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On June 4, 2019, the Illinois legislature passed the Cannabis Regulation and Tax Act (the “Cannabis Act”).  Under the Cannabis Act, Illinois residents over 21 years of age may legally possess 30 grams of marijuana flower and five grams of marijuana concentrate for their personal use, starting January 1, 2020.  The 610-page Cannabis Act also provides the most extensive workplace protections for employers of any marijuana legalization statute around the country. Indeed, the Illinois General Assembly declares at the beginning of the Cannabis Act that “employee workplace safety shall not be diminished and employer workplace policies shall be interpreted broadly to protect employee safety.”  Illinois Governor J.B. Pritzker is expected to sign the legislation this month.

Section 10-50 of Cannabis Act specifically identifies the following protections for employers:

  • The Cannabis Act does not require employers to permit an employee to be under the influence of or use cannabis in the workplace or while performing the employee’s job duties or while on call.
  • The Cannabis Act does not limit or prevent an employer from disciplining or terminating an employee for violating an employer’s employment policies or workplace drug policy.
  • Employers can maintain reasonable zero tolerance or drug free workplace policies or employment policies concerning drug testing, smoking, consumption, storage or use of marijuana while in the workplace, while performing job duties off premises or while on call, if the policy is applied in a nondiscriminatory manner.
  • The Cannabis Act also amends the Right to Privacy In The Workplace Act, which prohibits employers from restricting employee use of “lawful products” away from work, by incorporating employer workplace protections set forth in Section 10-50 of the Cannabis Act into the Right to Privacy in the Workplace Act. The proper interpretation of this amendment to the Right to Privacy In The Workplace Act should be that even if an employee ingests marijuana legally in Illinois while off-duty, but the employer has a drug-free workplace policy and an employee tests positive for marijuana in his system from a random drug test, the Cannabis Act should allow an employer to terminate that employee even if not impaired at work without violating the law.  Indeed, during debate on the bill, the sponsor of the Cannabis Act acknowledged that Illinois employers will still be allowed to discipline or terminate an employee for failing a drug test, including a random drug test.
  • The Cannabis Act defines when an employer may consider an employee to be impaired or under the influence and allows an employer to discipline an employee based on a good faith belief that an employee is under the influence or impaired. However, the employer must afford the employee a reasonable opportunity to contest the basis of the determination.
  • The Cannabis Act specifically provides that it does not create a legal cause of action against an employer who disciplines or terminates an employee based on the employer’s good faith belief that an employee was impaired from the use of cannabis or under the influence of cannabis while at work, performing job duties, or while on call in violation of the employer’s workplace drug The Act identifies a number of symptoms an employer can consider to support its good faith belief of impairment. The Act appears to leave open the possibility that a terminated employee could maintain a cause of action for a bad faith termination of employment.
  • The Act does not interfere with an employer’s ability to comply with federal or State law or cause it to lose a federal or State contract or funding.

Now is the time for Illinois employers to prepare for the effective date of the Cannabis Act (January 1, 2020).  Some action items to consider include:

  1. Consider whether to address with your workforce the legalization of cannabis in Illinois at all and, if so, how; e.g., will your company make a preemptive statement that cannabis impairment and/or usage while on the job will not be tolerated?  Will your company take a low-key approach to legalization and not raise it at all?  Or is there a middle-ground approach that your company takes to legalization?
  2. Evaluate whether the legalization of marijuana in Illinois will affect your workplace drug policies and employment policies pertaining to disciplinary action currently in place,  including whether to specify that on-the-job marijuana consumption or being impaired or under the influence of marijuana at work, or testing positive for marijuana in the system, are against company policy and could lead to disciplinary action, up to and including termination.
  3. Evaluate your reasonable accommodation policy and procedure in light of the Cannabis Act.  Employers may need to engage in an interactive process about accommodating an employee’s off-duty use of medical marijuana.  Although the Cannabis Act does not specifically require that employers make accommodations for the use of medical marijuana, Illinois previously enacted the Compassionate Use of Medical Cannabis Pilot Program Act and the Opioid Alternative Pilot Program, both of which allow patients diagnosed with specified medical conditions to possess and use medical marijuana.  In addition, recent rulings in federal and state courts outside of Illinois have found that the use of medical marijuana may be a reasonable accommodation for an employee when the use is outside of working hours and does not adversely affect safety or job performance.
  4. Train supervisors on marijuana-related impairment signs and procedures to follow as a result. The Cannabis Act provides specific symptoms to look for when making a determination that an employee is “impaired” or “under the influence” of marijuana. This training will be very helpful in establishing that an employer had a “good faith belief” that the employee was impaired on the job and therefore that discipline was warranted and lawful.
  5. Establish a written procedure for employees to contest a cannabis-based disciplinary decision. The Cannabis Act requires that employees be given a reasonable opportunity to contest the basis of a disciplinary decision for being impaired or under the influence on the job.  Having a written procedure will help employers establish that employees had a reasonable opportunity to contest a disciplinary decision.

