States Keep Changing the Marijuana Laws

Coats had been employed by Dish Network as a telephone operator in its customer service department for three years at the time of the drug test, and he claimed that his work was not in any way impaired by the medical marijuana he used each night in the privacy of his home. Nevertheless, when the results came back positive, the company cited its zero-tolerance policy and terminated him.

The Coats case is particularly interesting in light of Colorado's 2012 first-in-the-nation law decriminalizing even recreational marijuana use, and employers in Colorado and around the country are paying close attention to the progress of this case. As we await the precedent-setting verdict from the Colorado Supreme Court, here are four key points for employers to consider:

1. Medical Marijuana Statutes Do Not Prohibit Employer Disciplinary Measures

The medical marijuana statutes in most states, as is the Colorado statute at issue in the Coats case, are limited in scope and drafted to permit approved patients to use small amounts of marijuana for medical purposes without fear of criminal prosecution under state drug laws. Generally, the statutes do not protect such individuals from non-criminal consequences of marijuana use, such as being fired from a job after a positive drug test. While the Americans with Disabilities Act of 1990 generally protects employees from workplace discrimination as a result of a disability, the law does not extend its protections to employee marijuana use.

The medical marijuana statutes in Arizona and Delaware (which have not yet been tested in the courts) go further and purport to protect qualified medical marijuana-using employees from discrimination solely as a result of failing a random drug test for marijuana, although they do permit employers to terminate an employee who used or possessed marijuana in the workplace or who was impaired on the job as a result of marijuana use. The Illinois statute (which has also not been tested in court to date) is more ambiguous but appears to offer some protections to an employee who fails a drug test but can demonstrate that his job performance was not affected by his approved medical marijuana use.

2. Federal Contractors May Still Fulfill Their Legal Obligations

All marijuana use, including use for both medical and recreational purposes, remains illegal under federal law. Accordingly, any employer that is subject to the federal Drug-Free Workplace Act of 1988 must continue to randomly test employees and generally comply with federal laws and standards, even as to individuals who are permitted to use marijuana for medical reasons under applicable state law, and even in states where all marijuana use is legal. Indeed, even the relatively more employee-friendly Arizona, Delaware and Illinois statutes described above explicitly permit employers to act upon a positive drug test if failure to do so could result in the employer's loss of a government contract or federal funding. Until there is a change in applicable law, employers that have adopted the federal drug testing standards may continue to randomly test employees and act upon any positive test results.

3. Employees' Off-Duty Legal Activities

The effect of state laws that protect employees' off-duty legal activities is uncertain. Many states have adopted statutes that prohibit employers from disciplining employees for engaging in certain lawful conduct while off-duty, even if such conduct is not permitted during working hours or on the employer's premises. While many of these state laws are limited to protecting off-duty tobacco use, some protect the use of all lawful products, and four states ' California, Colorado, New York and North Dakota ' offer broad statutory protection to employees who engage in any off-duty lawful activities. Employers and employees have wondered whether these off-duty lawful activity statutes offer any protection to employees who engage in the lawful use of marijuana outside of working hours. However, to date, no court has held in favor of a medical marijuana user who was terminated for failing a drug test.

Colorado has one of the broadest lawful off-duty conduct statutes in the nation. Under the law, it is illegal for a Colorado employer to terminate an employee for engaging in any lawful activity off the employer's premises during non-working hours unless the restriction on such activity “relates to a bona-fide occupational requirement,” “is reasonably and rationally related to the employment activities of a particular employee or group of employees, rather than to all employees of the employer” or “is necessary to avoid a conflict of interest with any responsibilities to the employer.”

Nevertheless, as described above, the Colorado trial and appeals courts held in the Coats case that Coats's employer retained its right to fire him for failing a random drug test, notwithstanding his doctor's approval of his use of medical marijuana in a state where such use was legal, and notwithstanding that his marijuana use was only outside of working hours and did not affect his performance. In the Coats case, Dish Network has consistently argued that marijuana use is not a “lawful activity” because its use remains unlawful under federal law. Soon, the Colorado Supreme Court will state whether it agrees.

