Closing a gap in Hawaii’s medical marijuana law, a new law sets up a regime of vertically integrated grow facilities and retail dispensing licenses for the delivery of medical marijuana to “cardholders” in Hawaii. The stated intent of the new law, signed by Governor David Ige on July 14, 2015, is to ensure a commercialized system for the delivery of marijuana to “seriously ill” individuals in Hawaii.

The new law amends an existing 15-year-old law that allowed the use of medical marijuana, but provided no legal way to obtain the drug. The new retail dispensing provisions close that gap in Hawaii’s law.

The new law, however, did not modify existing Hawaii law on workplace use of marijuana, continuing to recognize the right of employers to maintain “zero tolerance” policies regarding drug use. It expressly states that “the authorization for the medical use of marijuana shall not apply to the medical use of marijuana in the workplace of one’s employment.” Further, even in its medicinal form, marijuana remains a Schedule I drug (similar to heroin) under both Hawaii and federal law — meaning, by law, “no currently accepted medical use and a high potential for abuse.”

The active ingredient of marijuana is fat soluble and it tends to show up on drug tests for a considerable number of days following consumption. Depending on the frequency of use, marijuana can be detected in urine for a period of between a week and a month after consumption. Thus, some Hawaii attorneys representing employees have argued that simply having marijuana metabolites detected during a drug test does not indicate “use” in the workplace. To date, neither the Hawaii Civil Rights Commission nor an appellate court in Hawaii has decided the issue. Thus, while it is an almost universal practice of Hawaii employers to consider a positive marijuana drug test result as a disallowed “use” in the workplace, the issue remains open. Further, the Hawaii courts have not provided any guidance as to whether an employer must allow the use of a Schedule I drug as part of a reasonable accommodation of an employee’s underlying medical condition (i.e., disability). Accordingly, employers should consult with employment counsel to analyze each case of employee marijuana use on an individual basis.

Taxpayers cannot take deductions for business expenses associated with operating a medical marijuana dispensary, according to a recent ruling by the Ninth Circuit Court of Appeals.  Olive v. Commissioner of Internal Revenue, No. 13-70510 (9th Cir. July 9, 2015).

In 2012, the United States Tax Court assessed penalties and fines against San Francisco’s Vapor Room Herbal Center, finding the medical marijuana dispensary inappropriately deducted $654,071 as “business expenses” on its 2004 and 2005 tax returns.   Although the Internal Revenue Code allows individuals and businesses to deduct “ordinary and necessary expenses” from their gross income,  the Code prohibits deductions for any “trade or business [that] consists of trafficking in controlled substances . . . prohibited by Federal law.”  I.R.C. § 280E.  The Tax Court determined that operating a medical marijuana dispensary constituted trafficking a controlled substance prohibited by federal law, regardless of whether it was legal in California.

Martin Olive – the owner of Vapor Room – appealed to the Ninth Circuit, arguing (among other things) that Congress intended § 280E to apply only to “street dealers,” not medical marijuana dispensaries (which, at the time Congress enacted the Internal Revenue Code, did not yet exist).  The Ninth Circuit disagreed, stating that subsequent state legalization of marijuana was irrelevant to the question of whether “marijuana is a controlled substance ‘prohibited by Federal law.’”  As it is clear marijuana is illegal under federal law, the Ninth Circuit upheld the Tax Court’s decision and noted that “i[f] Congress now thinks that the policy embodied in § 280E is unwise as applied to medical marijuana sold in conformance with state law, it can change the statute.  We may not.”

The National Safety Council (“NSC”) has published a report entitled Prescription Pain Medications: A Fatal Cure For Injured Workers, urging employers to educate employees about the dangers of using opioid pain medications – such as addiction and death – while also taking steps to avoid potential liability in workers’ compensation and personal injury litigation.

The NSC report states that injured workers increasingly are prescribed opioid pain medications (such as Vicodin, OxyContin, Percoset, Morphine, Codeine, among many others). The use of opioid pain medications can lead to more serious harm to injured workers, including addiction, overdose and death. According to the Centers for Disease Control and Prevention, more than 43,900 people died of drug overdoses in 2013, of which 16,235 were tied to prescription opioids alone or in combination with other prescription medications or alcohol. The NSC report states that overdose deaths from prescription opioids now exceed deaths from both heroin and cocaine combined.

