The quandary of legal pot and workers' compensation deepens

Now that 28 states have legalized the medical and/or recreational use of marijuana, employers are struggling with zero tolerance policies, pre-employment drug testing, employee drug testing, discrimination suits, and general uncertainty. Laws about marijuana vary from state to state, making questions about how it affects workers' comp and other employer policies even more confusing. Further, as states tighten up laws on the use of opioids to manage pain, some argue that cannabis is a viable alternative, raising concerns that workers will be impaired when they return to work.

The changing landscapes are challenging for employers and will lead to more litigation, new laws and regulations. Here are six recent actions and trends that employers should know about:

1. Federal budget protects medical marijuana

   Although Attorney General Jeff Sessions has been an outspoken critic of medical marijuana, the $1 trillion spending bill approved in May, which will fund the U.S. government until the end of September, includes language that protects state medical marijuana programs from federal enforcement. It provides no funding for any prosecution of cases involving medical marijuana where it has been made legal. Recreational users are not protected under this provision.

2. Opioid crisis drives loosening of use of medical marijuana in comp cases

   Although medical marijuana remains illegal under federal law, the landscape of marijuana use in workers' comp is changing. Some advocate its use as a way to stem the epidemic of addiction and opioid abuse, but others argue there is little validated research to determine its effectiveness and possible side effects. Others see it as an effective way to reduce the ongoing costs of legacy claims, particularly those involving workers who will not return to work.

   In states such as New Mexico and Louisiana, judges have ordered insurers to reimburse injured workers for medical marijuana, when deemed medically necessary by a treating physician. New Mexico also required carriers to start reporting marijuana reimbursements beginning Jan. 1, 2016. For 2016, 15 payers reported reimbursements for medical marijuana totaling $46,826 for 19 claims. The average reimbursement amount per claim was $2,465. On average, each injured worker was reimbursed for 205 grams of marijuana, or about 22% of the maximum 920 grams allowed per year.

   In May, the Maine Supreme Court agreed to hear a case in which an administrative law judge had ordered reimbursement under workers' compensation for an injured worker's medical marijuana. While the Maine law made clear that medical marijuana was not a drug that could be paid for by a private health insurer, the statutory language does not apply to other insurers, including workers' comp. Insurers and employers are awaiting the outcome of Bourgoin vs. Twin Rivers Paper Company.

   Even when the law permits insurers to reimburse injured workers for medical marijuana, the claims are complex. The doctors prescribing cannabis typically may not be the same physicians treating injured workers for the medical cause of their workers' comp claim. It needs to be determined whether marijuana is medically appropriate, why they recommend it, and whether it is really for the work-comp injury or some other condition.

3. Employers rethinking drug testing policies

   A key challenge to employers is measuring impairment, when an employee uses marijuana. At issue is how long marijuana stays in a person's system and the lack of a reliable test to determine what level of THC (the chemical ingredient that causes the "high") leads to certain impairment.

   Positive marijuana tests continue to climb in both federally mandated, safety sensitive workplaces and the general workforce, according to Quest Diagnostics, Inc. Colorado and Washington, where recreational marijuana has been legal for several years, saw some of the biggest leaps for workers in safety-sensitive jobs. However, the dilemma for employers is that a positive test does not always equate with impairment.

   Although courts have supported employers in pre-employment drug testing cases, fewer Colorado employers are doing it. A tight labor market may be a reason, but some believe employers have become more accepting and looking for other ways to manage the issue.

   Some experts suggest that employers have a separate policy for marijuana testing. In developing any policy, it's important to consider what type of work employees are doing. Employers can have separate drug testing policies for those in safety-sensitive positions, machine operators, and still another for office and administrative workers.

   Others suggest the use of impairment or psychomotor testing, rather than the traditional urine, saliva, or hair testing, when legally possible. With traditional testing, it's difficult to determine whether the employee is high and impaired or is testing positive with lingering traces from weekend use. They argue that the point of drug testing is to determine if workers can do their job safely and not endanger others, and that impairment testing that measures reaction time, decision-making, and pattern recognition against an employee's baseline is more effective.

   The state of Maine recently offered state employers "impairment detection training," noting employers can continue drug screening of employees until the recreational marijuana law goes into effect in February 2018. However, thereafter, if not amended, testing for marijuana use will violate the state's regulations protecting those who wish to use marijuana recreationally outside of work.

   However, many employers and federally mandated testing still rely on traditional testing, believing it is the best way to control risk. For example, the Department of Transportation (DOT) determined that the urine tests would not change because of the new state laws legalizing marijuana.