4. Employers Should Anticipate and Prepare for Evolutionary Change

In the future, the law may treat lawful recreational use of marijuana differently from lawful medical use. To date, the only court cases to consider marijuana users' rights in the workplace have arisen in the medical marijuana context. In those cases, the employers' policies were clearly legitimate vis-'-vis the general population of employees and the only question was whether a particular employee who had a state-sanctioned right to use marijuana for medical reasons should have enjoyed a corresponding exemption from the employer's zero-tolerance policies. As noted above, recreational marijuana use is already legal in Colorado and Washington; two more states, Alaska and Oregon, will vote on legalizing recreational marijuana this month.

While employers have historically differentiated between off-duty employees' use of alcohol or tobacco (or other off-duty lawful activities that would violate company policies during work hours) and off-duty employees' use of marijuana, this distinction may become less defensible as more states adopt laws permitting recreational use of marijuana.

It seems clear that a cultural change is underway with regard to the legalization of marijuana use in the United States. How far that change will go remains uncertain. Through Coats's and similar cases in other states, the courts will play a big role in shaping the development of the law. Employers will need to keep a close eye on legal developments, and be prepared to revise policies, if necessary, to respond to evolutionary changes in the law.

John D. Shyer, a member of this newsletter's Board of Editors, is a partner in the New York office of Latham & Watkins LLP, and co-chair of the firm's global labor and employment law practice group. Rifka M. Singer is a benefits and compensation associate in the firm's New York office.

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Since 1998, 23 states and the District of Columbia have adopted statutes permitting medical marijuana use under limited circumstances, and similar legislation is pending in 10 more states. More recently, Colorado and Washington have passed laws legalizing recreational marijuana use. However, marijuana use remains illegal for both medical and recreational purposes under federal law, and many companies continue to maintain “zero tolerance” policies with respect to employee marijuana use.

On Sept. 30, attorneys for Brandon Coats, a 34 year-old Colorado quadriplegic and authorized medical marijuana user, argued in Colorado Supreme Court that Coats was unlawfully fired in 2010 by his employer, Dish Network, after failing a random workplace drug test. Colorado trial and appellate courts had previously ruled that Dish Network was within its rights to fire Coats, finding that the state's medical marijuana statute merely protected Coats from criminal penalties for his medical marijuana use, but did not afford civil protections.

Coats alleged that he was seriously injured in a car accident as a teenager, resulting in paralysis over 80% of his body. Prescription painkillers did not ease the debilitating muscle spasms and seizures that made sleep difficult for Coats, but in 2009, when his doctor prescribed a nightly dose of medical marijuana, he claimed to have found some relief. When Coats was selected for a random drug test for the first time in 2010, he voluntarily informed his employer that he was on the state's medical marijuana registry and that the test would come back positive for marijuana though he never used the substance during the workday.

Coats had been employed by Dish Network as a telephone operator in its customer service department for three years at the time of the drug test, and he claimed that his work was not in any way impaired by the medical marijuana he used each night in the privacy of his home. Nevertheless, when the results came back positive, the company cited its zero-tolerance policy and terminated him.

The Coats case is particularly interesting in light of Colorado's 2012 first-in-the-nation law decriminalizing even recreational marijuana use, and employers in Colorado and around the country are paying close attention to the progress of this case. As we await the precedent-setting verdict from the Colorado Supreme Court, here are four key points for employers to consider:

1. Medical Marijuana Statutes Do Not Prohibit Employer Disciplinary Measures

The medical marijuana statutes in most states, as is the Colorado statute at issue in the Coats case, are limited in scope and drafted to permit approved patients to use small amounts of marijuana for medical purposes without fear of criminal prosecution under state drug laws. Generally, the statutes do not protect such individuals from non-criminal consequences of marijuana use, such as being fired from a job after a positive drug test. While the Americans with Disabilities Act of 1990 generally protects employees from workplace discrimination as a result of a disability, the law does not extend its protections to employee marijuana use.

