This month, New Jersey has expanded the state’s medical marijuana law and limited employers’ ability to inquire about job applicants’ salary history. Employers should review these new laws and ensure compliance, including reviewing their drug screening programs, evaluating their hiring practices to eliminate prior-pay inquiries, and training staff on the requirements of the new laws.
On July 2 Gov. Phil Murphy signed into law the Jake Honig Compassionate Use Medical Cannabis Act, which significantly expanded the state’s existing medical marijuana law to include employment protections for authorized users of medical marijuana, and create additional obligations for employers when drug testing.
Since 2010, marijuana has been legal for medicinal purposes under New Jersey’s Compassionate Use Medical Marijuana Act (CUMMA). CUMMA did not include employment protections for medical marijuana users and, in fact, expressly stated that “[n]othing in this act shall be construed to require. . .an employer to accommodate the medical use of marijuana in any workplace.”
The recent amendments to New Jersey’s new medical marijuana law—which took effect immediately upon enactment—include critical employee protections that will have implications for employers with New Jersey employees, particularly with respect to workplace accommodations and drug testing procedures.
Employee Protections
The amended law expressly prohibits an employer from taking any adverse employment action “based solely on the employee’s status” as a “registered qualifying patient.” Notably, the new law’s use of the word “solely” leaves open the question of whether it is permissible for an employer to take an adverse employment action based on an employee’s status as a medical marijuana user plus some other factor, including, for example, the safety-sensitive nature of the employee’s job. A “registered qualifying patient” is defined as an individual who both (1) has been authorized by a healthcare provider for the medical use of cannabis, and (2) has registered with the state’s Cannabis Regulatory Commission. The new law broadly 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.”
Employers are also now limited in their ability to enforce zero-tolerance drug policies with respect to medical marijuana. Under the amended law, an employee or job applicant who tests positive for marijuana must be given an opportunity to provide a “legitimate medical explanation for the positive test result,” which includes authorization for medical marijuana use by a healthcare provider, proof of registration for medical marijuana use, or both. Employers are required to inform the employee or applicant of this right to explain by way of a written notice. Then, within three working days of receiving the written notice, the employee or applicant may either provide a legitimate medical reason for the positive test result, or request retesting at the employee or applicant’s own expense.
What Is Not Covered
Notably, the amended law also benefits employers by providing greater clarity on two critical issues. First, the law explicitly states that it does not “restrict an employer’s ability to prohibit or take adverse employment action for the possession or use of intoxicating substances during work hours or on workplace premises outside of work hours.” Second, the law makes clear that employers need not accommodate the use of medical marijuana when doing so “would cause the employer to be in violation of federal law” or “result in the loss of a federal contract or federal funding.”
Potential Protections Under the LAD
Employers must also be mindful of potential employment protections for medical marijuana users under the New Jersey Law Against Discrimination (NJLAD). The New Jersey Supreme Court recently granted review of Wild v. Carriage Funeral Holdings, Inc., 458 N.J. Super. 416 (App. Div. 2019), an Appellate Division decision holding that employees may advance NJLAD claims against employers for failing to accommodate their off-duty use of medical marijuana.
The plaintiff-employee in Wild alleged that his employer terminated him for his lawful off-duty use of medical marijuana, in violation of CUMMA and the NJLAD. The trial court dismissed the employee’s claims, finding that CUMMA “does not contain employment-related protections for licensed users of medical marijuana.” On appeal, the Appellate Division disagreed, finding that although CUMMA states that it does not “require . . . an employer to accommodate the medical use of marijuana in any workplace,” that restriction “does not mean that the [NJLAD] may not impose such an obligation.” Accordingly, the Appellate Division reversed the trial court’s dismissal, allowing the employee to advance his NJLAD claim.
Until the state Supreme Court weighs in on this issue, the Appellate Division’s holding in Wild remains binding precedent in New Jersey, creating an increased risk under the NJLAD for employers who fail to accommodate the off-duty use of medical marijuana.
Recommended Next Steps
In light of these recent developments in the law, employers should, at a minimum, review and amend their policies to prohibit adverse employment actions against New Jersey employees because of their status as registered medical marijuana users. Employers should also amend their drug screening programs and hiring processes to ensure that they are in compliance with the new medical marijuana law, and begin preparing the written notice that is now required for employees or applicants who test positive for marijuana. A template notice is not likely to be issued by the state.
On July 25, Acting Governor Sheila Oliver signed into law Assembly Bill 1094, which restricts employers’ use of applicants’ salary history during the hiring process. The new law supports the state’s sweeping pay equity legislation known as the “Diane B. Allen Equal Pay Act,” which places the burden on employers to justify any pay discrepancies among substantially similar positions between gender, race, or ethnicity. This follows a nationwide trend toward the adoption of laws aimed at prohibiting salary inquiries, based on the supposition that wage-history inquiries or reliance perpetuate discrimination in the workplace.
The new law prohibits employers from screening applicants based on salary history, including, but not limited to, the applicant’s prior wages, salaries, or benefits. It would also make it unlawful for an employer to require an applicant’s salary history to satisfy any minimum or maximum criteria, or considering an applicant’s refusal to volunteer salary history information in any employment decisions. These prohibitions apply at any stage in the hiring process, including finalizing the employment contract. The Statement to Assembly Committee Substitute for Assembly Bill 1094 also provides that if an employee is a member of a protected class, a violation of these provisions would be an unlawful employment practice under the Law Against Discrimination. Employers that violate the new law can be fined up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for the third.
Exceptions
There are certain exceptions to the salary history restriction as outlined in the Statement to Assembly Committee Substitute for Assembly Bill 1094. First, if an applicant voluntarily provides the employer with his or her salary history, an employer may consider the applicant’s salary history in determining salary, benefits, and other compensation and may verify the history provided by the applicant. An applicant’s refusal to volunteer compensation information, however, shall not be considered in any employment decisions. Second, employers may request that the applicant provide a written authorization to confirm the previous salary history after they have provided them with an offer of employment that includes a compensation package.
What Is Not Covered
Recommended Next Steps
The legislative and enforcement momentum in the equal pay area is likely to continue. Accordingly, employers should continue to evaluate their hiring practices and seek to identify and, where appropriate, address any disparities. As a practical matter, employers should remove questions seeking current or prior earnings from employment applications, new hire paperwork, candidate questionnaires, and background check forms. In addition, employers should train individuals involved in the hiring process on the new law to include instructions regarding the importance of ensuring that candidates are not asked to disclose salary history, what to do if such information is volunteered, and how to respond to requests for pay scale information.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Princeton
August W. Heckman, III
Richard G. Rosenblatt
Thomas A. Linthorst
Michelle Seldin Silverman
Terry D. Johnson