Please contact James Oh and Kathleen Barrett if you would like to discuss assistance in preparing your workplace for the effective date of the Cannabis Act.

Our Employee Benefits and Executive Compensation practice now offers on-demand “crash courses” on diverse topics. You can access these courses on your own schedule. Keep up to date with the latest trends in benefits and compensation, or obtain an overview of an important topic addressing your programs.

In each compact, 15-minute installment, a member of our team will guide you through a topic. This on-demand series should be of interest to all employers that sponsor benefits and compensation programs.

In our newest installment, Cassandra Labbees, an Associate in the Employee Benefits and Executive Compensation practice, in the New York office, presents on “Hot New Benefits.”

Benefits are a useful and necessary tool in the recruitment and retention of employees. As a result, new benefit options are continuously being developed and offered by employers. This 15-minute crash course will discuss a few of those new benefit options as well as the tax and public policy considerations that may impact which benefits employers choose to offer.

Click here to request complimentary access to the webinar recording and presentation slides.

As we previously reported, on April 9, 2019, the New York City Council passed Int. 1445-A, which prohibits employers from pre-employment drug testing for marijuana and tetrahydrocannabinols (“THC,” the active ingredient in marijuana). On May 10, 2019, Int. 1445-A became law by operation of the New York City legislative process, which automatically made the bill law after 30 days without action by Mayor de Blasio. The law becomes effective May 10, 2020, giving New York City employers one year to prepare.

Under the law, employers, labor organizations, and employment agencies, and all of their agents, are prohibited from requiring a prospective employee to submit to a marijuana or THC drug test as a condition of employment. This conduct is now characterized as an “unlawful discriminatory practice.” There are, however, several exceptions to the law. For example, the law will not apply to employees in the following roles: safety-related positions, transport-related positions, caregivers, and certain federal contractors. Further, to the extent that a collective bargaining agreement requires drug testing, the law will not apply to such testing. Please see our Act Now Advisory for further details related to these exceptions.

What Employers Should Do Now:

In addition to the steps that we have previously suggested, employers should consider the following actions:

  • Determine whether you are a covered employer, and if so, review and potentially revise your drug-testing requirements to ensure that they will not violate the new prohibition, and be prepared to cease pre-employment drug screening for marijuana and THC.
  • Determine whether any of your employees fall within one of the many carve-outs and exceptions provided under the law and if so how the Company will implement the testing for such individuals.
  • Look out for any rules or regulations published by the City to facilitate and guide implementation of the law.

On February 19, 2019, New Jersey Governor Phil Murphy signed into law A 3975 (“the Law”), which significantly expanded the state’s the Family Leave Act (“NJFLA”), Family Leave Insurance Act (“NJFLI”), and Security and Financial Empowerment Act (“SAFE Act”). We prepared an Act Now Advisory, summarizing the extensive changes made by the Law, including, among other things, the expanding and making uniform the definition of “family member” for all three laws, and, effective June 1, 2019, extending the NJFLA to employers that have 30 or more employees.

In response to these amendments, the state recently issued an updated NJFLA poster, which may be accessed here and an updated NJFLI poster, which may be accessed here. In addition, the NJDOL has posted updated FAQs regarding the NJFLI. The NJ Safe Act Poster has not yet been updated.

