Will Compliance With the CREAMMA Jeopardize Federal Funding?

Individuals, entities, and government agencies who receive federal funding or are federal contractors are required to comply with the provisions of the federal Drug-Free Workplace Act (DFWA) as a condition of continued receipt of those benefits. In general, the DFWA imposes several requirements on federal grantees and contractors aimed toward ensuring the maintenance of a drug-free workplace. In the event that a grantee or contractor fails to comply with those requirements, there is a risk of losing those federal grants or contracts. As many rely upon these sources of revenue to maintain their operations, the risk associated with non-compliance can be substantial and, in some instances, disastrous.

The enactment of the New Jersey Cannabis Regulatory, Enforcement Assistance and Marketplace Modernization Act (CREAMMA) ushered in major changes with respect to cannabis usage and employment. Broadly, the CREAMMA prohibits an employer from taking adverse employment action against an employee solely based upon the results of a drug test indicating the presence of cannabinoids. The question many are asking now: Does the CREAMMA require employers to conduct their operations in a manner inconsistent with the DFWA?

The purpose of this article is to explore the interplay between the federal Drug-Free Workplace Act and New Jersey’s CREAMMA. This article details the obligations imposed under both acts and answers, in the affirmative, the question of whether it is possible to simultaneously comply with both sets of laws.

The Cannabis Regulatory, Enforcement Assistance and Marketplace Modernization Act

Representing perhaps the most significant and employee-protective pieces of cannabis legislation in the country, the CREAMMA contains a broad anti-discrimination provision which reads as follows:

No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions, or other privileges of employment because that person does or does not smoke, vape, aerosolize or otherwise use cannabis items, and an employee shall not be subject to any adverse action by an employer solely due to the presence of cannabinoid metabolites in the employee’s bodily fluid from engaging in conduct permitted under [the CREAMMA].

N.J.S.A. 24:6I-52.

The above provision sets forth the general rule that an employer is prohibited from taking adverse employment action against an employee solely based upon a drug test revealing the presence of cannabinoids.

There are two key exceptions to this general rule. First, an employee may be disciplined on account of cannabis use occurring on-duty or while on the employer’s premises. N.J.S.A. 24:6I-52(b)(1). Second, an employee may be subject to adverse employment action based upon cannabis usage to the extent necessary to satisfy federal conditions for a grant or contract. N.J.S.A. 24:6I-55(c) and (d). In other words, an employer remains free to maintain a drug-free work environment and to take any action necessary to maintain federal contracts or funding.

To preserve the employer’s ability to maintain a drug-free workplace, the CREAMMA establishes a two-step drug testing framework. An employee must not only test positive for the presence of cannabinoids, but must also receive a contemporaneous physical evaluation by an individual certified as a Workplace Impairment Recognition Expert (WIRE) to opine in the employee’s present state of impairment. If both conditions are met, an employer may lawfully discipline an employee based upon on-duty impairment.

Crucially, however, the WIRE certification has yet to be established by the Cannabis Regulatory Commission. In recognizing that the WIRE certification plays a critical role in enabling an employer to determine on-duty impairment, the Commission promulgated a regulation staying the requirement that a contemporaneous physical evaluation occur prior to employee discipline:

Notwithstanding the provisions of N.J.S.A. 24:6I-52, until such time that the Commission, in consultation with the Police Training Commission established pursuant to N.J.S.A. 52:17B-70, develops standards for a Workplace Impairment Recognition Expert certification, no physical evaluation of an employee being drug tested in accordance with N.J.S.A. 24:6I-52 shall be required.

N.J.A.C. 17:30-2.1(e).

Thus, as a practical matter, the regulation preserves the pre-CREAMMA status quo as it relates to employee discipline and the results of a drug test, pending the creation of the WIRE certification. What this means, for the purposes of the DFWA, is that presently federal grantees and contractors are not at any risk of losing benefits by virtue of compliance with the CREAMMA because, essentially, the two-step drug testing framework is incomplete and employers are not yet required to make any substantial changes to their practices regarding drug testing, cannabis usage, and employee discipline.

The question then becomes: What happens once the WIRE certification is created? This requires a more in-depth discussion of the DFWA, but the answer remains that federal funding and contracts are not jeopardized by CREAMMA compliance.

The Drug-Free Workplace Act

Under the DFWA, the receipt of federal funding or contracts is conditioned on the employer’s agreement to maintain a drug-free workplace by complying with certain statutory criteria. Specifically, an employer must agree to provide a drug-free workplace through compliance with the following conditions:

• Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited in the grantee’s workplace and specifying the actions that will be taken against employees for violations of the prohibition.
• Establishing a drug-free awareness program to inform employees about the dangers of drug abuse in the workplace, the grantee’s policy of maintaining a drug-free workplace, available drug counseling, rehabilitation, and employee assistance programs, and the penalties that may be imposed on employees for drug abuse violations.
• Making it a requirement that each employee to be engaged in the performance of the grant will be given a copy of the employer’s statement regarding its drug-free workplace.
• Notifying the employee in the statement that he or she will abide by the terms of the statement and notify the employer of any criminal statute conviction for a violation occurring in the workplace no later than five days after the conviction.
• Notifying the granting agency within 10 days after receiving notice from an employee or otherwise receiving actual notice of a conviction.
• Imposing a sanction on or requiring the satisfactory participation in a drug abuse assistance or rehabilitation program by any employee who is convicted.
• Making a good faith effort to continue to maintain a drug-free workplace through implementation of the above requirements.

See 41 U.S.C. 8103(a)(1).

The requirements above represent the full extent of a federal grantee or contractor’s obligations under the DFWA.

This is evident not only in the DFWA itself, but also in the implementing regulations. Under the DFWA, federal agencies are required to establish uniform, government-wide regulations implementing the DFWA. 41 U.S.C. 8106. These uniform regulations are contained in the DFWA Guidance regulations promulgated by the Office of Management and Budget (OMB).

Grant or contract-issuing agencies promulgate regulations giving regulatory effect to the OMB Guidance. For instance, the Department of Health and Human Services regulations pertaining to the issuance of grants and cooperative agreement gives regulatory effect to the OMB Guidance regulations and establishes certain additional minor requirements, such as designating the individual to whom employee drug-related convictions must be reported to. 2 C.F.R. 382.10.

The OMB Guidance itself contains the following sections:

• Part 182 – Governmentwide Requirements for Drug-Free Workplace (Financial Assistance)
• Subpart A – Purpose and Coverage
• Subpart B – Requirements for Recipients Other than Individuals
• Subpart C – Requirements for Recipients Who Are Individuals
• Subpart D – Responsibilities of Agency Awarding Officials
• