Compliance officers may have to work more closely than ever with human resources professionals as more states pass laws allowing for the use of marijuana, anti-bullying campaigners score a legislative victory, the Supreme Court prepares to rule on religious and disability accommodations as well as wage and hours issues, the SEC continues to award eye-popping sums to whistleblowers and the potential threat of deadly, contagious diseases in the workplace worries employees and customers.
Drug Testing in the Workplace
In 2014, at least 15 states considered liberalizing medical marijuana laws, following the lead of 23 others and the District of Columbia, which have already done so. Eighteen states have decriminalized the use of marijuana, meaning that first-time offenders do not receive jail time or a criminal conviction and the possession is treated almost like a traffic infraction. Only two states, Colorado and Washington, had legalized the recreational use of marijuana, but Oregon and Alaska joined them after the November 2014 midterm elections. The District of Columbia went from decriminalization to allowing small amounts of the drug for recreational use.
Marijuana use, even if state-sanctioned for medicinal purposes, is still considered by the Controlled Substances Act as a Schedule I drug and, therefore, is illegal under federal law. Because of this, most employers have not changed their drug-testing policies for applicants and current employees, leading to higher turnover and more time to hire because most employees do not realize that legal, off-duty use of marijuana can still run afoul of their employers’ policies. Many employers in these states have actually increased random drug tests, and courts have upheld the rights of employers to terminate employees who test positive. Further, federal contractors are required to comply with the mandates of the Drug-Free Workplace Act, which requires testing and programs designed to detect and prevent drug use.
The use of medical marijuana adds complications. The Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (ADA) does not protect employees who have prescriptions from termination because section 12210 of the ADA excludes persons currently engaged in the “illegal use of drugs” from the definition of an “individual with a disability.” Courts have consistently sided with employers in ADA claims brought by medicinal marijuana users and have rejected the argument that users fall within the “supervised use by a licensed health care professional exception” in § 12110(d)(1).
Although the ADA does not require employers to extend reasonable accommodations allowing the use of medical marijuana, they may still be required to accommodate the underlying medical condition that necessitated the prescription in the first place, most commonly pain, nausea from chemotherapy, spasticity, glaucoma, AIDS, ALS, multiple sclerosis and movement disorders. In addition, at least seven states have rules preventing non-federally funded employers from terminating employees for palliative use of marijuana. Connecticut’s statute, for example, states:
Unless required by federal law or required to obtain federal funding:
(3) No employer may refuse to hire a person or may discharge, penalize or threaten an employee solely on the basis of such person’s or employee’s status as a qualifying patient ….
Nothing in this subdivision shall restrict an employer’s ability to prohibit the use of intoxicating substances during work hours or restrict an employer’s ability to discipline an employee for being under the influence of intoxicating substances during work hours.
Other states with similar statutes include Arizona, Delaware, Maine, Rhode Island, Illinois, Minnesota and Nevada. Employees in these states, including Connecticut, may thus have a private right of action if they are terminated for testing positive for marijuana. States differ in what type of marijuana is covered. Minnesota, for example, does not provide protection for marijuana that is smoked. Employers, particularly those operating in several states, should work with legal counsel to determine how to address this potential conflict in the laws.
Bullying in the Workplace
Tennessee passed the nation’s first and only workplace bullying law in June 2014, but it only protects public sector employees. Tennessee’s law defines abusive conduct as “repeated verbal abuse, threats, intimidation, humiliation or work sabotage.” The bill’s proponents explained that almost one-third of Tennessee’s citizens have experienced “health-endangering harassment,” which can “inflict serious harm upon targeted employees, including feelings of shame and humiliation, severe anxiety, depression, suicidal tendencies, impaired immune systems, hypertension, increased risk of cardiovascular disease and symptoms consistent with post-traumatic stress disorder.” That language is similar to the verbiage in bills that have not passed. Legislators in 28 states, including Tennessee, and two U.S. territories have modeled their language on Professor David Yamada’s Healthy Workplace Bill.
One study indicates that bullying is four times more prevalent than illegal harassment. In another study, half of human resources managers surveyed admitted that bullying occurred in their workplaces. Notwithstanding what they saw, 44 percent of respondents had no policy. Only 3 percent acknowledged having a standalone policy.
On September 9, 2014, California Governor Jerry Brown signed AB 2053 into law, which requires employers to train on abusive conduct beginning in January 2015, even though workplace bullying is not illegal in that state. As new versions of these laws are proposed, employers should consider whether revising their policies may be an appropriate proactive step.
Supreme Court Roundup
In June 2014, The Supreme Court ruled on a highly anticipated case, NLRB v. Noel Canning; at issue was whether any decisions by the National Labor Relations Board can be valid if the President’s recess-appointed commissioners were not legally appointed. Because the Court ruled that the appointments were invalid, the case had an immediate impact on the Board decisions made between January 4, 2012, the day of the recess appointments, and August 5, 2013, when the Senate confirmed them.
