Employee failed drug test after work mishap: Can he be fired for legal marijuana use?

Conflicting federal, state and local laws on marijuana use raise tough questions for HR professionals. For example, should you require employees to submit to a drug test? And if so, when it is OK to fire someone who fails? How does medical marijuana factor in? Are workers entitled to accommodations?

A recent Nevada Supreme Court ruling provides insight. In this case, an employee was let go following a drug test that came back positive for marijuana. He sued his employer, alleging he was fired in violation of a state law that protected his off-the-clock use of recreational marijuana – a lawful product in the state. His suit sought damages, alleging the termination amounted to a common-law tortious discharge.

Slip and fall leads to drug test, termination

Danny Ceballos worked as a table games dealer at Palace Station in Las Vegas for more than a year. He never had disciplinary or performance issues – until he got fired, that is.

On June 25, 2020, Ceballos slipped and fell in the employee breakroom. As a result, he was required to submit to a drug test, which came back positive for marijuana. On July 16, the company fired Ceballos based on the positive drug test.

Ceballos sued, alleging that he:

• was not intoxicated or impaired during his June 25 shift
• did not use marijuana in the 24 hours prior to that shift, and
• was at home – not at work – when he used the marijuana that led to the positive drug test result.

The case reached the state’s highest court.

Court puts text of statute under a microscope

Under Nevada state law, it is illegal for employers to fire an employee who “engages in the lawful use in this state of any product outside the premises of the employer during the employee’s nonworking hours, if that use does not adversely affect the employee’s ability to perform his or her job or the safety of other employees.”

Ceballos argued that the phrase “lawful use in this state” meant lawful under state law. And because recreational marijuana use is legal in Nevada, the company couldn’t fire him, he insisted.

But the court disagreed with Ceballos. In the court’s view, the phrase “in this state” was not synonymous with “under state law.” The court said the legislature uses the latter phrase to signal its intent “to specify state law.”

In this context, “in this state” implies geographical boundaries, the court explained. Thus, the phrase “in this state” actually “indicates laws applicable to conduct occurring in Nevada.” Simply put, Nevada state laws “cannot completely legalize marijuana use ‘because the drug remains illegal under federal law,’” the court pointed out.

The Colorado Supreme Court looked at a similar issue back in 2015 and came to the same conclusion.

In Coats v. Dish Network LLC,  an employee was fired after he tested positive for marijuana after a random drug test. State law prohibited employee termination based on “that employee’s engaging in any lawful activity off the premises of the employer during non-working hours.” (Emphasis in original.) The employee sued, and the case reached the state’s highest court. Reasoning that “lawful activity” conveys an activity that is either “permitted by law” or “not contrary to or forbidden by law,” the Colorado Supreme Court held the statute did not apply to the employee because his marijuana use, “though legal under state law, was illegal under federal law.”

Court: Tortious discharge claim ‘falls short’

The court also rejected Ceballos’ tortious discharge claim, pointing out that such actions “are severely limited to those rare and exceptional cases where the employer’s conduct violates strong and compelling public policy.”

What kinds of “rare and exceptional” things could’ve supported a tortious discharge claim? The court provided several examples: A claim involving “employer-coerced criminal activity, workers’ compensation for an on-the-job injury, or public service, like jury duty or whistleblowing.”

The court pointed out that Nevada state law “specifically authorizes employers to adopt and enforce workplace policies prohibiting or restricting [adult marijuana use before a shift at work].”

Importantly though, the legislature did not include any requirement for employers to “accommodate employees using recreational marijuana outside the workplace” who later tested positive at work. If the legislature had meant to include such protections, “it would have done so,” the court concluded.

Adding one final note, the court pointed out that state law did include protections for employees who use medical marijuana – as employers are required to provide reasonable accommodations except in extremely limited circumstances.

As such, the court affirmed the ruling in the employer’s favor.

Ceballos v. NP Palace, LLC, d/b/a Palace Station Hotel & Casino, No. 82797, 2022 WL 3335772 (Nev. 8/11/22).

Best practices for HR: 6 action steps

This Nevada case is state-specific. But even so, it provides insight about what to put in company policies – and what to leave out!

• Prohibit marijuana use while on the clock. State laws that legalize marijuana don’t require companies to let employees work while under the influence. Borrowing language from your alcohol policy could help you put together an updated marijuana policy. This sample policy specifically stipulates that marijuana use is also prohibited during rest and meal breaks.
• Understand the risks of zero-tolerance policies. We live in a litigious society. Immediate termination – a hallmark of zero-tolerance policies – may prompt lawsuits. They also tie employers’ hands to respond in a certain way rather than providing wiggle room to make judgment calls. For example, under a zero-tolerance policy, if a valuable employee failed a drug test, then he or she would have to be terminated – despite having a stellar performance record. Ensure that if you go this route, you have a bona fide occupational qualification to enact it.
• Know state (and municipal) laws. Such laws vary widely, with some protecting workers’ right to off-duty use of medical and/or recreational marijuana as well as protecting employees’ right to contest the finding of a drug test. For companies operating in multiple states, this means staying on top of things in several locations at once. It also means that your company policies may need to vary by location depending on state laws.
• Consider state disability laws. First things first: The Ninth Circuit has held that because marijuana is illegal under federal law, the use of medical marijuana is not protected under the ADA. Even so, many state disability laws prohibit discrimination on the basis of the use of medical marijuana. And a few state disability laws require employers to provide reasonable accommodations for medical marijuana use.
• To test or not to test? Consider when it is (and isn’t) appropriate to require drug tests. Most state laws leave testing decisions up to employers, which makes things complicated. It’s probably a good idea to consult with an attorney as you update policies.
• Understand that this is a developing area of law. Even if marijuana isn’t yet legal in your state, keep in mind that cannabis reform legislation has a lot of momentum. This fall, six more states plan to introduce legislation to legalize recreational and medicinal adult use. So it’s probably a good time to reexamine your existing policies and make updates as needed.