Cannabis at work: What California employers need to know

The legalization of cannabis in California raises significant questions as to whether employers can enforce policies prohibiting cannabis use by employees. Recent California legislation provides employers with the right to do so, even if the employees' use occurs outside of work and does not impair performance.

Generally, an employer's anti-cannabis policy should explain why the restriction promotes the legitimate business interests of the company. However, cannabis businesses must be careful when drafting such policies to comply with applicable regulations without self-imposing liability on the employer.

The Right to Enforce Anti-Marijuana Policies

California legalized the use of marijuana for medical purposes under the Compassionate Use Act of 1996. Health and Safety Code Section 11362.5. Last November, Californians passed Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), a ballot measure allowing the possession and use of moderate amounts of marijuana for recreational purposes. Last month, California enacted the Medical and Adult Use Cannabis Regulation and Safety Act (MUCRSA), which effectively repealed the Medical Marijuana Regulation and Safety Act.

AUMA and MAUCRSA both permit employers to impose anti-marijuana policies. One of the enumerated purposes of Proposition 64 is to "allow public and private employers to enact and enforce workplace policies pertaining to marijuana." AUMA Section 3(r). MAUCRSA expressly states that the legalization of cannabis use does not (i) restrict the rights of employers to maintain a drug free workspace, (ii) require an employer to permit or accommodate cannabis use in the workplace, or (iii) affect the ability of employers to have policies prohibiting the use of cannabis by employees and prospective employees. See MAUCRSA Section 133, amending Health and Safety Code Section 11362.45.

Limited Accommodation Obligations

These statutes align with the position taken by the California Supreme Court. In Loder v. City of Glendale, 14 Cal. 4th 846 (1997), the court determined that employers have the right to undertake pre-employment drug testing "[i]in light of the well-documented problems that are associated with the abuse of drugs and alcohol by employees -- increased absenteeism, diminished productivity, greater health costs, increased safety problems and potential liability to third parties, and more frequent turnover." The ruling held that the California Fair Employment and Housing Act does not require employers to accommodate the use of illegal drugs.

In 2008, the Supreme Court considered whether an employer could fire an employee who failed a pre-employment drug test after he disclosed that, at his physician's recommendation, he was using medicinal marijuana for back spasms as a result of injuries suffered while serving in the Air Force. Ross v. RagingWire Telecommunications, Inc., 42 Cal. 4th 920 (2008). Four justices sustained the dismissal of the complaint, finding that neither the Compassionate Use Act nor the accommodation requirements of the Fair Employment and Housing Act applied.

But two dissenting justices noted that the majority opinion permits an employer to fire the employee for marijuana use, even when it occurs off-hours, does not affect the employee's performance, does not impair the employer's legitimate business interests, and provides effective relief for the employee's medical condition. In their view, an employer must demonstrate that doctor-approved use of medicinal marijuana off-duty and off-premises is likely to impair business operations in some way or offer an alternative reasonable accommodation. Otherwise, they found discharge to be disability discrimination prohibited by the Fair Employment and Housing Act.

The dissenting position suggests that the court may eventually require employers to accommodate the use of medical marijuana unless such use affects the employee's performance or impairs the employer's legitimate business interests. This view may now be particularly sympathetic to the courts in light of the increased support for medical marijuana among the medical community and the general public in the past decade.

Despite the enactment of laws permitting companies to prohibit marijuana use among employees, employers should carefully consider incorporating language into their policies that expresses the rationale behind their prohibition. An examination of factual, scientific evidence of the impact of being under the influence at work, rather than mere speculation, should precede policy development.

In what may portend things to come, on Monday, the Massachusetts Supreme Court ruled that an employee who had been lawfully prescribed marijuana to alleviate effects of Crohn's disease and was terminated for being under its influence at work has a civil remedy. In Barbuto v. Advantage Sales and Marketing LLC (Mass.Sup.Ct., SJC 12226), the plaintiff used medicinal marijuana at home on two to three nights a week. When asked to take a drug test, she informed her supervisor that she would test positive for that reason. After a human resources officer reviewed the test results, she was fired. She sued. The Massachusetts Supreme Court found that the plaintiff could seek a civil remedy under the state's handicap discrimination law, but not under the Massachusetts law approved by a voter initiative that does not permit a private right of action.

Tips for Cannabis Employers

Employers in cannabis-related industries should carefully craft language in handbook and drug-testing policies to detail the rights and obligations of employees. To protect themselves from liability for the use of products they grow or sell, their policies and practices should ensure that limitations on use and being under the influence at work do not, without more, suggest that marijuana-related consumption necessarily impairs productivity, affects safety, or promotes absenteeism. Such policies and practices may not, under any circumstances, allow smoking marijuana anywhere where smoking of tobacco is otherwise prohibited. Consumption of other marijuana products during working time may also be prohibited.

Most municipalities expressly prohibit the consumption of cannabis on the premises of cannabis businesses. For example, the city of Los Angeles has proposed commercial cannabis regulations which are currently subject to a public comment period ending on Aug. 8, 2017. If adopted, the regulations will require businesses to monitor employee conduct to assure that employees do not consume cannabis on the premises and within the parking areas and require employers to post "No...Smoking of Cannabis" signs in and outside the business.

In the meantime, California employers in all industries may conduct pre-employment drug testing and refuse to employ individuals who test positive for marijuana use. While a few cases allow employers to terminate an employee when the drug test is administered after the employee is on the payroll, the better practice is to conduct the test prior to on-boarding the candidate. Random testing of current employees, however, must be justified by compelling employer interests. Seymore v. Pool, 217 Cal. App. 3d 1087 (1990). Failure to articulate such interests may expose an employer to substantial damages in post-termination litigation claiming a violation of the right to privacy.