In another noteworthy case (and another defeat for the Obama Administration), the Supreme Court ruled in Burwell v. Hobby Lobby that the Affordable Care Act mandate requiring closely held companies to provide no-cost contraception to employees through employer health plans violated the Religious Freedom Restoration Act. No doubt the courts and the federal government will address a number of other religious accommodation challenges for employers related to Obamacare.
In December 2014, a unanimous Court ruled in a wage-and-hour case that could have an impact on a large number of employers. In Integrity Staffing Solutions v. Busk, the Court examined whether employees of a contractor for Amazon must be paid for time going through extensive security checks that search for contraband before they can go home. Under the Portal-to-Portal Act, an employee’s compensable work includes his or her “principal activities” as well as any activity that is “integral and indispensable” to the employer’s principal activities. The employees argued that the 25-minute security screening benefited the employers and thus is integral and indispensable. The federal government, the Solicitor General’s Office and a number of business groups filed briefs in support of the Amazon contractor, which supplies employees to its warehouses. In addition to enforcing the Fair Labor Standards Act, the federal government asserted that it also had an interest in the case because it conducts post-shift security screenings for many of its own employees. The Court held that security screenings, unlike activities such as showering after working all day in a chemical plant, were not necessary and integral to an employee’s tasks. Writing for the Court, Justice Thomas explained that the screenings could have been eliminated and the workers could still have performed their work. Despite the victory for employers, HR and compliance personnel should ensure that written job descriptions and the employees’ actual daily tasks focus on why the employee was hired and what tasks the employee is required to perform to avoid challenges arguing that tasks are compensable.
In the upcoming term, the Court will decide on a number of cases of interest to employers. A Muslim job applicant sued teen retailer Abercrombie & Fitch for failure to hire, allegedly because she wore a hijab, or head scarf, for religious reasons. Although the applicant scored a high enough rating on “style” to merit hire, a supervisor said that her hijab did not comport with the store’s “looks policy.” The company has a very strict dress code, which does not allow hats, and the hiring supervisor claimed that he did not know that her hijab had religious significance. The Equal Employment Opportunity Commission filed suit on the applicant’s behalf and won $20,000 after a jury trial, but an appellate court reversed the verdict because the applicant had never notified Abercrombie & Fitch that she needed to wear the hijab for religious purposes. The EEOC petitioned to the Supreme Court, and the Court agreed to decide on the issue of whether, under Title VII of the Civil Rights Act of 1964, an employer must (1) have actual knowledge that an employee or applicant requires a religious accommodation and (2) whether the applicant or employee must provide explicit notice to the employer.
The Court will also rule on the Pregnancy Discrimination Act, which requires employers to provide similar accommodations to both non-pregnant and pregnant workers. UPS provides accommodations only to those injured on the job, those considered “disabled” under the law and those who had lost their federal Department of Transportation certification. The plaintiff Peggy Young appealed a lower court ruling, which found that UPS’ policy was appropriately “pregnancy blind,” and that the company did not have to accommodate her inability to lift heavy boxes. After the Court accepted the case, however, UPS changed its policy in both a memo to employees and in its own Supreme Court brief, stating “While UPS’s denial of [Young’s] accommodation request was lawful at the time it was made (and thus cannot give rise to a claim for damages), pregnant UPS employees will prospectively be eligible for light-duty assignments.”
In September 2014, the SEC awarded a record $30 million to a whistleblower who lived outside of the United States. Unfortunately, as of the time of this writing, the SEC has provided neither the name of the whistleblower nor any details about the company. For this reason, although the award is extremely large, it provides no guidance for employers who may want to improve, because the SEC has not revealed the facts of the case, the role of any internal compliance program or whether the company had outside auditors. Last year, in what was at the time the highest award, another foreign tipster received $14 million. That whistleblower had waited an unreasonable amount of time to report; otherwise, the award would have been higher, according to the SEC. In another important development, the SEC provided a reward to an internal auditor, opening the door to awards to compliance professionals and even in-house counsel.
As of October 2014, nine whistleblowers had received awards, up from four in 2013 from among over 3,200 tips. The most common complaint categories reported by whistleblowers in the 2013 fiscal year were Corporate Disclosures and Financials (17.2 percent), Offering Fraud (17.1 percent) and Manipulation (16.2 percent).
Although the number of awards is low thus far, the large amount of the awards given will undoubtedly embolden others to come forward. Accordingly, employers should continue to re-evaluate their policies—particularly any that could run afoul of SEC Rule 21 F-17, which prohibits impeding investigations and attempting to enforce certain confidentiality agreements against whistleblowers. Relevant parts of the Rule appear below:
240.21F-17 Staff communications with individuals reporting possible securities law violations.
- No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by § 240.21F-4(b)(4)(i) and § 240.21F-4(b)(4)(ii) of this chapter related to the legal representation of a client) with respect to such communications.
