Ambiguity in Your Drug Policy May Allow Terminated Employees to Collect Unemployment Benefits

The rise of medical cannabis use across the country leaves many employers in a state of confusion. As it stands, 36 states have legalized medical cannabis for patients with qualifying conditions. Though these states allow for the legal use of cannabis, the overarching federal prohibition remains a significant obstacle. The dichotomy between state legalization and federal prohibition has left many employers in the dark on how to implement effective drug use policies.

Over the past few years, it has largely been accepted that businesses in most states may terminate an employee for the use of cannabis regardless of whether they have a state-issued medical card. When such termination occurs, the employee generally cannot collect unemployment since they were fired for violating the business’s drug policy. Though this precedent still runs true, recent legal authority demonstrates that nothing in the medical cannabis industry is absolute.

A recent case heard before the Pennsylvania Appeals Court tackled the issue of whether a medical cannabis patient was permitted to collect unemployment after being terminated for failing a drug test. The patient, an employee of the Pittsburgh Water and Sewer Authority, applied for unemployment benefits after his termination but was ultimately denied. The Authority asserted that its reason for denying unemployment to the former employee was permitted because cannabis was still federally illegal.

The Authority’s reasoning is a common principle that many businesses rely on when terminating an employee for violation of an established drug policy. However, the use of such reasoning is not absolute in indemnifying a business. After the Authority’s decision, the former employee filed an appeal with the Unemployment Compensation Board of Review which overturned the Authority’s decision. The Board reasoned that ambiguity in the Authority’s drug testing policy meant the policy did not expressly prohibit the use of medical cannabis.

The Authority escalated the matter to the Appeals Court, which affirmed the Board of Review’s reasoning. The court went on to clarify that unemployment compensation laws require only compliance with employers’ drug policy, not federal law. Since the Authority’s drug policy was ambiguous, the employee was not barred from receiving unemployment benefits.

The case serves as a reminder that if your business wants to prohibit the use of medical cannabis, it must do so using explicit language. The common presence of medical cannabis across the U.S. likely means that increased litigation regarding terminations and employee rights is coming down the pipeline. As such, having a clear and effective policy addressing employee drug use can help insulate your business from liability.

* Tanner Lawrence contributed to this post.