February 7, 2018

What the proposed new marijuana law means for New Jersey companies

Posted in Employment Law by Eugene Killian Jr. |


“The motion picture you are about to witness may startle you. It would not have been possible, otherwise, to sufficently emphasize the frightful toll of the new drug menace which is destroying the youth of America in alarmingly increasing numbers. Marihuana is that drug - a violent narcotic - an unspeakable scourge - The Real Public Enemy Number One!”

That’s a quote from what I’ve always found to be one of the most unintentionally hilarious movies of all time, “Reefer Madness” (1936). (And yes, they used to spell it “marihuana.” So did most judges.)

 Times have certainly changed in the past 80 years, because the substance that “Reefer Madness” warned would cause a spate of axe murders in the streets is about to be legalized for recreational purposes in New Jersey.  The new Governor, Phil Murphy, campaigned aggressively on the issue, and has made it a priority for 2018.  Cynical people (not me, of course) would say that the real reason behind the move has nothing to do with civil liberties, but with cash.  Estimates are that the legalization will bring in $300 to $500 million a year in new tax revenue, and, given its unfunded liabilities, the state could sure use the money. I find the projections a little hard to believe, because the proposed bill will impose a 7% sales tax on marijuana and marijuana products, which escalates to 25% after five years. With a 25% tax rate for legalized pot, I’m guessing that a black market that can sell the drug more cheaply will not be going away anytime soon.  But what do I know.

Some background:  New Jersey is one of 29 states that have decriminalized medical marijuana, through its passing of the Compassionate Use of Medical Marijuana Act in 2014. (Citation: N.J.S.A. 24:6I-1 et seq.) Personal anecdote:  When my father-in-law was terminally ill, the only thing that seemed to relieve his excruciating pain was medical marijuana.  He had been vehemently anti-drug his entire life, and it was a task to get him to smoke the stuff.  (He lived in California, one of the states that has legalized the drug.)  

CUMMA does not require employers to accommodate an employee’s medical use of marijuana in the workplace. It’s unclear, though, whether employers may take employment actions based on an employee’s “off-duty” use. So, one big problem faced by employers is whether they can terminate an employee who tests positive for pot due to off-duty use of the drug as part of the employee’s treatment.  And, as I’ll discuss below, medical testing may not be all that informative. The intoxicating ingredient in pot, THC, can linger in the system for months, unlike alcohol.

There have been a couple of Court decisions in New Jersey federal courts under CUMMA, both of which dismissed employment law claims on technical grounds.

Wild v. Carriage Services involved a funeral director (Wild) who was diagnosed with cancer and was prescribed medical marijuana. He was then involved in an auto accident while on the job.  He disclosed his marijuana usage to his employer (Carriage Services), and claimed that he was not under the influence during the accident, that he only used pot at night, and that he was never under the influence at work.  His employer required him to take a drug test, which he naturally failed, and he was fired for violating the employer’s drug and alcohol policy.  Apparently, several coworkers, including a supervisor, then told the local Funeral Directors’ Association and other potential employers that Wild was fired for being a drug addict who was under the influence at the time of the accident.  The Court has allowed Wild to sue the funeral home and his coworkers for defamation. As to the proposed claim under the New Jersey Law Against Discrimination, the Court noted that Carriage Services terminated his employment based on marijuana use, despite knowing that it was his prescribed medical treatment; but Wild did not sufficiently allege that the funeral home either replaced or sought to replace him with a similarly qualified individual outside of his protected class (as a cancer patient), which would be required for a discriminatory discharge claim.  After Wild amended his complaint to address the Court’s concerns, the Court punted the case to State Court (because federal jurisdiction no longer existed, for procedural reasons).  You can read the Court’s later decision here.

