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Employment Law

Hi[gh]ring Practices: Salary History Bans

As more states legalize cannabis, growth in job opportunities rises. However, with more jobs, the greater the risk of employment related lawsuits at the hiring stage. While there are a host of issues cannabis companies need to consider at the hiring stage (i.e. background checks, policies, benefits, payroll, etc.), this blog post focuses on salary histories.

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As more states legalize cannabis, growth in job opportunities rises. However, with more jobs, the greater the risk of employment related lawsuits at the hiring stage. While there are a host of issues cannabis companies need to consider at the hiring stage (i.e. background checks, policies, benefits, payroll, etc.), this blog post focuses on salary histories.

Salary history bans at the State level. Many states and municipalities have enacted bans that prevent employers from asking applicants about their prior salary information.

For example, California employers cannot ask applicants for prior salary histories and, if the applicant shares this information voluntarily, employers cannot use the information to determine pay. San Francisco goes a step further and adds that employers cannot disclose a current or former employee’s salary without their consent unless it’s publicly available, required by law, or subject to a collective bargaining agreement.

New Jersey, where voters approved a cannabis legalization referendum, prohibits employers from requesting prior wages, salaries, or benefits. But employers can confirm pay history and consider pay history in determining the applicant’s salary, benefits, and other compensation if such history is voluntarily disclosed.

Oregon, which recently decriminalized drugs, prohibits employers from asking prospective employees about their compensation history until after an offer is made. Employers are also prohibited from paying employees who perform comparable work different pay rates because of their race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age.

Other states with similar salary bans (where cannabis has been legalized in some form) include: Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Missouri, Vermont, and Washington.

The Federal government could soon invoke a salary history ban. President-elect Joe Biden has pledged to sign the Paycheck Fairness Act (Sec. 10) during his term, which, among other things, would create a federal ban on requesting a job applicant’s prior salary history.

Specifically, the Act would make it illegal for employers to use wage history to decide whether to hire a prospective employee. It would also prohibit employers from relying on or seeking prospective employees’ pay histories to determine their wages, and prevent employers from taking any adverse action against any employee or prospective employee for refusing to provide salary histories. There is one exception though: “an employer may rely on wage history if it is voluntarily provided by a prospective employee, after the employer makes an offer of employment with an offer of compensation to the prospective employee, to support a wage higher than the wage offered by the employer.”

Employers who violate the Act may be subject to civil penalties and individual and collective/class actions.

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Employment Law

The ‘High’ Court Denies Review of Federal Overtime Case Involving Cannabis Employees

As you might recall from our previous post, The 10th Circuit Grants Re-leaf to Workers Seeking Overtime Under the FLSA, the 10th Circuit held that cannabis employers are not immune from federal overtime laws even though the cannabis sector is illegal under federal law.

The employer in Robert Kenney v. Helix TCS, Inc., sought to clear the haze … Continue Reading

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As you might recall from our previous post, The 10th Circuit Grants Re-leaf to Workers Seeking Overtime Under the FLSA, the 10th Circuit held that cannabis employers are not immune from federal overtime laws even though the cannabis sector is illegal under federal law.

The employer in Robert Kenney v. Helix TCS, Inc., sought to clear the haze that the 10th Circuit’s ruling created with respect to the “confusion, conflict, and lack of uniformity between state and federal law regarding federal rights and protections accorded” to employees in the cannabis industry by filing a petition for writ of certiorari with the United States Supreme Court.

While the Appellate court found that cannabis employees can bring suit under the Federal Labor Standards Act (FLSA) because employers are not excused from complying with federal law just because their business practices are federally prohibited, in its petition, Helix argued that this notion seemed at odds with the principle that the federal government does not “extend federal benefits to those associated with the marijuana industry.”

The High court denied review. For now, it appears that cannabis employees can seek redress for federal labor law violations under the FLSA. But even if the court had ruled that the FLSA did not apply, cannabis employers still need to comply with state labor laws. Thus, employers must ensure their practices are compliant in their relevant jurisdictions. Otherwise, they might find themselves involved in high stakes litigation.