This Employment Law This Week® Monthly Rundown discusses the most important developments for employers heading into May 2019.

NYC is set to become the first city to ban pre-employment marijuana drug testing. With a growing number of jurisdictions legalizing the medical and adult recreational use of marijuana, it’s no surprise to see the emergence of additional employment-related laws. The New York City Council recently passed a bill that would prohibit marijuana drug testing for prospective employees as a condition of employment. The Council passed the bill on April 9, and employers will have to comply beginning one year from the date it becomes law. The law would restrict employer use of tests for marijuana and tetrahydrocannabinol (also known as “THC”). This bill is the first of its kind, and we may see more of the same in jurisdictions across the country.

Watch the full episode below. 

 

June 6, 2019 at 8:00 a.m. – 10:00 a.m.

NYC Roundtable Event

Our colleagues Denise M. Dadika, Michael F. McGahan, Kathleen M. Premo, and Ian Carleton Schaefer will be participating in an upcoming interactive roundtable discussion “Managing in the #MeToo Era: The Latest Legal Developments and Their Implications for Health Care Employers” on the implications of the #MeToo movement for members of the health care industry. The program will include an in-depth discussion on:

  • creating a workplace environment free from harassment and discrimination, including the critical role senior leadership plays in creating an anti-harassment culture;
  • how proper policies, training, and substantive investigations can reduce occurrences of sexual harassment;
  • new and pending legislative changes, including limitations on the use of confidentiality or nondisclosure agreements, which have important implications for the highest levels of management, given the risk of unwanted publicity and reputational damage.

For more information on the event, please visit here and register to attend here by May 30, 2019 as space is limited.

Epstein Becker Green is an accredited provider of Continuing Legal Education (CLE) credit for the State of New York. This course has been approved in accordance with the requirements of the CLE Board for one credit hour in the area of Professional Practice. This course is transitional and appropriate for both newly admitted and experienced attorneys.

In an announcement about New York’s budget for fiscal year 2020, New York Governor Andrew Cuomo highlighted, among other things, an amendment to Section 3-110 of New York’s Election Law mandating three hours of paid time off for all New Yorkers to vote on election day.

Under the amendment, which is effective immediately, all New York employees who are registered to vote may request up to three hours of paid time off to vote, regardless of their work schedules, as long as the request is made at least two working days before the election.  New York employers may designate that any requested time be taken at the beginning or end of the employee’s shift.  Employers also must post a notice at least ten days in advance of an election to inform employees of the provisions New York Labor Law § 3-110. The notice must remain posted until the close of the polls on election day. Section 3-110 does not set forth any exceptions.

Employers with employees in the State of New York should review their time off policies to ensure compliance and should also ensure timely compliance with the posting requirement.

As employers are wrapping up their reporting under the Affordable Care Act (“ACA”) for the 2018 tax year (filings of Forms 1094-B/C and 1095-C/B with the IRS are due by April 1, 2019, if filing electronically), they should start preparing for new reporting obligations for the 2019 tax year.

After a string of failed efforts to repeal the ACA, Congress, through the Tax Cuts and Jobs Act of 2017 (“TCJA”), reduced the federal individual shared responsibility payment assessed (with limited exceptions) against individuals who failed to purchase health insurance to $0 beginning January 1, 2019. In response, to ensure the stability and provide more affordable rates for health coverage, States, such as New Jersey, have stepped in and adopted their own individual health insurance mandates. New Jersey’s individual health insurance mandate requires employers to verify health coverage information provided by individuals. To assist with employer reporting, New Jersey has launched an official website (lasted updated on March 19, 2019) with guidance on the filing requirements.

The New Jersey Health Insurance Market Preservation Act (“NJHIMPA”)

Beginning January 1, 2019, New Jersey requires its residents to maintain health insurance. The NJHIMPA requires New Jersey residents to have minimum essential health coverage throughout 2019 (and beyond), with certain qualifying exemptions. Failure to have health coverage or qualify for an exemption will result in a Shared Responsibility Payment (“SRP”) when taxpayers file their 2019 New Jersey Income Tax return. The amount of the SRP is generally based on income and family size and is capped at the statewide average premium for Bronze Health Plans in New Jersey. Individuals not required to file a 2019 New Jersey Income Tax return are exempt from this mandate. Most basic health coverage satisfies the requirement, including health insurance plans through an employer. However, certain employer plans that provide only very limited benefits, such as vision or dental, do not.

