Recreational Marijuana Is Legal in New Jersey: What Employers Need to Know

On February 22, 2021, New Jersey Governor Phil Murphy signed into law the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA). Among other things, the 240-page measure legalizes the recreational use of marijuana for adults age 21 and older and—unfortunately for employers—places significant burdens on companies doing business in New Jersey with respect to marijuana and the workplace. Among other things, CREAMMA prohibits an employer from taking adverse action against an individual solely because that person does (or does not) use marijuana recreationally and, in doing so, creates a new “protected class” under New Jersey law. CREAMMA also imposes on an employer the obligation to conduct a “physical evaluation” of an individual along with any drug test for marijuana and calls for employers to use certified “experts” to make decisions about an individual’s usage of, or impairment from, marijuana when employers conduct such testing.

CREAMMA represents a radical change in New Jersey employment law, and complying with the various employment-related provisions of the law will not be easy. Employers may want to take steps now to ensure their policies and practices do not run afoul of this new law.

Employer Rights Under CREAMMA

The good news for employers is that CREAMMA expressly provides that employers can still maintain and enforce drug-free workplace policies that prohibit the use, possession, or being under the influence of marijuana in the workplace and during work hours. Specifically, nothing in the new law

[r]equires 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 use of cannabis items or intoxication by employees during work hours.

Accordingly, employers are expressly permitted to take adverse employment action against employees who engage in any of the conduct described above while in the workplace or during work hours.

Additionally, CREAMMA creates 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.” This would include employers that are subject to the United States Department of Transportation’s (DOT) drug-testing requirements for safety-sensitive positions, which prohibit the use of Schedule I drugs, including marijuana, for any reasons.

Employment Protections for Employees

Perhaps most notably, CREAMMA prohibits an employer from refusing to hire or from taking adverse employment action against an individual merely because that person engages in the recreational use of marijuana:

No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against an 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, and an employee shall not be subject to any adverse action by an employer solely due to the presence of cannabinoid metabolites in the employee’s bodily fluid from engaging in conduct permitted under [this law].

Interestingly, a prior version of the legislation would have expressly permitted employers to take adverse action against an individual if the employer had a “rational basis for doing so which [was] reasonably related to the employment, including the responsibilities of the employee or prospective employee.” However, this language was not included in the version of the bill passed by the Legislature and signed into law by Governor Murphy.

CREAMMA defines “adverse employment action” 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.”

Notably, these prohibitions apply with respect to all employees, regardless of their job classifications or the nature of their job duties and responsibilities, including employees who work in safety-sensitive job positions. (Notably, several other states’ marijuana laws expressly exclude from its employment-related protections individuals working in safety-sensitive positions—e.g., “Nothing in this section shall apply to an employee whose employer deems that the employee works in a safety-sensitive position.” Unfortunately for New Jersey employers, CREAMMA contains no such carve-out.)

Therefore, an individual’s decision to use marijuana recreationally is now afforded “protected class” status under New Jersey law. To that end, employers that make employment decisions based solely on individuals’ decisions to use marijuana recreationally may run afoul of the employment protections under CREAMMA. For example, an employer cannot refuse to hire or discharge an employee simply because he or she fails a drug test; instead, it appears that pursuant to CREAMMA an employer would need to conclude that the individual engaged in some prohibited conduct, such as being impaired at the worksite or during working hours.

Drug Testing Requirements

CREAMMA does not prohibit companies from conducting drug screenings on either applicants or current employees. In fact, CREAMMA expressly allows employers to conduct drug testing in any of the following scenarios:

• a pre-employment screening;
• upon reasonable suspicion of an employee’s usage of a cannabis item while engaged in the performance of the employee’s work responsibilities or during work hours;
• “upon finding any observable signs of intoxication related to usage of a cannabis item”;
• “as part of … regular screening of current employees to determine use during an employee’s prescribed work hours”;
• random testing (which, consistent with Hennessey v. Coastal Eagle Point Oil Co., is limited to employees in safety-sensitive positions); and
• “following a work-related accident subject to investigation by the employer” (even in the absence of suspicion of intoxication).

Further, CREAMMA provides that an employer may “use the results of the drug test when determining the appropriate employment action concerning the employee, including, but not limited to dismissal, suspension, demotion, or other disciplinary action.” That being said, this provision must be read in conjunction with CREAMMA’s prohibition against taking adverse action against an employee solely because the employee uses marijuana recreationally, as discussed above. Thus, a failed drug test for marijuana, alone, is likely insufficient for an employer to take adverse action under CREAMMA.

Instead, in order to take adverse action against an employee following a failed drug test for marijuana, CREAMMA would presumably 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.