The medical marijuana statutes in Arizona and Delaware (which have not yet been tested in the courts) go further and purport to protect qualified medical marijuana-using employees from discrimination solely as a result of failing a random drug test for marijuana, although they do permit employers to terminate an employee who used or possessed marijuana in the workplace or who was impaired on the job as a result of marijuana use. The Illinois statute (which has also not been tested in court to date) is more ambiguous but appears to offer some protections to an employee who fails a drug test but can demonstrate that his job performance was not affected by his approved medical marijuana use.

2. Federal Contractors May Still Fulfill Their Legal Obligations

All marijuana use, including use for both medical and recreational purposes, remains illegal under federal law. Accordingly, any employer that is subject to the federal Drug-Free Workplace Act of 1988 must continue to randomly test employees and generally comply with federal laws and standards, even as to individuals who are permitted to use marijuana for medical reasons under applicable state law, and even in states where all marijuana use is legal. Indeed, even the relatively more employee-friendly Arizona, Delaware and Illinois statutes described above explicitly permit employers to act upon a positive drug test if failure to do so could result in the employer's loss of a government contract or federal funding. Until there is a change in applicable law, employers that have adopted the federal drug testing standards may continue to randomly test employees and act upon any positive test results.

3. Employees' Off-Duty Legal Activities

The effect of state laws that protect employees' off-duty legal activities is uncertain. Many states have adopted statutes that prohibit employers from disciplining employees for engaging in certain lawful conduct while off-duty, even if such conduct is not permitted during working hours or on the employer's premises. While many of these state laws are limited to protecting off-duty tobacco use, some protect the use of all lawful products, and four states ' California, Colorado, New York and North Dakota ' offer broad statutory protection to employees who engage in any off-duty lawful activities. Employers and employees have wondered whether these off-duty lawful activity statutes offer any protection to employees who engage in the lawful use of marijuana outside of working hours. However, to date, no court has held in favor of a medical marijuana user who was terminated for failing a drug test.

Colorado has one of the broadest lawful off-duty conduct statutes in the nation. Under the law, it is illegal for a Colorado employer to terminate an employee for engaging in any lawful activity off the employer's premises during non-working hours unless the restriction on such activity “relates to a bona-fide occupational requirement,” “is reasonably and rationally related to the employment activities of a particular employee or group of employees, rather than to all employees of the employer” or “is necessary to avoid a conflict of interest with any responsibilities to the employer.”

Nevertheless, as described above, the Colorado trial and appeals courts held in the Coats case that Coats's employer retained its right to fire him for failing a random drug test, notwithstanding his doctor's approval of his use of medical marijuana in a state where such use was legal, and notwithstanding that his marijuana use was only outside of working hours and did not affect his performance. In the Coats case, Dish Network has consistently argued that marijuana use is not a “lawful activity” because its use remains unlawful under federal law. Soon, the Colorado Supreme Court will state whether it agrees.

4. Employers Should Anticipate and Prepare for Evolutionary Change

In the future, the law may treat lawful recreational use of marijuana differently from lawful medical use. To date, the only court cases to consider marijuana users' rights in the workplace have arisen in the medical marijuana context. In those cases, the employers' policies were clearly legitimate vis-'-vis the general population of employees and the only question was whether a particular employee who had a state-sanctioned right to use marijuana for medical reasons should have enjoyed a corresponding exemption from the employer's zero-tolerance policies. As noted above, recreational marijuana use is already legal in Colorado and Washington; two more states, Alaska and Oregon, will vote on legalizing recreational marijuana this month.

While employers have historically differentiated between off-duty employees' use of alcohol or tobacco (or other off-duty lawful activities that would violate company policies during work hours) and off-duty employees' use of marijuana, this distinction may become less defensible as more states adopt laws permitting recreational use of marijuana.

It seems clear that a cultural change is underway with regard to the legalization of marijuana use in the United States. How far that change will go remains uncertain. Through Coats's and similar cases in other states, the courts will play a big role in shaping the development of the law. Employers will need to keep a close eye on legal developments, and be prepared to revise policies, if necessary, to respond to evolutionary changes in the law.

John D. Shyer, a member of this newsletter's Board of Editors, is a partner in the New York office of Latham & Watkins LLP, and co-chair of the firm's global labor and employment law practice group. Rifka M. Singer is a benefits and compensation associate in the firm's New York office.

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