- If you are a director, officer, member, agent or employee of an entity that has counsel, and you have initiated communication with the Commission relating to a possible securities law violation, the staff is authorized to communicate directly with you regarding the possible securities law violation without seeking the consent of the entity’s counsel.
The Chief of the SEC Office of the Whistleblower has indicated that the enforcement of this provision will be a top priority, especially with severance, nondisclosure, confidentiality and other agreements that prohibit employees from reporting wrongdoing externally.
On a related note, employers must pay special attention to compliance, audit and legal professionals as potential litigants following the Supreme Court’s Lawson decision last term in which the Court held that private contractors of public companies are entitled to whistleblower protection under Sarbanes-Oxley (the decision was discussed in more detail in the 2014 Risk Report). In-house lawyers as well as outside counsel who choose to blow the whistle will have to balance their state ethical rules with the Lawson ruling. Compliance professionals must redouble their efforts to ensure that the avenues for reporting wrongdoing for this special class of potential whistleblowers are credible and confidential both for their own internal personnel and for outside professionals such as lawyers or external auditors.
Disease in the Workplace
Another area that may trap the unwary employer is the issue of whistleblowers in health care, transportation and other professions in which workers might come into contact with customers or co-workers with contagious diseases. During the summer and fall of 2014, the world learned about Ebola, a disease that has plagued parts of Africa intermittently for over 40 years in isolated outbreaks. When Ebola reached the United States and Spain, medical facilities began to revamp a number of protocols to ensure that contagion did not spread. Nonetheless, a Texas hospital faces a lawsuit by a nurse claiming to be a whistleblower about the lack of protective gear for health care workers. Hospitals and indeed all employers need to re-evaluate the ADA, paid leave and whistleblower policies regarding Ebola, in the same way that they reviewed policies in light of SARS and avian flu in past years. Employers should confer with counsel to prepare for employees who refuse to work with customers or co-workers exposed to Ebola and what questions they can ask employees about travel plans or illness without running afoul of state and federal laws about privacy and disabilities. In an increasingly globalized world, employers will need to prepare for contagious, potentially deadly diseases in the workplace both compassionately and legally, even after the threat of Ebola passes.
Compliance officers can add value to over-worked human resources professionals by staying abreast of international, national and local laws and even the news. While some compliance topics such as SEC whistleblower awards typically escape the attention of the general public, medical and recreational marijuana, bullying and contagions such as Ebola are front-page news. Accordingly, the likelihood of claims from these kinds of issues rises, and compliance officers and their HR colleagues should proactively prepare for them.
Marcia Narine is an expert with LRN’s Ethics & Compliance Alliance (ECA). The ECA is an online community of thought leaders and practitioners that provides unique resources and support to enhance enterprise-wide knowledge, mitigate risk, support collaboration with experts and implement program components. It provides a unique opportunity to interact and collaborate with leading subject-matter experts across all the major ethics and compliance risk areas and provides an extensive library of hands-on resources and tools to include model policies and program materials, risk assessment procedures, legal research, analyses of recent legal developments and educational materials such as the ECA Risk Forecast Report.
The ECA Risk Forecast Report is an annual publication of the most significant risks facing organizations today, as reported upon and analyzed by 12 leading ethics and compliance experts. These individuals—leading specialists whose articles are featured in the body of the Report—provide insight into the regulatory and compliance challenges we face in 2015 and the developments that are likely to result.
 The law provides an incentive for public sector agencies to adopt the model policy to prevent abusive conduct in the workplace, which will be created before March 1, 2015, by the Tennessee advisory commission on intergovernmental relations. Government employers may create their own policy if it (1) assists employers in recognizing and addressing abusive conduct, and (2) prevents retaliation. Those who create a policy will receive immunity from lawsuits alleging bullying. H.R. 1981, 108th Gen. Assemb., Reg. Sess. (Tenn. 2014) available at http://www.capitol.tn.gov/Bills/108/Bill/HB1981.pdf.
 H.R. 1981, 108th Gen. Assemb., Reg. Sess. (Tenn. 2014) available at http://www.capitol.tn.gov/Bills/108/Bill/HB1981.pdf.
 Results of the 2010 WBI U.S. Workplace Bullying Survey, supra note 12.The Tennessee law does not use the same figure, but states that “this form of mistreatment is more prevalent than sexual harassment.” H.R. 1981, 108th Gen. Assemb., Reg. Sess. (Tenn. 2014) available at http://www.capitol.tn.gov/Bills/108/Bill/HB1981.pdf.
Society for Human Resources Management, SHRM Survey Findings: Workplace Bullying, 1 (Feb. 28, 2012) http://www.shrm.org/research/surveyfindings/articles/pages/workplacebullying.aspx.
 Id. at 8. Forty percent indicated that bullying was part of another policy.