Additionally, the NSC report lists fifteen court cases in the last six years in which an injured employee died of an opioid-related drug overdose. In some of these cases, the courts held that when injured workers fatally overdose on medications prescribed to treat pain related to a compensable workplace injury, the deaths were compensable by the workers’ compensation program.

NSC recommends that employers and workers’ compensation insurance providers be proactive to reduce their legal risk in situations where employees are being treated with pain medications as follows:

  1. Educate all employees about the hazards associated with prescription pain medication use, especially injured employees. Key educational messages include:
    • The risks of opioid pain medication use, especially for workers with sleep apnea, COPD or other respiratory problems;
    • Hazards associated with using together multiple forms of opioid pain medication such as short-acting and long-acting drugs together;
    • Dangers of using alcohol and sleep aids with opioid pain medications;
    • The risks of addiction and drug overdose.
  2. Require workers’ compensation and network providers to use opioid prescribing guidelines issued by the American College of Occupational and Environmental Medicine. These guidelines include:
    • Informed consent;
    • Thorough patient history with a more detailed screening if treatment continues for more than two weeks;
    • Urine drug monitoring;
    • Checking the state prescription monitoring database;
    • Avoiding co-prescribing benzodiazepines with opioid pain medications; and,
    • Discontinuing treatment with opioids when patients reach meaningful functional recovery.
  3. Use caution and require prior approval for the use of methadone to treat chronic noncancer pain.
  4. Screen injured workers for depression, mental health conditions and current or prior substance use.
  5. Require network providers to utilize state prescription drug monitoring programs.

Employers also should review their workplace drug and alcohol testing policies and update them if appropriate. Many employers believe that their drug test panels cover a wide range of opioid (or opiate) drugs.  A “standard” 5-panel tests for marijuana, cocaine, amphetamines, opiates and PCP.  The opiates tested for in a “standard” drug test panel generally include heroin, morphine and codeine, but not synthetic opiates such as oxycodone, hydrocodone, oxymorphone or hydromorphone (i.e., Vicodin and OxyContin, among others).  Employers who wish to test for potential abuse of prescription opioid painkillers should speak with their drug testing vendors to request an “extended opiates” panel or “synthetic opiates” panel.  Of course, employers should have all positive drug test results reviewed by a Medical Review Officer (“MRO”) (a licensed physician with expertise in analyzing drug test results) to ensure that they do not take adverse employment actions based on lawful prescription drug use.  A MRO discusses the positive drug test result with an applicant or employee to determine whether the applicant or employee is using a prescription drug legitimately.  The MRO may request a copy of the prescription and may request to speak with the prescribing physician.  If the MRO is satisfied that the use of the prescription drug is legitimate, he will verify the result to the employer as a negative.  If the MRO is not satisfied that the use of the prescription drug is legitimate, he will verify the result to the employer as a positive.  This process ensures that employers do not take discriminatory actions against applicants or employees who lawfully use prescription medications.

A California appellate court affirmed an award of emotional distress to two employees who felt pressured to submit to a random drug test. Aro v. Legal Recovery Law Offices, Inc., Case No. D065422 (unpublished) (Cal. Ct. App. Apr. 8, 2015).

Plaintiffs Aro and O’Toole were employed as debt collectors by Legal Recovery Law Offices, Inc. (“LRLO”). They had access to personal information of others such as social security numbers and credit reports. Neither was subject to pre-employment drug testing. The Company generally did not conduct any post-employment drug testing, until the tests at issue in October 2011. The employee manual was revised in 2011 to state that the Company “reserved the right” to conduct drug or alcohol testing “after an accident or with probable cause of impairment while on the job.”

In October 2011, Aro and O’Toole (along with others) were unexpectedly asked to take a drug test. This “random” test occurred on the heels of complaints they lodged regarding unpaid overtime pay. They were told to execute consent forms, told to report to the public bathroom and provide a sample.