Use of Forms 1094 and 1095 Are Expected to Satisfy Employer Reporting in New Jersey

While the IRS has stated that it will continue to study whether and how the reporting requirements should change, if at all, for future years, in light of the effective repeal of the individual mandate by the TCJA, starting with 2019 tax year, the New Jersey Legislature requires third-party reporting to verify health coverage information provided by individual taxpayers.

The State expects employers that filed Form 1094-C/Form 1095-C federally in 2018, will use those forms for purposes of reporting in New Jersey. Filers of Form 1094-B/Form 1095-B should use those forms for New Jersey filings. Forms 1095-B have been used to report whether individuals have minimum essential coverage and, therefore, are not liable for the individual shared responsibility payment under the ACA. Forms 1095-C are used to report information about offers of health coverage and enrollment in health coverage for employees, to determine whether an applicable large employer (“ALE”) owes an employer shared responsibility payment, and to determine the eligibility of employees for the premium tax credit.

The State requires that employers provide New Jersey taxpayers and the State with the same Forms 1094 and 1095 health-care coverage information they send to the IRS. Employers will file health coverage forms through New Jersey’s system for filing of W-2 forms.

If the federal government discontinues or substantially alters Forms 1094-B, 1094-C, 1095-B, or 1095-C, New Jersey will deploy similar forms and require that they be sent to the State and to New Jersey taxpayers. Employers should check the website periodically for reporting updates.

Out-of-State Employers of New Jersey Residents Are Required to Report

Out-of-State employers that withhold and remit New Jersey Gross Income Tax for New Jersey residents have the same filing requirements as businesses located in New Jersey.

Deadline

The deadline to file 2019 coverage information electronically for the 2019 tax year is February 15, 2020. The State indicates that it will post further instructions on its website in mid-2019. This deadline is earlier than the deadline to file Forms 1094 and 1095 with the IRS, which for 2018 information returns was February 28, 2019 for paper filers and April 1, 2019 for electronic filers.

Guidance on Forms Sent to New Jersey

Requirements for the filings will vary depending on whether an employer is fully insured, self-insured, or a participating employer in a multi-employer plan. The size of a company will also affect reporting requirements as detailed in the State’s guidance.

Adult Children under Age 26

The ACA requires that adult children up to age 26 be covered by their parents’ health plan.

The NJHIMPA does not require Forms 1095-B or 1095-C to be provided separately to children covered by their parents’ health plans. However, the State recommends that employers advise their employees to provide a copy of any Form 1095-B or 1095-C containing coverage information to their children residing in New Jersey (presumably, so that they can properly file their New Jersey State Income Tax returns and avoid a SRP assessment).

Employer Takeaways

Employers in New Jersey and out-of-state employers with New Jersey residents should begin to prepare for reporting for the 2019 tax year, especially since the deadline to file in New Jersey is earlier than the deadline to file the applicable forms with the IRS. They should monitor the State’s website for further instructions on their reporting obligations.

Massachusetts, Vermont, and Washington, D.C. also have adopted individual health insurance mandates and several other states including California, Connecticut, Hawaii, Maryland, Rhode Island, Minnesota, and Washington are considering their own individual health insurance mandates. As more states adopt mandates, employers operating in multiple states should monitor their obligations in the various jurisdictions where their employees reside and expect reporting obligations to become more complex than they are under the ACA.

The information letter issued by the Department of Labor (the “DOL”) on February 27, 2019 (the “Information Letter”) provides a reminder to plan sponsors about the importance of disclosing the procedure for appointing authorized representatives in the benefit claim and appeal procedures for employee benefit plans subject to the Employee Retirement Income Security Act of 1976 (“ERISA”), as amended and also about the extent of the authority of the authorized representative. The Information Letter was in response to a query as to whether an entity that acts as a patient advocate and health care recovery expert for plan participants, in connection with initial benefit claims and appeals of adverse determinations (the “Entity”) could act as an authorized representative for claimants pursuant to Section 503 of ERISA.

