Nevada Supreme Court Holds Recreational Cannabis Is Not A “Lawful” Off-Duty Product –

30 September 2022

Seyfarth Shaw LLP

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In the last two years, more jurisdictions have passed laws
providing employment protections to applicants and employees using
cannabis on their free time, including in New York, Washington, DC, and California. Recently, however, the Supreme
Court of Nevada upheld dismissal of an employee’s lawsuit,
which claimed that his termination for testing positive for
recreational cannabis violated the state’s lawful off-duty
product law. (Ceballos v. NP Palace, LLC, Aug. 11,
2022.)

The plaintiff worked as a table games dealer at a casino for
more than a year without incident. After he slipped and fell in the
employee breakroom, the employer required him to submit to a drug
test, which came back positive for cannabis. As a result, the
employer terminated the plaintiff.

The plaintiff sued, claiming a violation of the state’s law
prohibiting employers from taking action against employees who
engage “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.” Because the state decriminalized recreational
cannabis in 2017, the plaintiff argued that his employer could not
terminate him for his off-duty use of the drug. He also sued for
wrongful discharge. The district court dismissed the complaint in
its entirety.

The Supreme Court of Nevada upheld the dismissal. The court
framed the issue as whether “lawful use in this state”
means “lawful under state law” or “generally lawful,
under both state and federal law.” After analyzing the text of
the statute, reviewing it in conjunction with other state cannabis
laws, and citing to the Colorado Supreme Court’s 2015 decision
in Coats v. Dish Network, LLC (which
addressed a similar issue), the court disagreed with the
plaintiff’s arguments. Specifically, it concluded that by using
the phrase “in this state,” rather than “under state
law,” the legislature intended for the law to require that the
product be legal under both state and federal law. The court also
rejected the wrongful discharge claim because it did not involve
one of the “rare and exceptional cases” where Nevada
courts have recognized such a claim. The court found it important
in resolving both claims that the state’s decision to
decriminalize cannabis in 2017 expressly preserved to employers the
right to enforce workplace policies prohibiting or restricting
employees’ recreational cannabis use:

“If the Legislature meant to require employers to
accommodate employees using recreational marijuana outside the
workplace but who thereafter test positive at work, it would have
done so.”

While the decision is somewhat favorable to Nevada employers
concerned about maintaining a safe and drug-free workplace, Nevada
employers must still be mindful of state laws that restrict their
ability to test job applicants for cannabis, except in
narrow circumstances, and arguably provide employment protections
to medical cannabis users.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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