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Employment Law

Rhode Island Court Upholds Termination of Medical Marijuana User for Refusing a Reasonable Suspicion Drug Test

On May 29, 2020, the Rhode Island Supreme Court affirmed dismissal of an employee’s lawsuit against his former employer after it terminated him for refusing to submit to a reasonable suspicion drug test, even though his “bizarre” behavior could have been attributed to other causes. As employers are becoming increasingly concerned about marijuana use in states with recreational or medical … Continue Reading

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On May 29, 2020, the Rhode Island Supreme Court affirmed dismissal of an employee’s lawsuit against his former employer after it terminated him for refusing to submit to a reasonable suspicion drug test, even though his “bizarre” behavior could have been attributed to other causes. As employers are becoming increasingly concerned about marijuana use in states with recreational or medical marijuana laws, the decision serves as a reminder to employers to develop a process for making and defending a reasonable suspicion determination (including manager and supervisor training and objective and clear documentation).

Facts

The plaintiff, who worked as a “supply delivery driver,” suffered an injury to his arm and back while making a delivery. As a result of injuries he sustained while in the military, he previously had applied for and received a medical marijuana card. Although he used marijuana for medicinal purposes, the plaintiff claimed he never used it “on the clock or the job” and was never “under the effects of marijuana” while working. While his managers questioned him about the work-related injury, the plaintiff exhibited “bizarre” behavior, prompting them to request that he submit to a drug test. The plaintiff admittedly got quite angry as a result of their request and had sworn “excessively” during the conversation. Once at the drug testing site, the plaintiff submitted to a breathalyzer, but refused to submit to a urinalysis drug test. The employer terminated him for refusing the test.

The plaintiff claimed in his lawsuit (Colpitts v. W.B. Mason Co., Inc.) that the employer did not have reasonable suspicion to send him for the drug test. Rhode Island’s drug testing statute states that employers may require employees to submit to a drug test if the employer “has reasonable grounds to believe based on specific aspects of the employee’s job performance and specific contemporaneous documented observations, concerning the employee’s appearance, behavior or speech that the employee may be under the influence of a controlled substance, which may be impairing his or her ability to perform his or her job . . .” The plaintiff argued that his behavior was not indicia of drug use, and seemed to suggest on appeal that the behavior on which an employer relies to support a request for a reasonable suspicion drug test “must lead ineluctably to the conclusion that the employee is under the influence of a controlled substance and not to any other conclusion.”

The Trial and Supreme Court Uphold the Termination

The trial court admittedly struggled with the case because some of the plaintiff’s behavior could have been due to substance use but also could have been due to the pain he suffered as a result of the work-related injury. In finding for the employer, however, the trial judge said that “reasonable grounds [do not] have to be the only grounds,” and that while there might have been competing explanations for the plaintiff’s behavior, this does not mean the employer’s request was unreasonable.

The Supreme Court agreed with the trial court based on what it described as contemporaneous observations and other evidence concerning the plaintiff’s appearance, including: (1) testimony at length about the plaintiff’s “odd” behavior; (2) the plaintiff’s failure to call the warehouse to report his injury despite it being his habit to do so; (3) the plaintiff’s inability to clearly articulate what had occurred when he was injured; (4) the plaintiff’s bending over, repeated use of obscenities, staggering and saying that he was going to “puke”; and (5) his superiors’ belief that he was under the influence.

Turning to the issue of whether the behavior could have been the result of pain from the injuries, the Supreme Court wrote:

The employee’s behavior does not need to be such that it could lead to only a conclusion that he or she is under the influence of a controlled substance. The statute at issue clearly and unambiguously does not require actual knowledge that the employee is definitely under the influence, nor that the employee manifest the specific symptoms usually associated with being under the influence; the statute requires only that there be reasonable grounds to believe that the employee is under the influence of a controlled substance.

To hold otherwise, according to the court, would require managers and supervisors to “possess that degree of medical sophistication” that would allow them to distinguish between symptoms of pain and symptoms of drug use.

