Cannabis: Now an Equal Employment Opportunity Issue in California

Much has already been made about California’s AB 2188, which prohibits discrimination against employees for the use of cannabis off the job and away from the workplace. The bill amends the state’s Fair Employment and Housing Act (“FEHA”), (controversially) elevating it to the same EEO status as gender, race, religion, sexual orientation, and other categories of (arguably) greater social significance.

The law contains various exceptions such as construction trade workers, employees subject to testing under other state or federal regulations (such as DOT-regulated truck drivers), and workplaces with mandated Drug Free Workplace programs. It also applies only to employers with five or more employees otherwise covered by the FEHA.

It will create difficult issues for employers, who may test for the presence of cannabis but may not rely on “nonpsychoactive cannabis metabolites.” Employers will need to use potentially more invasive “alternative tests” such as “impairment tests, which measure an individual employee against their own baseline performance and tests that identify the presence of THC in an individual’s bodily fluids.”

It is an open question whether the law will ever take effect. First, the law is not effective until January 1, 2024, leaving plenty of time for courts and the legislature to consider its validity.

Second, though mirroring state-law protection of lawful off-duty off-premises conduct, it violates state-court precedent protecting employers from requirements to accommodate cannabis. This issue was addressed more than a decade ago, when cannabis proponents argued that medical use of marijuana was protected by existing FEHA requirements. Faced with this question, the state Supreme Court held that neither the FEHA nor the state’s medical marijuana laws require employers to accommodate cannabis use because, regardless of its state-law status, the substance is unlawful under federal law. The case, Ross v. RagingWire Telecommunications, Inc., can be viewed online here.

Cannabis remains unlawful under federal law, though the bill’s proponents likely believe that more progressive administrations will argue against its preemption. This creates an interesting issue for the courts, who may need to interpret the interplay between state and federal law without clear guidance.

AB 2188 can be viewed on the California Legislative Information site by clicking here.

Equal Pay Act: A Cautionary Tale

One California appellate court opinion highlights risk under the state's recently expanded Equal Pay Act ("EPA"). The EPA requires equal pay for employees who perform “substantially similar work” when viewed as a composite of skill, effort, and responsibility. Initially applied to differences in sex, the law has been expanded to include race and ethnicity as well.

Unlike federal law, which has stricter requirements, the state law applies to 'similar' (rather than nearly identical) work. It also requires equal pay among different establishments, prohibits retaliation, and requires that any 'bona fide' justification account for the entire difference in pay. The law is discussed on the Labor Commissioner's website here.

In the recent opinion, Allen v. Staples, Inc., a female employee argued that she had not been paid the same for substantially similar work performed by male employee(s). The trial court had dismissed her claims on the basis that men and women had made more or less than one another, without apparent bias toward women. The appellate court noted that, during Allen's employment, "women were among the highest earning" in her position and "at least six men earned less than" her.

Unfortunately, however, there was one male employee who made more than Allen in the same position. The court reversed the trial ruling, reinstating the case, on the basis that "a plaintiff claiming gender-based pay disparity may establish a prima facie case by showing that she was paid less in salary than a single male comparator." The case will be sent back to the lower court for trial even though the appellate court agreed that Allen had not shown evidence of actual discrimination or harassment, upholding dismissal of most of her claims.

The employer will have an opportunity to justify the difference with legitimate factors (such as tenure at the company), but it will have to present that defense at - or settle with Allen before - an expensive trial.

This case may not remain published or could be reviewed by the Supreme Court. Other appellate courts might also disagree. But Allen is a strong cautionary tale for employers who pay too little attention to differences in salary between employees.

Allen v. Staples, Inc. can be viewed here.

NLRB and Ninth Circuit Expand Potential Unfair Labor Practice Liability

The relationship between employers and unions has never been easy.

Over the past century, federal labor law has replaced actual battles (see a good discussion of this issue here) with tools allowing "economic warfare" when disputes cannot be resolved. These tools traditionally included acts by one party that could pressure the other such as strikes (withholding work by employees), lockouts (withholding work by employers), and picketing (advertising that could hurt an employer's reputation and generate support for workers).

The National Labor Relations Act also provides remedies for violations of labor law ("unfair labor practices") such as refusal to bargain in good faith, refusal to recognize a lawfully certified representative, or worker intimidation. These remedies usually attempt to eliminate the effect of a party's unfair labor practice, even sometimes requiring back pay.

Both sides traditionally funded their own legal costs even when only one party violated the law. This is consistent with both the "American Rule" (where parties typically bear their own legal costs) and the fact that unfair labor practice proceedings technically are prosecuted by the National Labor Relations Board's General Counsel - who does not charge either side for its services.

This traditional relationship is changing. In September 2021, the NLRB General Counsel issued a memorandum titled "Seeking Full Remedies" recommending "a new make-whole remedy to those traditionally ordered" including all "consequential damages" suffered as a foreseeable result of an unfair practice. This might include hard costs by an employee who suffered discrimination or - on a much larger level - lost potential benefits due to an employer's failure to bargain immediately. It may also include the remarkable step of awarding attorneys' fees for costs caused by an alleged unfair labor practice. (The General Counsel memorandum can be viewed here.)

Our Ninth Circuit Court of Appeal recently upheld this broad power even though other courts, particularly the District of Columbia Circuit (which decides far more NLRB issues than any other), had found such awards to be 'punitive' and beyond the NLRB's agency power. Crafting a distinction between "litigation" and "bargaining" costs, the Ninth Circuit panel approved fees incurred by the union during collective bargaining (even though attorneys are not required in bargaining or any other NLRB proceeding). (The Ninth Circuit opinion can be viewed here.)

This poses a radically increased potential cost should an employer disagree with the local NLRB Region's decision in a local election - or in any other situation.

It remains to be seen whether this theory will be adopted by other federal Circuits or survive U.S. Supreme Court review. In any event, employers are well advised to consider the potentially much greater costs likely to be imposed by the NLRB over the coming months, factoring them into their overall risk assessment during any union interactions.