   For a workers' comp claim to be denied, some states require employers to prove that a worker's intoxication caused the injury, which can be difficult when the only evidence is a positive marijuana drug test. Employers are encouraged to better train supervisors and employees to recognize impairment and take steps to control and document it.

4. Non-hiring or firing for positive marijuana testing can lead to discrimination suits

   A "watershed" decision in Massachusetts sheds light on the issues employers face in employment practices and zero tolerance drug policies. In Cristina Barbuto vs. Advantage Sales and Marketing L.L.C., a worker was authorized by her physician to use marijuana to stimulate her appetite and help with symptoms of Crohn's disease and informed the company that she would test positive on drug screenings. A supervisor told her the medicinal use of marijuana "should not be a problem," which he later confirmed after consulting with others at the company, according to court documents.

   On her first day of work, she submitted a urine sample for a mandatory drug test and began work. Later in the day, she was terminated by an HR rep for testing positive for marijuana and was told the company followed federal, not state, law. She filed discrimination charges, alleging six claims, including handicap discrimination, invasion of privacy and denial of the right to use marijuana lawfully as a registered patient to treat a debilitating medical condition.

   A trial court judge dismissed all claims except the invasion of privacy claim, but a six-judge panel of the Massachusetts Supreme Court reversed the lower court judge's dismissal of her claim for handicap discrimination and related claims, but affirmed the motion to dismiss on counts claiming an implied private cause of action and wrongful termination in violation of public policy. Notably, the supreme judicial court became the first appellate court in any jurisdiction to hold that medical marijuana users may assert state law handicap or disability discrimination claims-regardless of whether the state's medical marijuana statute provides explicit employment protections. (Massachusetts's medical marijuana statute does not provide such employment protections.)

   "The fact that the employee's possession of medical marijuana is in violation of federal law does not make it per se unreasonable as an accommodation," the court ruled. "The only person at risk of federal criminal prosecution for her possession of medical marijuana is the employee. An employer would not be in joint possession of medical marijuana or aid and abet its possession simply by permitting an employee to continue his or her off-site use." The case has been remanded to the Superior Court.

   Takeaways for employers:

   • Employers may find it harder to argue that an adverse employment action against a medical marijuana user is justifiable solely because marijuana is categorized as an illegal controlled substance under federal law
   • Courts may increasingly look upon "the use and possession of medically prescribed marijuana by a qualifying patient as lawful" as the use and possession of any other prescribed medication
   • State law handicap or disability discrimination claims may apply to medical marijuana users
   • Employers should engage in the "interactive process" with medical marijuana users to determine if they can perform essential job functions with a reasonable accommodation
5. Comp coverage for medical marijuana dispensaries uncertain

   The conflict between federal and state laws on marijuana means that individual insurers are using their business and legal judgment in deciding whether to provide services to the marijuana industry. Hawaii's largest workers' compensation insurer, Hawaii Employers' Mutual Insurance Co. (HEMIC), recently announced that it is canceling insurance policies for seven medical marijuana dispensaries that were slated to open this summer. In its statement, it noted that legal opinions clearly acknowledge that HEMIC and its board of directors have potential exposure for criminal liability based on federal law applicable to marijuana businesses.

   While many major carriers have provided coverage in other states, there is more uncertainty under the new presidential administration. On the other hand, it is a $6.5 billion dollar business and legitimate employers can be an attractive market for insurers.

6. New information is emerging

   The federal government's stance that marijuana is an illegal substance has stalled research on its effectiveness, side effects, dosage, and so on. The first large study to directly compare medical marijuana to an opioid drug is beginning at the University of Colorado, Denver. The grant for this study is part of $9 million awarded by the state for trial purposes, funded in part by tax money from marijuana sales.

   A recent study by the Highway Loss Data Institute (HLDI) showed a correlation between marijuana use and traffic accidents. Claims frequency in Colorado, Washington, and Oregon, the states to first legalize recreational marijuana, was 3% higher than the controlled states that had not legalized marijuana. The HLDI has also begun a large-scale study in Oregon to assess how legalized marijuana use may be changing the risk of crashes with injuries.

There's no easy answer for employers trying to respond to the increase in marijuana use and be compliant with the law. While the use of medical marijuana is still in its infancy, it's important to recognize that if a doctor concludes medical marijuana is the most effective treatment for an employee's debilitating condition, an interactive process, including an exception to an employer's drug policy, may be warranted. Staying informed, updating and monitoring drug policies, educating employees on how it can impair judgment and motor skills, developing policies based on the employee base, and consistent hiring and disciplinary treatment can help ensure that they have a safe and productive workforce.