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Cannabis Regulatory Commission Rules Released: The Thorny Area of Managing Employee Personal Marijuana Use

On August 19, 2021, the Cannabis Regulatory Commission (Commission) published its Initial Rules for the Personal-Use of Cannabis (Initial Commission Rules) (N.J.A.C. 17:30) in response to the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (Bill A21, CREAMMA and/or the Law). N.J.S.A. 24:6I-52. Governor Murphy signed CREAMMA into law in February 2021 following New Jersey voter approval on the November 2020 ballot.

The Law legalized the personal use of cannabis for adults over the age of 21. Also in February 2021, Governor Murphy signed two other laws. One law (Bill A1897) decriminalized the possession of small amounts of marijuana and lessened the penalties for its distribution. The second law (Bill S3454) clarified marijuana and cannabis use and possession penalties for individuals younger than 21 years old.

CREAMMA will require changes in New Jersey workplaces and necessitate updating employment policies and practices. Employers need to carefully assess how they balance these newly bestowed employee protections and rights against ensuring a safe and productive workplace. Employers that conduct drug testing and/or background checks should also revisit their policies to ensure compliance.

Employee Protections: Off the Clock Use of Cannabis/Positive Drug Tests

Under the Law, absent very limited exceptions, an employer may not refuse to hire or employ an individual who uses cannabis. Further, an employer may not take adverse action against an applicant or employee who uses cannabis or solely because the applicant or employee tests positive for cannabinoid metabolites.

An “adverse employment action” is defined as:

• Refusing to hire or employ an individual;

• Barring or discharging an individual from employment;

• Requiring an individual to retire from employment; or

• Discriminating against an individual in compensation or in any terms, conditions, or privileges of employment.

CREAMMA’s prohibitions apply with respect to all employees, regardless of their roles. To date, there is no specific carve-out for employees in safety-sensitive job positions. However, employers still have certain rights to enforce drug-free workplaces.

Employer Protections: Drug-Free Workplace

The Law also includes some protections for employers by recognizing that an employer:

• May maintain a drug (and alcohol) free workplace;

• Is not required to permit or accommodate the use, consumption, being under the influence, possession, transfer, display, transportation, sale, or growth of cannabis or cannabis items in the workplace; and

• May prohibit employee use of cannabis items or intoxication by employees during work hours and while driving.

Since Federal law still recognizes marijuana as a Schedule I Controlled Dangerous Substances, CREAMMA created a carve-out for employers that are federal contractors, providing that, if the requirements of the law “result in a provable adverse impact on an employer subject to the requirements of a federal contract, then the employer may revise their employee prohibitions consistent with federal law, rules, and regulations.”

Employee Protections: Drug Testing, Physical Evaluations by WIREs

With respect to drug testing, an employer may require an employee to undergo: (1) reasonable suspicion testing (reasonable suspicion of use at work or reasonable suspicion of impairment); (2) post-accident testing; (3) random testing; and (4) preemployment testing. The employer may use the drug test results in determining appropriate employment actions only if:

• The drug test includes scientifically reliable testing of blood, urine, or saliva; and

• A physical evaluation is performed in order to determine an employee’s state of impairment.

CREAMMA provides that the physical evaluation must be conducted by a “Workplace Impairment Recognition Expert” (WIRE), which is defined as an individual with the necessary certification to ascertain the employee’s state of impairment and training to detect and identify an employee’s use or impairment from cannabis or other intoxicating substances. However, as it set forth below, until more standards are developed, employers are presently not required to perform physical evaluations.

For employers to take adverse actions against employees after failing a drug test for marijuana, CREAMMA appears to require the employer to have a good-faith belief that the employee engaged in some other conduct prohibited under the law, such as using, being under the influence, possessing, selling, or transporting marijuana while in the workplace or during work hours.

A key challenge for employers will be determining whether an employee was under the influence. At present, there are no accepted drug tests for marijuana that can detect real-time impairment, such as the case with alcohol tests. Rather, current drug tests for marijuana merely highlight the presence in the body of THC (the main psychoactive compound in cannabis). THC can remain in the body for lengthy periods of time after consumption.

Employee Protections: Background Checks

Further, the Law impacts employer background checks. An employer is not permitted to consider any arrest, charge, or conviction for certain types of marijuana and hashish offenses when making an employment decision. Similarly, an employer cannot require an applicant to disclose or take any adverse action against an applicant solely based on any arrest, charge, or conviction for certain types of marijuana and hashish offenses. One challenge for employers will be discerning prior offenses that have now been decriminalized or reduced under Bill A1897.

