ATTENTION NJ EMPLOYERS: IT’S TIME TO GET INTO THE WEEDS NEW JERSEY ENACTS NEW EMPLOYMENT PROTECTIONS FOR ADULT CANNABIS USERS

In November 2020, New Jersey voters approved the legalization of adult recreational cannabis use. On February 22, 2021, after months of negotiations between the Governor’s Office and the State Legislature and within minutes of a state deadline, Governor Murphy signed a trio of bills establishing the legal and regulatory framework for recreational cannabis.

Among the new laws are NJ A21 (the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (“CREAMM”) Act) and A1897/4269, which together provide various employment-related protections for adult recreational cannabis users, adding to the existing protections for registered users of medical cannabis. [CLICK HERE for our July 22, 2019 eAlert on the Jake Honig Compassionate Use Medical Cannabis Act.]

Although the CREAMM Act is effective immediately, its employment-related protections do not become operative until the Cannabis Regulatory Commission adopts its initial rules and regulations. Here are some FAQs on what we know so far:

Q1: Can we require prospective employees to undergo a drug test for cannabis?

A: Yes. Employers may require drug testing as part of pre-employment screening. See Q3 for limitations on relying on a positive result.

Q2: Can we test current employees for cannabis?

A: Yes. Employers may test current employees for controlled substances, including cannabis, upon reasonable suspicion that the employee was using cannabis during the performance of work responsibilities, upon finding “observable signs” of intoxication, or in connection with a work-related accident subject to investigation by the employer. Drug tests that include cannabis also may be done randomly or as a regular screening of current employees to determine use during work hours. Employers may use the outcome of such tests to determine appropriate employment actions, but may not rely solely on a positive result.

Q3: Can my company have a blanket policy against hiring an applicant or providing for discipline or termination of an employee who tests positive for cannabis?

A: No. An employer may not refuse to employ or take any adverse action “solely due to the presence of cannabinoid metabolites in the employee’s bodily fluid,” unless failure to do so would put the company in violation of a federal contract or cause it to lose federal funding.

Employers also should keep in mind that, if an employee or job applicant tests positive for cannabis, the Jake Honig Act requires the employer to provide written notice of the opportunity to present a “legitimate medical explanation”, including authorization for medical cannabis issued by a health care practitioner, proof of registration as a medical cannabis user, or both. [CLICK HERE for more information about this mandated process in our July 22, 2019 eAlert.]

Q4: What must a cannabis drug test entail?

A : Drug tests of applicants or employees must include two components: (1) “scientifically reliable” objective testing methods (e.g., blood, urine or saliva testing), A N D (2) a physical evaluation to determine the current state of impairment.

Q5: Who may conduct the physical evaluation portion of the drug test?

A: A physical evaluation to determine an employee’s or applicant’s state of impairment must be conducted by an individual certified as a “Workplace Impairment Recognition Expert,” under standards to be set forth by the Commission. Workplace Impairment Recognition Experts can be full- or part-time employees or employers may consider contracting out this service.

Q6: Can we terminate an employee for smoking marijuana at home during his or her free time?

A: No. Employers may not refuse to hire, discharge from employment, or take any other adverse action against an individual “because that person does or does not smoke, vape, aerosolize or otherwise use cannabis items” during non-working hours.

Q7: Can my company have a drug-free workplace policy?

A: Yes. Notwithstanding these new protections, an employer still may maintain a drug-free workplace policy and may prohibit the possession or use of cannabis in the workplace or the use of cannabis or intoxication by employees during work hours.

In addition to the CREAMM Act’s restrictions, companies should be aware that A1897/4269 prohibits an employer from relying solely on for employment decisions, requiring an applicant to reveal, or taking adverse actions against an applicant solely on the basis of an arrest, charge, conviction or adjudication of delinquency for certain manufacture, sale or use offenses relating to small amounts of marijuana or hashish, derivatives of cannabis.

An employer who does so is subject to civil penalties of up to $1,000 for the first violation, $5,000 for the second and $10,000 for each subsequent violation. Exceptions are made for positions in law enforcement, corrections, the judiciary, homeland security, or emergency management. This provision takes effect later this year in conjunction with the decriminalization of the underlying offenses.

If you have any questions on these new restrictions or would like guidance in reviewing and revising your drug testing or other policies to ensure compliance, please reach out to the NFC Attorney with whom
you typically work or call us directly.

ATTENTION NEW YORK EMPLOYERS: New York State DOL Releases Updated Guidance on COVID-19 Sick Leave

The New York State Department of Labor recently updated its previously published COVID-related guidance to address how New York State employers should handle certain related COVID-19 sick leave issues.

