NJ Legalizes Recreational Cannabis – What It Means for Employers Is Not Entirely Clear, Yet

Morgan Lewis
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Morgan LewisLegalized adult recreational use of cannabis is coming to New Jersey. On November 3, 2020, New Jersey voters approved a ballot measure to amend the New Jersey Constitution to, among other things, make lawful the personal, nonmedical use of cannabis for individuals age 21 and over. Effective January 1, 2021, the amendment provides that regulatory authority will be given to the Cannabis Regulatory Commission, which already oversees medical marijuana, but that the commission’s authority must be authorized by “law enacted by the Legislature.”

The New Jersey legislature is working quickly to pass this enabling legislation, known as the “New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” (NJCREAMMA) (S21/A21). The legislature is also working to pass a separate law that would decriminalize possession and distribution of small amounts of marijuana, among other things (S2535/A-1897/A-4269, referred to here as the decriminalization bill).[1] The decriminalization bill is necessary, in part, because individuals still face arrest between now and January 1, 2021 and the constitutional amendment does not legalize recreational cannabis use for individuals under the age of 21.

Both the New Jersey Senate Judiciary Committee and the Assembly Oversight, Reform and Federal Relations Committee approved NJCREAMMA on November 9. On Thursday, November 12, lawmakers will hold further committee hearings on NJCREAMMA and expect the legislation could pass the full Senate and Assembly by November 16. If enacted as currently written, NJCREAMMA and the decriminalization bill will have important implications for New Jersey employers. These proposed laws, however, are still moving through the legislative process, subject to change, and likely will have to be reconciled to iron out inconsistencies.

EMPLOYMENT PROVISIONS OF NJCREAMMA

NJCREAMMA would prohibit employers from taking adverse employment action against employees or applicants based on their cannabis use (or non-use). Specifically, the bill provides that:

No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions, or other privileges of employment because that person does or does not smoke, vape, aerosolize or otherwise use cannabis items, unless the employer has a rational basis for doing so which is reasonably related to the employment, including the responsibilities of the employee or prospective employee.[2]

The bill does not contain an express private right of action for violations of this provision. That silence likely will lead to litigation regarding whether an implied right of action exists under the three-part test adopted in R. J. Gaydos Ins. Agency v. Nat’l Consumer Ins. Co., 168 N.J. 255, 271 (2001): “To determine if a statute confers an implied private right of action, courts consider whether: (1) plaintiff is a member of the class for whose special benefit the statute was enacted; (2) there is any evidence that the Legislature intended to create a private right of action under the statute; and (3) it is consistent with the underlying purposes of the legislative scheme to infer the existence of such a remedy.”

The bill also does not define “rational basis” or otherwise provide guidance on how to apply that standard. Notably, however, it appears that NJCREAMMA borrowed its standard from the nondiscrimination provision of New Jersey’s Smoke-Free Air Act.[3] Thus, if courts determine that an implied private right of action exists, they may look to case law interpreting the rational basis standard in the Smoke-Free Air Act for guidance. See Still v. Bd. of Review, 2012 WL 2035802, at *6 (N.J. Super. Ct. App. Div. June 7, 2012) (no-smoking in company vehicle policy was rationally based). This silence will breed litigation. For example, while employers still may prohibit the use of cannabis items while working, the question remains, for example, whether workplace safety considerations would be considered a “rational basis” for adverse actions based on cannabis use outside of work and, if so, under what circumstances? And, of course, the fundamental question of how to determine if/when an employee is under the influence of cannabis (or medical marijuana) at or during work remains.

NJCREAMMA, however, would permit employers to keep or establish drug and alcohol-free workplaces and employers would not have to permit or accommodate cannabis use in the workplace or during work hours. Specifically, the proposed law states that nothing in it:

Requires an employer to amend or repeal, or affect, restrict or preempt the rights and obligations of employers to maintain a drug and alcohol free workplace or require an employer 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, or to affect the ability of employers to have policies prohibiting cannabis use or intoxication by employees during work hours.

Relatedly, private property owners – which would seemingly include landlords for leased office, warehouse, and retail spaces – may also generally prohibit the “consumption, use, display, transfer, distribution, sale, or transportation of cannabis items on or in that property.”