While the Information Letter does not directly respond to the query from counsel to the Entity, the DOL’s response indicates that the Entity could be an authorized representative. The DOL states that, although a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant, “the procedure cannot prevent claimants from choosing for themselves who will act as their representative or preclude them from designating an authorized representative for the initial claim, an appeal of an adverse benefit determination, or both.”

The Information Letter further provides that the description of claim and appeal procedures included in a plan document and in the summary plan description for the plan must include any procedures for designating authorized representatives.  The Information Letter references the Benefit Claims Procedures Regulation FAQs, (the “FAQs”) which include FAQs on the appointment of authorized representatives. FAQ B-1 provides that, with one exception, an example of a reasonable procedure that a plan may establish to determine an authorized representative is completion of a form by the claimant identifying the authorized representative. The exception is where a claim involves urgent care, in which case a plan must permit a health care professional with knowledge of the claimant’s medical condition to act as the authorized representative if the claimant is not able to act on his or her own behalf.

FAQ B-2 addresses authorized representatives and assignment of benefits, a topic of particular interest to plan sponsors of self-insured group health plans. The FAQ states that an assignment of benefits to a health care provider does not constitute the designation of an authorized representative. The DOL explains that assignments are not a grant of authority to act on behalf of a claimant in pursuing and appealing a benefit determination. The DOL further notes that the validity of a designation of an authorized representative depends on whether the designation has been made in accordance with the procedures, if any, established by the plan.

In FAQ B-3, the DOL clarifies the notifications and disclosures that a plan must provide to an authorized representative. The DOL states that when a claimant clearly designates an authorized representative to act and receive notices on his or her behalf regarding a claim for benefits, the plan should, unless the claimant advises otherwise, direct all information and notifications to which the claimant is otherwise entitled to the authorized representative. Based on this view, the DOL cautions that it is important that both claimants and plans understand the extent to which an authorized representatives will be acting on behalf of a claimant.

An information letter issued by the DOL is informational only and is not binding on the DOL with respect to any particular factual situation.

Takeaways for Plan Sponsors

Based on the Information Letter, sponsors of employee benefit plans subject to ERISA should review the claim and appeal procedures to confirm that they include the procedure that claimants must follow to designate an authorized representative. If the procedure for designating an authorized representative is not included, the plan sponsor should consider amending the plan provide a reasonable procedure for claimants to follow if they wish to designate an authorized representative. As an example, the DOL has stated that requiring claimants to complete a form is a reasonable procedure.

Similarly, plan sponsors should review and update, as needed, the claims and appeal procedures in the summary plan descriptions for their ERISA plans and confirm that the authorized representatives are receiving appropriate notices and disclosures, as directed by the claimant. Plan sponsors may also want to verify that the current authorized representatives under their plans have been properly authorized by the claimants.

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On March 18, 2019, New Jersey Governor Phil Murphy signed a bill amending the New Jersey Law Against Discrimination (LAD) to prohibit contractual provisions that result in the wavier of a right or remedy provided under the LAD or prevent the disclosure of information pertaining to claims of discrimination, retaliation or harassment.   The amendment, which is immediately effective, prohibits any provision in an employment agreement, other than a collective bargaining agreement, that:

  • Waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment; or
  • Prospectively waives any right or remedy under the LAD.

The amendment also prohibits any provision in a settlement agreement that prevents the disclosure of “details relating to a claim of discrimination, retaliation or harassment.”  Settlement agreements that resolve claims of discrimination, retaliation or harassment must include “a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

New Jersey employers should consider this new amendment when reviewing and updating employment contracts and anti-discrimination and harassment policies.  Any prohibited provision in an agreement entered into on or after the effective date will be considered void as a matter of public policy.  The amendment entitles current and former employees to bring a civil action to recover common law tort remedies as well as attorney fees.

The amendment should also be considered when deciding whether or not to settle claims of discrimination, retaliation or harassment.  Details surrounding allegations of such claims may no longer remain confidential, which may lead to greater reputational risk.