This supplemented guidance, issued on January 20, 2021 and available HERE, boils down to four key takeaways:

  1. 1. An employee does not have to be tested to return to work following mandatory quarantine/isolation (with the exception of nursing home staff). And, further, an employee “is not recommended to be tested” to end isolation or quarantine.
  2. An employee who was subject to a mandatory quarantine or isolation order and who receives a positive COVID-19 test (documented by a licensed medical provider/facility unless the employer is doing the testing) after completing the quarantine/isolation period is automatically deemed subject to a mandatory order of isolation and therefore entitled to sick leave under the NY COVID-19 sick leave law, regardless of whether he/she received sick leave for the first period of quarantine/isolation.
  3. An employee may only qualify for NY COVID-19 sick leave for three orders of quarantine/isolation. The second and third leaves require a documented positive COVID-19 test as above.
  4. According to the new guidance, if an employer requires an employee who is not subject to a mandatory or precautionary order of quarantine/isolation to remain out of work due to a
    COVID-19 exposure or potential exposure (regardless of whether such exposure was in the workplace), the employer must continue to pay the employee at the employee’s regular rate of pay. If such guidance is followed, the employer’s obligation to pay would continue until the employer allows the employee to return OR he/she becomes subject to such an order (and then would be eligible for the NY COVID-19 sick leave, provided that he/she hasn’t already been subject to three orders). However, it should be noted that this provision in the guidance appears to go beyond the statute and, accordingly, we expect it to be subject to legal challenge.

As employers can see, there continues to be emerging COVID sick pay parameters that must be carefully followed. As further guidance is published, we will provide additional information as appropriate. If you have any questions relating to this eAlert or any other COVID-19 issue, please contact NFC’s COVID-19 Response Team as we are closely monitoring the rapidly changing legal landscape relating to this global pandemic. Please feel free to reach out to the NFC Attorney with whom
you typically work or call us directly.

ATTENTION EMPLOYERS: IT’S TIME TO REVISIT YOUR INDEPENDENT CONTRACTORS

While states have been busy passing their own independent contractor misclassification laws, on January 7, 2021, the U.S. Department of Labor (DOL) published its final rule adopting a streamlined “economic reality” test to determine a worker’s status as an employee or an independent contractor for purposes of the Fair Labor Standards Act (FLSA). The new rule does not become effective until March 8, 2021, leaving open an opportunity for withdrawal by the Biden Administration.

Until now, the DOL and courts have been using various multifactor balancing tests to make the determination of whether a worker is an employee or independent contractor under the FLSA. The new regulations retain the aspect of a multifactor test but put the majority of the weight on two “core factors”:

  • the nature and degree of the worker’s control over the work, and
  • the worker’s opportunity for profit or loss based on initiative and/or investment.

The new test puts the emphasis on the worker, rather than the employer’s work structure. Thus, the core factors look to whether the worker has freedom to determine when to work, on what projects and for whom and to the impact of the worker’s own actions on his or her earnings. If both core factors suggest the worker is an employee, this is unlikely to be outweighed by any other factors in favor of independent contractor classification. However, three additional factors may serve as “guideposts,” particularly where the core factors are inconclusive:

  1. the amount of skill required for the work,
  2. the degree of permanence of the working relationship between the worker and the putative employer, and
  3. whether the work is part of an integrated unit of production.

Other factors also may be considered to the extent they inform the ultimate question of whether the individual is, as a matter of economic reality, dependent on the employer or in business for him- or herself. Significantly, the DOL made clear in its commentary that simply offering health, retirement or other benefits to a worker does not necessarily indicate employment status, provided that the benefits are not the same as those offered to employees and the other factors continue to support the conclusion that the worker is an independent contractor.

The new regulations explain that, in determining whether a worker is an employee or an independent contractor, actual practice is more relevant than what may be contractually or theoretically possible. The regulations provide six examples (CLICK HERE TO VIEW) demonstrating how the new test may be applied under various factual situations.

While NFC has been recommending that employers revisit their independent contractor classifications due to changing state laws, this final DOL rule underscores the necessity of that task.

Please e-mail the NFC attorney you work with or call us directly for assistance reviewing your employee classifications in light of this new rule or any other employment law needs you may have.

ATTN Employers: The New Year Brings New Wage and Benefit Entitlements for Employees

Notwithstanding the impact of the current pandemic on the economy and, in particular, on businesses in New York and New Jersey, previously scheduled annual wage and benefit increases march on.

In the past week, minimum wage rates rose in both New York and New Jersey. In addition, New Jersey employees will see increased maximum benefit levels for unemployment insurance, temporary disability and family leave insurance, and workers’ compensation benefits. For your ease of reference, we set forth the changes below.