Determining whether an employee was under the influence may prove difficult for employers, as currently there is not a widely used and accepted drug test for marijuana that can detect real-time intoxication. Instead, the available drug tests for marijuana merely highlight the presence of THC (the main psychoactive compound in cannabis) in the body, which can remain for days or weeks after a person last consumed it. Moreover, unlike testing for alcohol impairment, there is no measure that directly corresponds to a level of impairment for marijuana, making it even that more difficult to establish that the individual was under the influence of marijuana at the time in question.

Finally, while nothing in the law requires employers to drug test employees before taking adverse action, CREAMMA imposes on employers a brand-new, significant requirement if they do conduct such drug testing. Not only does CREAMMA require that a drug test be based on “scientifically reliable objective testing methods and procedures, such as testing of blood, urine, or saliva,” it also requires an employer to conduct a “physical evaluation in order to determine an employee’s state of impairment.” (Interestingly, CREAMMA does not address testing for marijuana through one’s hair follicles, in which marijuana may be detected for up to several months.) Pursuant to CREAMMA, this physical evaluation must be “conducted by an individual with the necessary certification to opine on the employee’s state of impairment, or lack thereof, related to the usage of a cannabis item,” as discussed below.

Effective Date and Implementing Regulations

CREAMMA also provides that the Cannabis Regulatory Commission shall be comprised of five members who are responsible for overseeing the development, regulation, and enforcement of activities associated with both medical and recreational marijuana use. CREAMMA further provides that, within 180 days after Governor Murphy signs the law, or within 45 days of all five members of the commission being duly appointed, whichever is later, the commission shall promulgate rules and regulations to carry out its duties and functions under the law. Notably, while some provisions of CREAMMA become operative immediately upon enactment, the provisions governing the employment relationship are not operative until the commission adopts its initial rules and regulations.

Creation of Workplace Impairment Recognition Experts

CREAMMA requires the Cannabis Regulatory Commission to prescribe “standards in regulation for a Workplace Impairment Recognition Expert [WIRE] certification, to be issued to full- or part-time employees, or others contracted to perform services on behalf of an employer, based on education and training in detecting and identifying an employee’s usage of, or impairment from, a cannabis item or other intoxicating substance, and for assisting in the investigation of workplace accidents.”

CREAMMA states that the purpose of engaging an individual with a WIRE Certification is to “better ensure the protections for prospective employees and employees” against adverse employment action while “simultaneously supporting the authority of employers to require employees undergo drug tests” as well as employer “efforts to maintain a drug- and alcohol-free workplace.” CREAMMA further directs the commission to promulgate regulations that prescribe the “minimum curriculum courses of study” for the WIRE certification.

Several critical questions, however, remain unanswered as a result of this new requirement. For example:

• At what stage in the drug-testing process does the expert get involved? Pre-testing? Post-testing? Must the expert first “approve” of sending an employee for a drug test?
• What is the nature and extent of the expert’s involvement? Does the expert merely render a determination as to the employee’s level of impairment, if any, at the time in question?
• If an employer chooses to engage such an expert, what weight, if any, is accorded the expert’s determination as to the individual’s level of impairment? Is the Expert’s opinion/decision binding on the employer?
• Must the expert render an opinion/decision that the individual was under the influence of marijuana before an employer is permitted to take adverse employment action against the individual?
• What if the employer’s drug test does not test for marijuana, and the applicant or employee tests positive for another illegal drug? Must the employer still solicit the opinion/advice of the expert in that case?
• How might this process work with employees who work remotely, do not typically report to the job site, or work night shifts?
• Can an employer use the services of a remote expert via video?

Interplay With Jake Honig Medical Cannabis Act

It is also unclear how the drug testing requirements of CREAMMA interact with those required under the Jake Honig Compassionate Use Medical Cannabis Act. By way of background, the Honig Act replaced the New Jersey Compassionate Use Medical Marijuana Act and provides certain employment law protections for users of medical marijuana. Under the Honig Act, when an individual fails a drug test for marijuana, the employer is required to provide the individual written notice of the failed drug test and offer the individual an opportunity to present a valid medical explanation for the result.

The individual has three working days after receipt of the employer’s written notice to explain the result (such as by providing a medical marijuana card) or request a retest of the original sample (at the employee’s expense). If the individual demonstrates that he or she is a valid medical marijuana user, the Honig Act prohibits an employer from using the failed drug test alone as a basis to take adverse employment action against the individual. The Honig Act, however, is silent with regard to an employer’s ability to take adverse action against an applicant or employee who fails a drug test and is unable to demonstrate that he or she is a valid medical marijuana user.

In light of CREAMMA, however, the notice and “opportunity-to-cure” requirements of the Honig Act seem to be moot, as employers are now prohibited from taking adverse action against applicants or employees based solely on their failed drug tests for marijuana, regardless of whether the individuals are using marijuana for medical or recreational reasons.