CREAMMA Effective Date, Commission’s Initial Rules

The CREAMMA provisions impacting the workplaces were not immediately operative in February 2021. The employment protections and drug testing requirements were to become operative once the Commission promulgated initial rules and regulations. Specifically, the Law stated that New Jersey would create a Commission to regulate the use, purchase, sale, and production of cannabis. Among other areas, the Commission was tasked with issuing rules and regulations clarifying restrictions regarding workplace drug testing and employer actions in response thereto.

Now that the Initial Rules were released on August 19, 2021, employers should ensure that their policies and practices comply with the Law. The Initial Rules do not fully address workplace drug testing. Significantly, the Commission has, for now, delayed the requirement of the physical evaluation by a WIRE until more standards are developed. Specifically, the Initial Rules provide that: “Notwithstanding the provisions of N.J.S.A. 24:6I-52, until such time that the Commission, in consultation with the Police Training Commission established pursuant to N.J.S.A. 52:17B-70, develops standards for a Workplace Impairment Recognition Expert certification, no physical evaluation of an employee being drug tested in accordance with N.J.S.A. 24:6I-52 shall be required.” (Emphasis added). The lack of real-time impairment testing and mechanisms for real-time physical evaluations could pose challenging for employers seeking to ensure drug-free work environments.

CREAMMA Remedies/Penalties, Potential Claims

An employer in violation of the Law may be liable for a civil penalty in an amount up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. This is the sole remedy.

While there is no private right of action against an employer under the Law, it would not be unexpected if employees subjected to adverse employment action for off-duty marijuana use were to pursue potential claims under a public policy cause of action (i.e., Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980); Hennessey v. Coastal Eagle Point Oil Co., 129 N.J. 81 (1992)), or under the New Jersey Conscientious Employee Protection Act (CEPA).

Medical Accommodations, Testing under Jake Honig Compassionate Use Medical Cannabis Act

Notably, under CREAMMA, “cannabis” excludes medical marijuana under the Jake Honig Compassionate Use Medical Cannabis Act (Jake Honig Act) and hemp products under the New Jersey Hemp Farming Act (NJ Hemp Act).

Even prior to the passage of the Law, the Jake Honig Act provided certain employment law protections for medical cannabis users and required New Jersey employers to engage in the interactive process to reasonably accommodate a qualifying employee’s use of medical cannabis off-site and during off-hours. It prohibited an employer from taking any adverse employment action against an employee who is a registered qualifying patient based solely on the employee’s status as a registrant with the Cannabis Regulatory Commission. Additionally, if an employee or applicant tests positive for cannabis, the employer is required to: (1) provide written notice of the right to provide a valid medical explanation for the test result; and (2) offer an opportunity to present a valid medical explanation for the result. N.J.S.A. 14-6I-9. The employee or applicant then has 3 working days from receipt of the employer’s written notice to explain the result (i.e., evidence that a health care practitioner has authorized the use of medical cannabis, or proof that the applicant or employee is a registered patient, or both), or request a retest of the original sample. The Jake Honig Act prohibits an employer from using the failed drug test alone as a basis to take adverse employment action against an individual demonstrated to be a valid medical cannabis user.

Lawsuits on the Horizon

What is likely to be a barrage of lawsuits under CREAMMA has already started.

In May 2021, a class action lawsuit was filed against Amazon. The lawsuit alleged that Amazon violated CREAMMA and New Jersey common law and public policy as codified by CREAMMA when it refused to hire applicants and wrongfully discharged employees based on a positive drug test result between February 22, 2021 and June 1, 2021. On June 1, 2021, Amazon changed its drug testing policy to no longer disqualify applicants or terminate current employees for positive marijuana tests. The lawsuit seeks back pay, front pay and punitive damages, among other things. Amazon removed the case to Federal court in June 2021.

Take Away Points

CREAMMA will impact workplaces, and employers will need to carefully manage this thorny area. Until there are more standards and interpretive guidance, there will be challenges and areas of ambiguity.

If employers have not done so, they should create and/or revisit their policies and practices with respect to drug testing and background checks and seek counsel to navigate these issues.

Training for human resources, legal, compliance, and other employer representatives who are involved in making employment decisions or implementing policies is also essential.

Employers should avoid adverse actions against employees who test positive for cannabinoid metabolites or discriminate against employees or applicants who use cannabis when they are not working.

Employers must approach these issues with careful scrutiny and consult legal counsel for guidance.

This summary is for informational purposes only and is not intended to constitute legal advice. This information should not be reused without permission.