legal" or "illegal" drugs. However, as discussed above, marijuana is both legal and illegal depending on the jurisdiction. Employers should also be mindful of other issues that may be affected, including potential invasion of privacy, disability discrimination, and wrongful termination claims.

It is important for employers to ensure their workplace drug or alcohol policies are clear, non-discriminatory, and uniformly and consistently applied. For example, employers should expressly identify the company's position on marijuana and consider instituting a "zero tolerance" policy while an employee is (1) on company premises, (2) conducting or performing company business, (3) operating or responsible for operating company equipment or other property, or (4) responsible for the safety of others in connection with company business. Moreover, if an employer utilizes drug testing, the employer should expressly identify and explain the drug testing policy. Lastly, employers should clearly articulate that a violation of either policy is grounds for immediate termination.

Because of the complications that may arise in balancing the employer's legitimate interest in a drug free workplace with an employer's legal obligations regarding discrimination, reasonable accommodations, invasion of privacy, and maintaining confidential medical information, employers should consult with counsel before implementing or revising programs or policies related to drug and alcohol use.

Can We Still Drug Test Employees for Marijuana?

Proposition 64 does not prohibit or limit an employer's ability to screen for marijuana use as a condition of hiring or promotion. California law continues to allow employers to require pre-employment drug tests and take illegal drug use into consideration in making employment decisions, so long as such policies are applied in a consistent and non-discriminatory manner. Providing adequate disclosures, conditional offers of employment, and obtaining appropriate consent is also imperative before drug testing applicants.

Drug testing current employees, on the other hand, is more complex. While employers are permitted to drug test current employees, this right is subject to limitations under both state and federal law. Drug testing done on an existing employee is permissible if there is "reasonable cause." For example, an employer may require a drug test if there is a reasonable belief that an employee is under the influence at work in violation of company policy. Red eyes, distant gaze, and the strong aroma of marijuana are all indicators that an employee may be under the influence of marijuana. Ultimately, the law balances the employer's right to maintain a drug free workplace with the employee's expectation of privacy. To tip the balance, employers should have express written policies, and obtain prior consent through a written authorization form. Employers should also take care to consider the specific jobs for which drug testing is needed, ensuring that individuals in protected groups are not disparately impacted.

Lastly, it is important to reconsider whether drug testing for marijuana—while permitted by law—is a necessary business practice in the first place. The administration of employee drug testing programs can be costly and logistically burdensome, and employers who are not subject to an explicit drug testing mandate (i.e. federal government contractors, trucking companies, etc.) should evaluate the costs and benefits of testing for marijuana at all.

Takeaways

  • Confer with your leadership team to discuss how your company feels about marijuana use off-duty and whether certain laws may require regulating employees' off-duty conduct.
  • Review and revise your employee handbook to confirm your policies align with company objectives and that your policy does not vaguely refer to legal or illegal drugs.
  • Confer with legal counsel to determine whether your organization or certain positions may be subject to federally mandated marijuana prohibitions.
  • Confirm consent forms and disclosures related to drug testing are up to date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Events from this Firm
21 Oct 2018, Other, New York, United States

Partner Samantha Hardy will present on a panel titled, "Now You See It, Now You Don't - Keeping Up with California's Ever-Changing Wage and Hour Laws" on Monday, October 22 from 8:30 - 9:30 a.m.

24 Oct 2018, Seminar, Orange, United States

Please join us for Sheppard Mullin's Labor & Employment Law Update & Happy Hour Seminar Series. 2018 presents significant developments in California labor and employment laws that will affect the way you run your day-to-day business operations.

30 Oct 2018, Seminar, Los Angeles, United States

Please join us for Sheppard Mullin's Labor & Employment Law Update & Happy Hour Seminar Series. 2018 presents significant developments in California labor and employment laws that will affect the way you run your day-to-day business operations.

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