NEW MINIMUM WAGE RATES

New York and New Jersey new minimum wage rates for 2021 are set forth below. Please note that other rates may apply in certain industries or positions, such as for farm workers, fast food employees or tipped employees, and employers are cautioned to check carefully for any exceptions:

New York (as of December 31, 2020)
New York City: $15/hour
Long Island and Westchester: $14/hour
Rest of New York State: $12.50/hour

New Jersey (as of January 1, 2021)
Overall: $12/hour
Small businesses (less than 5 employees) and seasonal workers: $11.10/hour

INCREASED MAXIMUM BENEFIT LEVELS

New Jersey maximum weekly benefits

Each year, New Jersey’s Department of Labor and Workforce Development recalculates maximum benefits for unemployment insurance, temporary disability and family leave insurance and workers’ compensation based on average weekly wages. The new 2021 rates (listed below) reflect a 2.5 percent increase:

Unemployment insurance: $731/week
Temporary disability and family leave insurance: $903/week
Workers’ compensation: $969/week

In addition, the threshold for qualifying for benefits also has increased. To qualify for New Jersey unemployment, disability or family leave insurance, employees must have earned $220 per week for 20 weeks or at least $11,000 (up from $200 per week or $10,000 in 2020).

New York maximum weekly benefits

Although New York’s maximum weekly benefits are not increasing as of January 1, 2021, eligible employees in New York saw an increase in such benefits in 2020 as follows:

As of September 1, 2020, the paid family leave maximum benefit is $971.61/week
As of July 1, 2020, the workers’ compensation maximum benefit is $966.78/week

New York’s unemployment insurance maximum benefit remains at $504/week and the temporary disability maximum benefit has not increased from $170/week since 1989.

Please e-mail the NFC attorney you work with or call us directly with any questions about these wage and benefit changes or any other employment law needs you may have keeping your business compliant in 2021.

ATTN EMPLOYERS: Federal Stimulus Package Extends PPP, Unemployment and FFCRA Tax Credits

ATTENTION: ALL EMPLOYERS

Federal Stimulus Package Extends PPP, Unemployment and FFCRA Tax Credits

On December 27, 2020, about one week after Congress approved the new legislation, the President signed into law the long-awaited coronavirus relief and spending package. For employers, critical provisions of the new law include extensions of the Paycheck Protection Program (“PPP”); federal unemployment benefits under the Coronavirus Air, Relief and Economics Security (“CARES”) Act; and tax credits under the Families First Coronavirus Response Act (“FFCRA”). Highlights of those changes are below.

PPP Extension

The new law provides additional funding for and expands the Paycheck Protection Program. The law reopens the PPP for qualifying businesses who have not applied before, as well as an expanded list of entities, including 501(c)(6) non-profits. Allowable uses of the loan amount have also been expanded to include certain operations expenditures, property damages costs, supplier costs and worker protection expenditures. Additionally, rejecting the IRS’s policy to date, the new law states that business expenses paid for with PPP loans may also be tax deductible, even if such loan amounts may be forgivable. The law also clarifies that employee wages paid with PPP loans that are not forgiven may also qualify for the employee retention tax credit.

Critically, the new law also allows certain small business to apply for “second draw loans” if they have exhausted their first PPP loan. The maximum loan amount for second draw loans is 2.5 times the average cost of monthly payroll (for restaurants and hospitality businesses, loans can be up to 3.5 times the average monthly costs), up to $2 million. To be eligible for second draw loans, the business may not employ more than 300 individuals, and generally must have had at least a 25% reduction in revenues between the current quarter and the same period in 2019.

Unemployment Insurance Benefit Extension

The new law has amended the CARES Act to extend the Pandemic Emergency Unemployment Compensation (“PEUC”) – which had provided 13 additional weeks of unemployment benefits under the CARES Act – for an additional 11 weeks (up to a maximum of 50 weeks) of unemployment benefits. For individuals who have otherwise exhausted their unemployment benefits, the extended benefits will cover periods of unemployment through March 14, 2021. For individuals who have not exhausted their PEUC by March 14, 2021, their benefits may continue through April 5, 2021.

The new law also provides an additional $300 per week for all eligible individuals on top of their existing unemployment benefit (the CARES Act had previously added $600 per week through July 2020). Although the $300 per week benefit was set to begin as early as December 26, 2020, the time it took to sign the bill may delay its implementation. The $300 benefit will end on March 14, 2021. The new law continues to cover all individuals covered under existing state eligibility requirements and the CARES Act.

FFCRA Paid Leave Tax Credit Extension

The new legislation further extends the tax credits available for employers who voluntarily provide the emergency paid sick leave and the emergency family and medical leave benefits under FFCRA between January 1 and March 31, 2021. Notably, the legislation does not mandate employers to provide such leave benefits after December 31, 2020.

 

 

If you have any questions relating to the new legislation or any other COVID-19 issue, please contact NFC’s COVID-19 Response Team, as we are closely monitoring the rapidly changing legal landscape relating to this global pandemic. Please feel free to reach out to the NFC Attorney with whom you typically work or call us directly.