EMPLOYMENT ASPECTS OF THE DECRIMINALIZATION BILL

Under this proposed law, employers cannot consider when making an employment decision, require an applicant to disclose or reveal, or take any adverse employment action against an applicant for employment based on an arrest, charge, conviction, adjudication of delinquency, civil penalty, or community service for certain marijuana-related offenses. The bill exempts, however, situations where the employment sought or being considered is for a position in law enforcement, corrections, the judiciary, homeland security, or emergency management.

Employers who violate this provision would be subject to civil penalties collectible by the Commissioner of the New Jersey Division of Labor and Workforce Development: up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each violation after that.

These civil penalties are the sole remedy for violations of this provision. The law specifically provides that nothing in this nondiscrimination provision is to be construed as creating a private cause of action against employers who violate it, that it does not establish a standard of care or duty for employers regarding any other law, and that evidence that employers have violated this provision is not admissible in any legal proceeding other than one to enforce the civil penalties. That said, we expect that there still could be litigation regarding whether a termination for off-duty marijuana use (instead of an off-duty arrest or conviction for such use) might provide the basis for a common law wrongful discharge claim under the New Jersey Supreme Court’s decision in Pierce v. Ortho Pharm. Corp., 84 N.J. 58 (1980). But sound arguments are available that no such claim should be allowed to proceed given that the bill’s language creates an alternative enforcement apparatus where the Division of Labor and Workforce Development enforces this provision and can impose penalties.

In a separate provision, the decriminalization bill creates a private cause of action for those who allege discrimination in “public or private housing, real property, or a place of public accommodation,” based on a prior arrest, charge, conviction, adjudication of delinquency, civil penalty, or community service related to certain marijuana-related offenses. While seemingly unconnected to employment, the provision provides that, if the discrimination in public or private housing, real property, or a place of public accommodation “impacted the person’s employment,” a court may order, among other relief, reinstatement of employment, reinstatement of benefits and seniority rights, and compensation for lost wages, benefits, and other remuneration. It is unclear how these employment-related remedies would work in practice, particularly in light of the bill’s separate civil penalties provision described above applicable to employers. For example, is an individual who is unlawfully denied housing because of a prior conviction and, as a consequent effect loses their job, entitled to seek reinstatement of employment even if the employer was uninvolved in the housing discrimination? Would the employer be a party to such a proceeding? Further legislative developments may shed light on whether this was a drafting error or whether there is some other meaning that is not readily apparent.

RECOMMENDATIONS FOR EMPLOYERS

While there could be, and likely will be, changes made during the legislative process, New Jersey employers will want to start considering taking the following steps when the finalized laws take effect:

  • Update policies to ensure compliance with the nondiscrimination portions of the proposed laws
  • Determine whether bans on employee or applicant recreational cannabis use are permissible under the proposed laws, applying the rational basis standard to each job position, and update drug-testing procedures accordingly
  • Update drug-testing protocols with vendors
  • Train managers and human resources employees on the proposed laws and ensure that they are aware of their nondiscrimination provisions, but also that employees are still prohibited from using, possessing, or being impaired by cannabis in the workplace or during work hours
  • Train managers on the indicia of reasonable suspicion of employees under the influence of cannabis at work
  • Consider researching the market for tests that provide an objective measure of impairment due to cannabis

[1] Generally speaking, “cannabis” refers to all products derived from the plant Cannabis sativa, and “marijuana” refers to parts of or products from the plant Cannabis sativa that contain substantial amounts of tetrahydrocannabinol, or THC. See Cannabis (Marijuana) and Cannabinoids: What You Need To Know. NJCREAMMA uses “cannabis” (and related terms) and the decriminalization bill addresses “marijuana” (and hashish). In this alert, we use these terms consistent with their use in the respective bills.

[2] The law defines “cannabis item” as “any cannabis, cannabis resin, cannabis product, and cannabis extract.” Each of those four terms have their own definitions in the proposed law. But “cannabis item” does not include any form of medical cannabis dispensed to registered qualifying patients under the Jake Honig Compassionate Use Medical Cannabis Act or hemp or a hemp product cultivated, handled, processed, transported, or sold pursuant to the New Jersey Hemp Farming Act.

[3] See N.J.S.A. § 34:6B-1 (“No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions or other privileges of employment because that person does or does not smoke or use other tobacco products, unless the employer has a rational basis for doing so which is reasonably related to the employment, including the responsibilities of the employee or prospective employee.”).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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