Aro objected. In response, a manager advised that his refusal would result in being sent home and the Company would “figure out what to do” with him. Inferring this statement as a threat against his job, he consented, provided his urine sample in a public bathroom while someone watched. He apparently tested positive for marijuana but never was given the result of the drug test.

Similarly, O’Toole (who was a cancer patient with a medical marijuana card) initially objected. Again, a manager told him his refusal would result in the company having to “figure out what to do” with him. O’Toole testified that he started to panic because he knew he would test positive due to his use of medical marijuana. He attempted to provide a urine sample while two men stood outside the bathroom stall, but physically could not. When he went back to his desk to drink more water, he learned his e-mail account was blocked. He refused to submit to any further testing. Afterwards, he emailed his concerns to a supervisor, stating that he objected to the “captive random” drug testing which he believed to be illegal, and the “gestapo” standing outside the stall. Soon thereafter, O’Toole claimed work was diverted away from him, his production (and compensation) decreased, and he could not afford both his cancer medication and food. Ultimately, Aro and O’Toole were terminated several months thereafter (though allegedly not because of the drug test results).

LRLO maintained that the drug tests were triggered by allegations of “rampant drug use” at the Company and were “voluntary.” The Company maintained that no adverse actions were taken as a result of the drug tests.

Aro and O’Toole asserted claims for intentional infliction of emotional distress, among other things. After a bench trial, the trial judge awarded them approximately $15,000 each for noneconomic damages and $1 in exemplary damages. LRLO appealed.

The Court of Appeal affirmed the trial court ruling. First, the Court determined that the Workers’ Compensation exclusivity rule did not prevent Aro and O’Toole from recovering monetary damages for emotional distress. The Court reasoned that the random drug test administered in this case violated a fundamental right to privacy, which is protected by the California Constitution, and therefore the employer could not “hide behind the shield of workers’ compensation.” As debt collectors, Aro and O’Toole did not occupy “safety or security sensitive” positions and so the random drug test was “unreasonable and outrageous.”

The Court also concluded that LRLO’s conduct was sufficiently extreme and outrageous to constitute intentional infliction of emotional distress because: (1) there was no notice of the “random” unannounced drug tests; (2) there was no individualized suspicion of Aro and O’Toole; (3) when they objected to the testing, they were told that they would be suspended and the Company “would figure out” what to do with them; (4) they were required to stand in line and sign a consent form in the presence of other employees; (5) they were observed while providing urine specimens; (6) they felt threatened and intimidated because they had complained about unpaid overtime; and, (7) they were never given their drug test results. Both Aro and O’Toole testified that they suffered severe emotional distress, including “anguish, nervousness, anxiety, worry, humiliation and shame.”

California employers must be cognizant of the privacy issues implicated by “suspicion-less” workplace drug and alcohol tests. Random testing in California will not outweigh employees’ privacy interests where the employees to be tested are not “safety-sensitive.” Employers should review their drug testing policies to ensure that all drug and alcohol tests comply with all applicable laws.

Connecticut’s drug testing laws apply only to urinalysis drug tests and not to a drug test using hair specimens which led to an employee’s termination, a Connecticut trial court has held.  Schofield v. Loureiro Engineering Associates, Inc., 2015 Conn. Super. LEXIS 1262 (Super. Ct., D. Waterbury, Docket No. CV 146024702S, May 22, 2015).

Plaintiff Ronald Schofield began work for the Company on April 1, 2014. A little over two weeks later he was directed to take a drug test. (The decision is silent as to reason for the test.) The test relied on hair analysis. Schofield was not informed he would be subject to drug testing after he was employed. As a result of the drug testing, he was terminated.

Schofield brought suit against the Company alleging violations of the state drug testing laws. He also claimed, alternatively, that he was fired in violation of public policy.