CREAMMA’s Impact on Off-Duty Conduct Laws

Finally, employers may want to review other states’ laws that restrict an employer’s ability to take adverse action against an employee for legal, off-duty conduct. While New Jersey does not have such a law, numerous other states do. For example, while the recreational use of marijuana is still illegal under New York state law, New York Labor Law Section 201-D prohibits an employer from taking adverse action against an employee based on certain lawful, off-duty conduct, including the “legal use of consumable products prior to the beginning or after the conclusion of the employee’s work hours.” Accordingly, when read together, CREAMMA and New York’s (or other states’) off-duty conduct law may prohibit an employer from taking adverse action against an employee who, say, works in New York but travels to New Jersey (or another state that has legalized the recreational use of marijuana) over the weekend to consume marijuana recreationally. But several questions remain.  For example, is the employer required to merely accept the employee’s word that he or she lawfully used marijuana in New Jersey?  And, even if so, does the fact that marijuana remains illegal under federal law allow the employer to take adverse action against the employee on that basis? Similarly, before taking any such adverse action, employers may also want to review whether any other states’ statutory protections for medical and/or recreational users apply with regard to the employee in question. For all these reasons, employers may want to exercise caution when evaluating options for taking adverse action based on a failed drug test for marijuana, particularly in jurisdictions that have off-duty conduct laws and/or have statutory protections for medical and/or recreational users.

Private Right of Action

CREAMMA does not contain an express private right of action for violations of the law. Nevertheless, it remains an open issue as to whether taking adverse employment action against an employee in violation of CREAMMA could give rise to a common law claim for unlawful retaliation pursuant to Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980) or a whistleblower claim under the New Jersey Conscientious Employee Protection Act (“CEPA”).

Key Takeaways

• Employers may ban “the use, … consumption, possession, transfer, display, transportation, sale or growth of cannabis or cannabis items in the workplace” and during work hours.
• Employers may forbid employees from coming to work under the influence of marijuana or using marijuana in the workplace and during work hours.
• Employers may administer drug tests to employees, but an employer may not take adverse employment action against an individual based solely on the individual’s failed drug test for marijuana.
• A physical examination “conducted by an individual with the necessary certification to opine on the employee’s state of impairment, or lack thereof” must accompany an employer’s drug test for marijuana.
• Employers may be entitled to discipline or discharge employees if the employers conclude that the employees used, possessed, or were under the influence of marijuana while in the workplace or during work hours.
• It appears that an employer may discipline or discharge an employee if the employer concludes that the employee used, possessed, or was under the influence of marijuana while in the workplace or during work hours, even without requiring the employee to undergo a drug test or engaging an individual with a WIRE certification to opine on the employee’s state of impairment, or lack thereof.

Potential Next Steps

There are several things that an employer may want to consider doing now to comply with the requirements and restrictions of CREAMMA.

• Determining an Organizational Approach to Marijuana Testing. Marijuana legalization raises challenging workplace questions related to drug testing, disability accommodation, workplace safety, hiring, and employment termination, among other issues. As more and more states legalize both the medical and recreational use of marijuana, many employers are reevaluating their organizations’ approaches to testing both applicants and employees for marijuana. With jurisdictions adopting legislation similar to CREAMMA, prohibiting employers from taking adverse action against individuals based solely on their failed drug tests for marijuana, some employers are either relaxing their drug policies as they relate to marijuana or abandoning such testing altogether. Employers that are federal contractors may want to carefully review their obligations to maintaining drug-free workplaces under federal law.
• Reviewing and Revising Policies. Employers may also want to review both their drug testing and drug-free workplace policies and procedures to ensure compliance with CREAMMA. Specifically, the law prohibits employers from enforcing any policy that automatically results in adverse employment action when an individual fails a drug test for marijuana. This includes failed drug tests by employees working in safety-sensitive positions. Employers may want to clarify in their policies that the “use, consumption, being under the influence, possession, transfer, display, transportation, sale, or growth of cannabis or cannabis items in the workplace” is strictly forbidden and grounds for immediate termination of employment.
• Training Managers and Human Resources Personnel. Employers may seek to provide training to managers and human resources professionals with regard to the requirements and restrictions of CREAMMA, as discussed above. Employers may also consider educating managers and supervisors about the signs and behaviors associated with being under the influence of marijuana.
• Engaging a WIRE. Once the Cannabis Regulatory Commission promulgates its standards for a WIRE certification, employers may want to consider having one (or more) employees obtain such certification, or engage a third-party to perform such services.
• Treading Carefully When Taking Adverse Employment Action. When dealing with marijuana issues at the workplace, employers may want to carefully evaluate the applicable statutes and case law of the relevant jurisdictions.

Ogletree Deakins’ Drug Testing Practice Group will continue to monitor developments related to marijuana laws in the workplace and will provide updates on the Drug Testing blog. Important information for employers is also available via the firm’s webinar and podcast programs.