Barrett v. Robert Half Corporation involved an employee with back problems who was prescribed medical marijuana and notified his employer, a staffing agency, of the issue. He failed a mandatory drug test and the agency fired him. He then sued under the LAD, claiming a failure to accommodate. The Court dismissed the complaint on the ground that the employee had never actually asked for an accommodation.  You can read that decision here.

Unlike medical marijuana, as of this writing, recreational marijuana remains illegal in New Jersey, but the primary piece of proposed marijuana legislation in New Jersey, Senate Bill S-3195 (Scutari), aims to change that.  If enacted (and it looks like that’s inevitable), the bill would allow for the possession of up to 1 ounce of dried marijuana, 16 ounces of edible cannabis products, and 72 ounces of cannabis in liquid form. The bill would also make it unlawful for an employer to take any adverse employment action against an employee due to the employee’s use of marijuana, unless the employer has a rational basis to do so (such as in safety-sensitive positions). In addition, employers do not have to take any action that would prohibit them from receiving a federal grant, or that would cause a violation of federal law.

Tension exists between the federal government and the governments of various states on the marijuana issue, and it’s not clear how the new New Jersey law will play out.  U.S. Attorney General Sessions has long been opposed to legalization, and the Trump administration recently freed prosecutors to enforce federal laws more aggressively against the drug in states that have decriminalized its production and sale, like California and Colorado. This is a switch in policy from the Obama administration, which discouraged federal prosecutors from bringing charges wherever the drug is legal under state laws.

Many police officers, and some municipalities, aren’t crazy about legalizing pot.  (Maybe that’s because cops who try weed themselves sometimes end up in trees, as you can see here.) One of the main problems is the lack of a reliable field test for marijuana, similar to the breath alcohol test. Most tests can show the presence of metabolized THC in urine or blood, but proving exactly when someone ingested the drug remains elusive.  The intoxicating substance in pot can remain in a person’s system for several days or weeks.  So if a blood test reveals marijuana use, it’s difficult to tell when the use actually happened.  As a result, more “drug recognition experts” are going to be needed, to analyze people suspected of being under the influence.  And there will continue to be court battles about the admissibility of the conclusions of those experts.

What does this all mean for companies doing business in New Jersey?  Who knows!  But the new law is going to create a bit of a minefield in the areas of employment law and risk management (as CUMMA already has). So here are a few observations:

  • Even if recreational weed gets legalized, that doesn’t mean that it assumes some type of holy status. If an employee shows up for work drunk, you can fire that employee because they pose a safety hazard to co-workers and the company. If an employee shows up obviously stoned, the same rules apply.  (But you might need someone trained as a “drug recognition expert” to confirm that the employee is, in fact, under the influence.) 
  • If an employee fails a drug test for marijuana, that does not necessarily mean that the employee is impaired on the job, since THC can remain in the system for a long time. Firing an employee solely for a positive drug test – without evidence that the employee was actually impaired at work – could result in a claim of discrimination based, for example, on the underlying disability or illness for which the drug has been prescribed. 
  • Under the new bill (if passed), if an employee is in a safety-sensitive position (heavy machinery operator and construction worker come immediately to mind), you can make abstinence from weed a condition of the job. (Accountant, not so much.) And you don’t have to tolerate marijuana use if you would run into trouble with federal law or grants. The Drug-Free Workplace Act of 1988, for example, requires some federal contractors (those with contracts worth $100,000 or more) and all federal grantees to maintain a drug-free workplace.  
  • You might want to use your employment manual to alert workers that insurance companies can use an “intoxication defense” (NJSA 34:15-7) to prevent an injured worker from receiving workers compensation benefits.  In practice, that defense is tough to establish, though.  In one case (Warner v. Vanco Mfg., 299 N.J. Super. 349 (App, Div.), 151 N.J 72 (1997), an injured worker had a blood alcohol content of .29 (meaning he was pretty damn drunk) and fell off a scaffold while trying to attach a crane hook. The Court found that the hook had not been working properly, so that alcohol was not the sole cause of the loss, and awarded benefits.