The employer moved to strike each of Schofield’s claims based on violations of statutory provisions. The court agreed with the employer, based on “a plain reading of the statutes,” and held that “the drug testing statutes in question apply only to urinalysis testing and do not cover an employee who is subjected to other forms of drug testing.” The statute relied upon by Schofield in his first count, Connecticut General Statutes §31-51u, prohibits employers from determining an employee’s eligibility for various personnel actions (including adverse actions) solely on the basis of a positive drug test result unless the employer has given the employee a “urinalysis drug test,” and a positive result was confirmed in a second, independent “urinalysis drug test,” as specified in the statute. The statute relied on by Schofield in his second count, §31-51v, prohibits employers from requiring prospective employees from being required to submit to a “urinalysis drug test” unless the prospective employer is informed in writing at the time of application of the employer’s intent to conduct such a drug test, among other things.  Schofield’s third count relied on §31-51x, which provides that no employer may require an employee to submit to a “urinalysis drug test” unless the employer has reasonable suspicion that the employee is under the influence of drugs or alcohol, as defined in the law. The court relied on a 2008 Superior Court decision that had reached the same conclusion as to §31-51x – specifically, that saliva testing, hair follicle testing, or any other valid non-urinalysis drug tests did not violate the statute. The court in Schofield found no difficulty in extending the rationale to §§31-51u and 31-51v.

The court, nevertheless, found “the logic of plaintiff’s position is readily understood and the seemingly irrational inconsistency which flows from disparate protections [of the statutes] made evident in this opinion are undeniable,” but concluded that any remedy lies with the legislature, not the courts. Having stricken plaintiff’s statutory claims, the court permitted plaintiff to plead a common-law claim of wrongful discharge in violation of public policy.

In a long-awaited and highly-anticipated decision, the Colorado Supreme Court unanimously upheld an employer’s termination of an employee who tested positive on a drug test due to his off-duty use of medical marijuana. Interpreting Colorado’s “lawful activities statute,” the Court held that the term “lawful” refers only to activities that are lawful under both state and federal law. Coats v. Dish Network, LLC, Case no. 13SC394 (June 15, 2015).

Brandon Coats was employed as a telephone customer service representative by Dish Network, LLC (“Dish”). In 2010, Coats received a medical marijuana license from the state to use marijuana to treat muscle spasms caused by his paraplegia. In May 2010, Coats tested positive for tetrahydrocannabinol (“THC”), a component of marijuana, during a random drug test. As a result, in June 2010, Dish fired Coats for violation of the company’s drug policy.

Subsequently, Coats filed suit, alleging wrongful termination under Colorado’s “lawful activities statute,” which generally prohibits employee discharge based on the employee’s engagement in “lawful activities” while the employee is off of the employer’s premises and during nonworking time. Coats argued that Dish terminated his employment for his off-duty use of medical marijuana, which was “lawful” under Colorado’s Medical Marijuana Amendment. The trial court, however, dismissed Coats’ claim, finding that the Medical Marijuana Amendment provided registered patients with an affirmative defense to criminal prosecution, but did not make their use of medical marijuana a “lawful activity” under the lawful activities law. On appeal, a split Court of Appeals affirmed the decision of the trial court, basing its decision on the illegality of marijuana under the federal Controlled Substances Act. Specifically, the Court of Appeals found that for a specific activity to be “lawful,” the activity must be permissible under both state and federal law. Because federal law prohibits the use of marijuana, Coats’ conduct could not be a “lawful activity” protected by the Colorado statute.

The Colorado Supreme Court agreed. Affirming the lower court’s opinion in a 6-0 ruling, the Court held that the term “lawful,” as used in the lawful activities statute, is not restricted in any way. As such, an activity that is unlawful under federal law, such as medical marijuana use, is not a “lawful” activity. The Court unanimously rejected Coats’ argument that the term “lawful” be read as limited only to those activities that are lawful under Colorado law, stating that it refused to “engraft a state law limitation onto the statutory language.” Because Coats’ use of medical marijuana was unlawful under federal law, his off-duty use of medical marijuana was not protected.

The Court also noted that although Congress recently passed a budget bill prohibiting the U.S. Department of Justice from using federal funds to prevent states from implementing medical marijuana laws, marijuana use still remains illegal under federal law.

