Kohl's Medical Marijuana Policy Sparks Worker's Claims

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By Patrick Dorrian

Aug. 3 — A former Kohl's employee in California who was fired after testing positive for marijuana may be able to show his discharge violated the department store's internal policy on medical marijuana use and thus state contract law, a federal judge ruled ( Shepherd v. Kohl's Dep't Stores, Inc. , 2016 BL 249936, E.D. Cal., No. 1:14-cv-01901, 8/2/16 ).

The case is important because it illustrates that a company's employment policies may provide workers who use medical marijuana with greater job rights than those provided under anti-bias laws, as well as broader protections against termination than typically afforded under state at-will employment laws, management-side attorney Nathaniel M. Green of Epstein Becker & Green said.

Here, Justin Shepherd can pursue a claim of breach of implied contract based on an update Kohl's Department Stores Inc. made to its personnel policies in 2012, the U.S. District Court for the Eastern District of California decided Aug. 2. Kohl's policy now provides that workers in certain states, including California, who possess valid recommendations for medical marijuana use won't be discriminated against in termination and other employment decisions, the court said.

According to Shepherd, he received a recommendation for medical marijuana use and began using the drug in 2011 after being diagnosed with acute and chronic anxiety. He said he relied on Kohl's policy change in deciding to continue working for the company as a shift supervisor and to stop looking for work elsewhere, the court said.

Shepherd didn't have a claim under California's Fair Employment and Housing Act, the court ruled, because the California Supreme Court held in 2008 that FEHA doesn't require California employers to accommodate illegal drug users.

Zero Tolerance, With Caveat

“Given the state of play with respect to various state laws on medical marijuana use and the fact that using marijuana is still illegal under federal law, I advise employers who have zero-tolerance drug policies to maintain them as the most prudent course of action,” the Washington, D.C.-based Green told Bloomberg BNA Aug. 3.

“But the caveat to that,” he added, is that some states—including New York, Illinois and Minnesota—have laws prohibiting employment discrimination against medical marijuana users and/or requiring employers to reasonably accommodate an employee's medical marijuana use.

Employers in these jurisdictions, which also include Maine, New Hampshire, Rhode Island, Connecticut, Delaware, Nevada, Arizona and the District of Columbia, need to be prepared to accommodate a worker's off-duty medical marijuana use and to take adverse job action against such an employee only when he's impaired on the job, Green said.

Use Discovered Following Back Injury

Shepherd didn't immediately disclose his medical marijuana use to Kohl's when he began using the drug in 2011. Instead, the company learned of his use—and his status as a lawful medical marijuana cardholder under California's Compassionate Use Act—when he hurt his back on the job in 2014.

He initially was suspended but was fired three days later. Kohl's corporate human resources director told him he should have picked a different medication, Shepherd alleges.

Partly based on that statement and Kohl's termination form, Shepherd also may be able to establish defamation under state law, Judge Dale A. Drozd said. The termination form indicated that Shepherd reported to work under the influence, and the HR director's statement suggests that she was “apparently unreceptive” to Shepherd's contention that he was never under the influence at work, the judge said.

Shepherd, however, presented evidence that marijuana metabolites may show in a user's urine for up to 30 days after use, that he hadn't used marijuana for a few days prior to his failed drug test, and that he had a personal policy of abstaining from medical marijuana use for several days prior to his next shift, the court said. Thus, a jury could find that Kohl's acted recklessly in stating on his termination form that Shepherd reported to work under the influence, the court ruled.

In granting summary judgment to Kohl's on Shepherd's disability-based FEHA claims, the court cited Ross v. RagingWire Telecommunications, Inc., 42 Cal. 4th 920, 20 AD Cases 223 (Cal. 2008). It rejected Shepherd's contention that Kohl's medical marijuana policy somehow expanded his rights under FEHA.

“Plaintiff presents no authority, and this court has found none, suggesting a cognizable FEHA claim can be based simply on an employer's failure to abide by policies not required by FEHA,” Drozd wrote.

Other Tips for Employers

Green told Bloomberg BNA that the court's holding on the defamation claim should serve as a reminder to employers that the reasons for an employment decision must be based on the facts and that they should take care not to overreach in stating why an employee was terminated or otherwise disciplined.

Here, “apparently the court decided” that the statement in the termination letter maybe shouldn't have been made without proper investigation, he said.

Another takeaway for employers, Green added, is that when implementing medical marijuana use policies like the one adopted by Kohl's, companies should include a disclaimer that the policy doesn't change their employees' at-will employment status. And get employees to sign a document acknowledging receipt of the disclaimer, he said.

Such measures may not shield an employer from the sort of implied contract claims allowed by the court here, Green said, but they should help insulate the employer somewhat, depending on the jurisdiction and the specific facts at hand.

The Law Office of Anthony J. Sperber and the Law Office of Kurt W. Dreger represented Shepherd. Payne & Fears LLP represented Kohl's.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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