Employer Takeaways

Given that marijuana legislation is sweeping the nation, many employers are presently updating their policies and procedures as they expect to see increased marijuana usage among their employees. There is a state law trend towards requiring employers to prove impairment to justify adverse action based on marijuana use. This follows from the widely recognized view that a marijuana-positive result by itself says virtually nothing about impairment at work. As a result, a best practice for employers who test current employees for marijuana, or any drug, is to establish a strong record of impairment independent of a positive result. That would include thorough, contemporaneous documentation of the reasons employees are sent for reasonable suspicion testing. It also could include an accident investigation report that rules out non-drug-related causes where circumstances warrant that conclusion.

Employers should consult outside counsel for help in revising policies, addressing new marijuana challenges in the workplace, and ensuring compliance in states (like Iowa, Minnesota, and Rhode Island, among others) with comprehensive and highly technical drug and alcohol testing statutes.

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CBD

Pennsylvania CBD User Entitled to Unemployment Benefits

On May 11, 2020, a Pennsylvania court upheld the state Unemployment Compensation Board of Review’s order granting a CBD (cannabidiol) user unemployment benefits after being terminated for testing positive for marijuana (Washington Health System v. Unemployment Compensation Board of Review). The decision highlights that employers must tread carefully before taking action against applicants or employees using medical marijuana … Continue Reading

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On May 11, 2020, a Pennsylvania court upheld the state Unemployment Compensation Board of Review’s order granting a CBD (cannabidiol) user unemployment benefits after being terminated for testing positive for marijuana (Washington Health System v. Unemployment Compensation Board of Review). The decision highlights that employers must tread carefully before taking action against applicants or employees using medical marijuana or CBD products to treat various ailments.

The claimant, a licensed occupational therapist, tested positive for marijuana after submitting to a random drug test under the employer’s drug and alcohol testing policy. That policy prohibited employees from “being under the influence of drugs or having drugs in one’s system while at work,” and defined “drug” to mean “any substance producing effects on the central nervous system, or any controlled substance.” The policy did not prohibit the use of legal drugs, but did require employees to advise the employer if such use would “pose[] a significant risk of substantial harm to the health or safety of the individual or to others” or “render[] the Employee unable to perform the essential functions of the job.” Before the test, the claimant advised her employer that she used over-the-counter CBD for symptoms related to cancer. Regardless, the employer terminated her for testing positive for marijuana.

The Board found, and the court agreed, that the claimant was entitled to benefits because the employer did not prove the claimant violated any company policy. Both pointed to the failure of the employer to present admissible evidence at the hearing that the claimant had tested positive for marijuana. That the claimant testified that she had been advised of the positive test result was not sufficient, and the Board and the court rejected the employer’s efforts at proving the fact of the positive test through hearsay evidence. The claimant maintained all along that she never used marijuana. Instead, she testified to using what she believed to be a legal, over-the-counter product to treat cancer symptoms, although she acknowledged that she had been advised that CBD use could result in a “false positive” test result for marijuana. Thus, because the employer did not present the test result or evidence that the claimant used an illegal drug, the Board concluded the employer failed to prove the claimant violated the drug and alcohol testing policy and awarded the claimant benefits. In upholding the Board’s decision, the court added that the employer also had failed to prove the claimant’s use of CBD would have affected her ability to perform the job.

As previously reported here, CBD is projected to be a $22 billion industry by 2022. However, employers remain hazy about this extremely popular product and the implications it has on their employees and businesses. CBD is now being marketed and sold in a variety of forms, including oil (the most popular), health and beauty products, vapors, beverages, and infused edibles, such as chocolates and gummies.

CBD derived from hemp usually will not report a positive test result for marijuana assuming the THC concentration in the product does not exceed .3%. However, if the CBD product contains a sufficient amount of THC, it is entirely possible the product could cause a positive drug test result for marijuana. In our prior blog, we reported studies showing that some over-the-counter CBD products did in fact have THC in them, which might explain the claimant’s positive test result in the Pennsylvania unemployment case. Regardless, before taking any action against medical marijuana or CBD users, employers should review the laws of the states in which they operate and work with employment counsel to help navigate this complex and rapidly evolving area of the law.

Seyfarth Shaw will continue to monitor legal developments at the federal and state level.

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