While Colorado is viewed as one of the most liberal states in the country with regard to marijuana use, Colorado’s medical marijuana law provides that “nothing in this section shall require any employer to accommodate the medical use of marijuana in any work place.” Even the state’s recreational marijuana statute provides that “nothing in this section is intended to require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale or growing of marijuana in the workplace or to affect the ability of employers to have policies restricting the use of marijuana by employees.” Other states, however, have medical marijuana laws that expressly prohibit employment discrimination against medical marijuana users.

This case continues the trend of employer victories in medical marijuana cases. Employers have been successful in litigating medical marijuana cases in California, Colorado, Michigan, Montana, Oregon and Washington. Although public acceptance of medical marijuana is growing and more states continue to enact medical marijuana laws, the courts recognize that federal illegality is still a significant obstacle for marijuana users who wish to challenge their employer’s employment actions.

Louisiana employers now can drug test employees’ hair samples, thanks to a recent amendment to the State’s drug testing statute.

Signed by Governor Bobby Jindal on June 5, 2015, House Bill 379 closes an 18 year-old loophole in Louisiana’s drug testing law, which permitted employers to drug test hair specimens (in addition to blood, saliva and urine), but did not authorize any laboratories to actually process the results of hair testing.   Prior to the recent amendment, employers were required to use only laboratories certified by the Substance Abuse and Mental Health Services Administration (“SAMHSA”) or the College of American Pathologists/Forensic Urine Drug Testing for all employee drug testing.  As neither certification allows for the testing of hair specimens, employers were de facto prohibited from hair testing.  (Click here to read our recent blog on SAMSHA’s solicitation of comments on hair testing for drugs).

House Bill 379 amends the law to allow employers to use laboratories certified for forensic hair drug testing by the College of American Pathologists.  The law went into effect immediately.

For the second year in a row, the percentage of American workers testing positive for illegal drugs has increased, according to a recent study conducted by Quest Diagnostics. Quest Diagnostics’ Drug Testing Index (“DTI”) – an annual analysis of workplace drug testing trends – analyzed the results of over 7.7 million urine, saliva and hair drug tests taken by employees nationwide during 2014.

The number of employees in the general workforce testing positive for illegal drug use increased in 2014 to 4.7%, up 9.3% from the year prior.  This is the second year in a row that the employee positivity rate has increased.  Prior to 2013, DTI had shown a decade’s-long decline in employees’ use of illegal drugs.  The increase in 2013 was driven largely by a 20% jump in the number of employees testing positive for marijuana use in Colorado and Washington.  Recreational marijuana laws in both states went into effect that year.

As in 2013, the 2014 increase is attributable primarily to an uptick in employees testing positive for marijuana – up 14.3% from the year prior (to 2.4%).  Unlike 2013, however, the increase in marijuana positivity in Colorado (14%) and Washington (16%) is roughly parallel to the nationwide average, surprising some drug testing experts.

While marijuana remains the most commonly detected illegal drug, the number of employees testing positive for cocaine, methamphetamines and heroin also increased, specifically:

  • Cocaine positivity was up 9.1% from 2013 in urine tests, 30.6% in oral fluid tests and 13.0% in hair tests.
  • Positive tests for amphetamines increased by 7.2% over 2013.
  • Methamphetamine positivity increased 21.4% over 2013 in urine tests, and 37.5% in oral fluid tests. The positivity rate for methamphetamines is now at the highest level since 2007.
  • The positivity rate for 6-acetylmorphine, a specific marker for heroin, doubled between 2011 and 2014.

The entire report may be accessed at www.QuestDiagnostics.com/DTI.

The Substance Abuse and Mental Health Services Administration (“SAMHSA”) published a Request For Information on May 29, 2015 that solicits comments about potential hair testing for drugs in an effort to revise and update standards for laboratory drug testing procedures for federal workers. Tasked by the Department of Health and Human Services, SAMHSA is looking to improve standards on the use of the best available technology for ensuring the reliability and accuracy of drug tests in the Mandatory Guidelines For Federal Workplace Drug Testing Programs. SAMHSA seeks information and comments on a variety of issues related to hair specimen drug testing, such as:

Hair Specimen:

  • What are the acceptable body locations from which to collect hair for workplace drug testing? What should be done if head hair is not available for collection?
  • What hair treatments (i.e., shampoo, conditioning, perm, relaxers, coloring, bleaching, straightening, hair transplant) influence drug concentration in hair and to what degree?
  • What are the acceptable reasons for hair testing (i.e., pre-employment, random, reasonable suspicion, post-accident, other (fitness for duty, return to duty, etc.))?

