New Jersey Legalizes Recreational Cannabis and Enacts Employment Protections for Cannabis Users

On February 22, 2021, Governor Phil Murphy signed the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“NJCREAMMA”), which legalizes the recreational use of cannabis for adults age 21 and over.  On that same date, Governor Murphy also signed the companion cannabis decriminalization bill (A1897) (the “Decriminalization Law”) and the “Clean Up” bill (S3454), which decriminalize cannabis and address penalties for the possession and consumption of cannabis by individuals who are under 21 years old.

NJCREAMMA provides various employment protections for employees who use cannabis recreationally and imposes strenuous requirements on New Jersey employers that conduct drug testing for the presence of cannabis in an individual’s system.  While some provisions of NJCREAMMA became effective immediately, the employment-related provisions do not become enforceable until the Cannabis Regulatory Commission (the “Commission”) promulgates initial rules and regulations.  The Commission, which is a five (5) member body, is responsible for the oversight of New Jersey’s medical cannabis marketplace and the impending recreational cannabis marketplace.  On February 25, 2021, Governor Murphy completed filling the seats on the Commission, which now has 180 days after the date Governor Murphy signed NJCREAMMA to establish such rules and regulations.

Non-Discrimination

Section 48 of NJCREAMMA prohibits discrimination against any applicant or employee who uses (or does not use) cannabis and states:

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, 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 [NJCREAMMA].

Therefore, NJCREAMMA effectively creates a new “protected class” under New Jersey law. New Jersey employers may not refuse to hire or take any adverse action against employees based solely on their use (or nonuse) of recreational cannabis.  For example, an employer may not terminate an employee solely because he or she fails a drug test due to cannabis use.  However, given the inclusion of the word “solely” in the law, an employer may lawfully terminate that employee if there is some other reason beyond the positive test result to support termination. For example, if the employer concludes that the employee was impaired by cannabis during work hours (which is supported by the positive test result), the employer could terminate the employee.

A “cannabis item” is defined as “any usable cannabis, cannabis product, cannabis extract, and any other cannabis resin.”  The law makes clear that a “cannabis item” does not include hemp or a hemp product cultivated, handled, processed, transported, or sold pursuant to the New Jersey Hemp Farming Act.  Further, a “cannabis item” does not include any form of medical cannabis given to registered patients under the Jake Honig Compassion Use Medical Cannabis Act (“NJCUMMA”).  As we reported, NJCUMMA includes its own set of employment protections for medical cannabis users.

Notably, the above non-discrimination provision applies to all employees, including those who work in safety-sensitive job positions. Other states that have legalized recreational cannabis enacted an exception for employees who work in safety-sensitive job positions from employment protections, but no such exception is included in NJCREAMMA.

Employment Implications of the Decriminalization Law

Section 15 of the Decriminalization Law prohibits employers from considering certain cannabis-related offenses in making employment decisions as it provides:

An employer shall not be permitted to, when making an employment decision, rely solely on, or require any applicant to disclose or reveal, or take any adverse action against any applicant for employment solely on the basis of, any arrest, charge, conviction, or adjudication of delinquency [for certain marijuana-related offenses].

Any violation of this provision will expose a New Jersey employer to a civil penalty of up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each further violation. The Decriminalization Law does not provide for a private right of action for employees to sue employers for violation of this provision.

Drug- and Alcohol-Free Workplace Policies

Despite the above non-discrimination protections, NJCREAMMA explicitly states that employers can still maintain drug- and alcohol-free workplace policies that prohibit the “use, consumption, being under the influence, possession, transfer, display, transportation, sale, or growth of cannabis or cannabis items in the workplace[.]”  The law further states that it does not “affect the ability of employers to have policies prohibiting the use of cannabis items or intoxication by employees during working hours.”

New Drug Testing Requirements

Under NJCREAMMA, New Jersey employers may drug test applicants and employees for cannabis in the following circumstances: (1) a pre-employment screening; (2) upon reasonable suspicion of an employee’s use of cannabis items at work; (3) upon “finding observable signs of intoxication related to usage of a cannabis item”; (4) as part of a work-related accident investigation (even if there is no suspicion of intoxication); (5) random testing (which must be limited in accordance with law); and (6) as part of “regular screening of current employees to determine use during an employee’s prescribed work hours[.]”

NJCREAMMA also places onerous requirements upon the testing procedures.  Not only must a drug test for cannabis be based upon “scientifically reliable objective testing methods and procedures, such as testing of blood, urine, or saliva,” the test must also include a “physical evaluation in order to determine an employee’s state of impairment.”  The individual conducting the “physical evaluation” must be certified as a “Workplace Impairment Recognition Expert” (“WIRE”) in accordance with standards to be established by the Commission.  A WIRE must receive 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.”

While NJCREAMMA provides that an employer may use drug test results when making various employment decisions (including termination), such decisions cannot be solely based on a failed drug test for cannabis alone (as noted above).  To support an adverse employment action, an employer will likely need to conclude that an employee engaged in some prohibited conduct, such as possessing cannabis while on company property or being under the influence of cannabis during working hours.  However, as there is no widely accepted and proven test to detect real-time cannabis intoxication, determining the timing of cannabis use will pose a practical challenge for employers as they face difficulty in establishing that an employee was under the influence of cannabis during working hours or while on company property.

Federal Contractor Exception

NJCREAMMA creates a carve-out for employers that are federal contractors.  Specifically, if the requirements of the law would 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 provision would include employers that are subject to the United States Department of Transportation’s (“DOT”) drug-testing requirements for safety-sensitive positions, which currently prohibit the use of cannabis.  As a result, employers that are federal contractors are generally permitted to take adverse employment actions against employees who test positive for cannabis use without any further evidence of misconduct.

Interaction with Off-Duty Conduct Laws

While New Jersey does not have an off-duty conduct law, many states (like New York) have enacted such laws to restrict an employer’s ability to take an adverse action against an employee based on legal, off-duty conduct.  Although recreational cannabis is currently illegal in New York, New York’s off-duty conduct law and NJCREAMMA may prevent an employer from taking an adverse employment action against an employee who works in New York, but travels to New Jersey during non-working hours to use cannabis recreationally.  Therefore, the impact of NJCREAMMA extends beyond the New Jersey State borders.  Employers who operate in states with off-duty conduct laws should speak with counsel before taking any adverse employment action against an employee who tests positive for cannabis use.

No Private Right of Action

NJCREAMMA does not contain an express private right of action allowing an employee to sue an employer for any violation under the law.  This omission will likely lead to litigation regarding whether there is an implied right of action under the law.  Further, it is unclear whether an employer’s violation of the law could give rise to a common law claim for wrongful termination or 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”).

Recommendations

Overall, New Jersey employers should consult with counsel to update drug- and alcohol-free workplace policies and drug testing protocols.  Further, New Jersey employers should reach out to counsel before making any hiring decision or taking an adverse employment action based upon an applicant or employee failing a drug test due to cannabis use or otherwise being found to have used cannabis.  As noted above, the Commission is set to promulgate rules and regulations within the next few months, so employers should stay up-to-date with any new developments.