Addressing Marijuana in the Workplace

As states across the country legalize recreational marijuana, it has become increasingly difficult for employers to maintain a ‘Drug Free Workplace.’ Some employers aren’t concerned; they never had to, nor cared to enforce that section of their Employee Handbook anyway. However a large percentage of jobs come with a pretty high risk of injury, so workplace safety is paramount. According to OSHA, there were 2.7 workplace injuries per 100 workers and 4,764 workplace fatalities in 2020. While those numbers have decreased over the years, America still loses 13 people a day to fatal workplace accidents.

Companies who operate in potentially dangerous situations are obviously concerned with their employees being impaired on the job. When you have someone working in a confined space installing an industrial furnace, or operating a forklift, or driving a heavy truck; you want them clear headed.  For good reason, these are jobs that employees needed to pass drug tests to get and keep. After legalization that is no longer always the case.

A State Issue

Marijuana legalization is a state issue. The workplace practices vary from state to state but the two states toughest on employers are New York and New Jersey.

In short, both states now bar an employer from making an adverse employment decision (read: fire, fail to promote, or choose not to hire) on the sole basis of a positive marijuana test. The logic is that someone can test positive for marijuana potentially up to a month after using so a test is not an accurate indicator of current impairment. You wouldn’t fire an employee for having a few drinks at home over the weekend so same logic applies to legal marijuana, except marijuana smokers are now a protected class. A marijuana smoker in NJ and NY can now successfully sue an employer for discrimination if fired or not hired solely because of a positive test. Employers with multi-state operations are especially exposed as you now are forced to provide different treatment to employees in different states.

So What Can You Do?

First off, federal law supercedes state law. Marijuana is still illegal federally so you still need to drug test for any positions that fall under federal jurisdiction. Most commonly, drivers that fall under the purview of the Federal Motor Carrier Safety Administration (FMCSA).  CDL drivers and drivers that operate a vehicle over 10,000 GVW while engaged in interstate commerce should be drug tested at-hire and post accident. If you currently employ those drivers, you can continue drug testing and continue to not offering employment if they fail.

If you employ workers in safety-sensitive position, but they are not subject to any federal regulations then it gets a little trickier.

In any state, you are allowed to maintain a policy of “Drug Free Workplace” and bar employees from using, possessing, or being under the influence of any drugs or alcohol at work. However in NJ and NY it is very difficult to prove if an employee is using, possessing, or under the influence because a positive test isn’t good enough anymore. You need to physically see that the employee is actively smoking/vaping/etc, find drugs on their person, or be able to document visible signs of impairment.

The New Jersey Cannabis Regulatory Commission has issued a worksheet called the Reasonable Suspicion Observed Report, you can download here, that helps you objectively document signs of impairment. This report lists a number of physical signs and behavioral indicators that could signal impairment. They also suggest that you have two separate managers/supervisors independently complete. Eventually both New York and New Jersey will require that your company has a “Workplace Impairment Recognition Expert” that is charged with detecting and identifying an employee’s usage of, or impairment, from marijuana or other drugs. However they have not yet developed standards for certifying this expertise so as of now they suggest you use the Reasonable Suspicion Observed Behavior Report.

To summarize:

If you find yourself needing to fire an employee for a marijuana offense: use the caution you do with any firing. Consult with an employment attorney, make sure your case is properly documented, remove any signs of bias or discrimination, and have both a Reasonable Suspicion Observed Report and a positive test. To be sure, workers are aware of these protections: I’ve seen potential employees threaten legal action when asked to take pre-employment drug test and employers getting sued for not hiring marijuana smokers.

Lastly, be sure to protect your company with an Employment Practices Liability Policy. Defending a wrongful termination or discrimination lawsuit can be extremely costly - the average discrimination lawsuit settles for $80,000, not including attorney fees. We can help you can avoid a costly legal battle through proper risk management and insurance.

How to Choose the Right Broker

There aren’t a shortage of insurance brokers in this country; over 36,000 independent agencies to be precise. With all of those options it can be a daunting task to determine who to trust with managing your company’s insurance and risk management. Non-renewals, rate hikes, denied claims are all consequences of choosing incorrectly. Here are a few considerations:

Do they have expertise in your industry?

Insurance policies are a promise and your broker’s job is to make sure that promise is crafted in a way that serves your best interest. More importantly, when it is time to cash in on that promise, they need to ensure that it is fulfilled completely and fairly. A broker with expertise in your industry knows the right coverages to include, the wrong ones that you don’t need, and how to solve the claims issues that are likely to arise. For example, I met with a flooring company who was paying about 10% of their annual premium on Product Recall insurance but due to the way the coverage was written and how the flooring industry operates; they would never be able to collect under that coverage and were wasting 10% a year.

Do they understand your company?

Perhaps more important than understanding your industry at large; your broker needs to deeply understand your company. Are they familiar with your operations, your strategy, your culture, and your mission? In order to be effective as your representative to the marketplace, your broker needs to be deeply knowledgeable about all aspects of your business. The party with access to more information wins any negotiation and when your broker is knowledgeable about your company then you can be confident that they are successfully negotiating on your behalf.

Do they provide concrete answers?

Admittedly, there can be a lot of gray area when deciphering insurance coverage and many brokers smartly tread with caution when discussing hypothetical claim scenarios. However there is a difference between navigating the nuance and giving a non-answer. Insurance coverage has existed here since before we were a country and much of the gray area has been litigated and adjudicated on in the past 250 years. You want a broker who leans on their in-depth understanding of the policy, as well as any relevant case law to provide you with actionable answers to your questions. A broker who is able to do that can also successfully advocate on your behalf when that hypothetical becomes a reality. For example, one of our insureds had a claim denied under the Product Recall exclusion in their General Liability policy. Because we’ve researched these hypotheticals, we were able to successfully argue that coverage exists by pointing to prior litigation around a similar scenario and got the carrier to cover the claim.

Do they have the proper infrastructure to service your account?

I am always surprised by how many prospects ask about our ability to issue Certificates of Insurance. Certificates of Insurance are a snapshot of your company’s insurance policies and take less than 5 minutes to produce but even so many clients have shared how they were a source of frustration with their old broker. When deciding on a broker find out what their process for issuing COIs is and if that fits with how your organization operates. Does a dedicated rep handle them? Do the requests go to a general mailbox? Do you issue them yourself through an online portal? Besides COIs it is important to find out who the service team is and their workload. Will your account be serviced by a back office team elsewhere or will there be a dedicated account manager? Will your business be another number or a valued client? These are important questions to help you understand the service level that you will be receiving.