Collection:

  • What training should a collector receive prior to collecting the hair specimen?
  • What is the best protocol to collect the hair specimen?
  • Should the hair collection protocol be standardized, including specific instructions on how close to cut the hair specimen to the skin, how to determine the authenticity of the hair specimen, what cutting instruments to use, how to ensure the cutting instruments are decontaminated, and whether the use of collection kits should be required?
  • What is the minimum amount of hair that should be collected?

 Analytes/Cutoffs:

  • What analytes should be measured in hair by the initial and confirmatory tests?
  • What initial and confirmation cutoffs should be used for the various hair drug testing analytes?

 Testing:

  • What technologies are available to perform initial and confirmatory testing on hair specimens?

Comments must be received by June 29, 2015, and may be submitted electronically at http://www.regulations.gov/#!documentDetail;D=SAMHSA-2015-0003-0003.

This Request For Information follows DHHS’s May 15th notice regarding proposed guidelines for oral fluid testing. These proposed changes could allow the use of oral fluid and hair for testing federal employees and remove the current requirement for urine specimens only. Once final guidelines are issued, it will be up to the Department of Transportation to decide whether to adopt these new guidelines and publish new testing rules for regulated transportation employees.

A Minnesota resident lost his bid to show that state laws and rules under which he lost driving privileges due to several driving-while-impaired (DWI) offenses gave rise to violations of the Americans With Disabilities Act (ADA). The federal court of appeals in St. Louis affirmed a lower court’s dismissal of his complaint for failing to allege he is a qualified individual under the ADA. Scheffler v. Dohman, Commissioner of Public Safety,  __ Fed. App’x __ (8th Cir., No. 13-3785, May 12, 2015).

Scheffler was repeatedly arrested for DWI since 1994. After his third arrest in 1997, his driving privileges were canceled subject to a one-year abstinence-only rehabilitation program. Scheffler successfully completed the program and received a license in 1998, which restricted him from using alcohol. In 1999, however, his license was cancelled, and he was required to complete a three-year alcohol rehabilitation program. Scheffler did so, and in 2002 he received a restricted license. In 2010, Scheffler again was arrested for DWI. He was directed either to complete a six-year rehabilitation program or submit to an Ignition Interlock Program in order to receive a new restricted driver’s license.

Scheffler brought suit, claiming ADA violations and seeking an injunction requiring the State to restore his driving privileges without restriction. The State moved to dismiss. The district court granted the motion, finding Scheffler failed to allege a disability under the ADA.

The court of appeals agreed. Noting that Scheffler did not allege that he met the ADA’s definition of a disabled person due to his alcoholism (he did not claim he was an alcoholic or that his alcoholism causes him to be substantially limited in a major life activity), it related that Scheffler argued instead his multiple DWI convictions created a record of alcoholism under ADA’s second prong of the definition of disability. “However,” the Eighth Circuit said, “as the district court correctly found, ‘[d]riving while intoxicated on multiple occasions does not, in and of itself, establish that [Scheffler] is an alcoholic.’” Additionally, the court observed, there was no allegation that Scheffler ever was diagnosed as an alcoholic, nor did his complaint allege he suffered from a substantial limitation to a major life activity due to alcoholism. Thus, he failed to allege he was disabled under the “record of” prong of the ADA definition.

The court also rejected Scheffler’s argument that he was unlawfully “regarded as” an alcoholic under the ADA’s third prong of the disability definition, merely because the State imposed restrictions on his driving. Again, the fact that Scheffler received several DWI convictions did not mean he is an alcoholic, the Court said. “Nor does the State, in imposing restrictions on drivers who incur multiple DWI offenses, necessarily perceive that person as an alcoholic.” In the absence of any other facts supporting his “regarded as” claim, the Eighth Circuit agreed with the lower court that Scheffler had failed to allege that the State, by its actions, regarded him as having an impairment under the ADA.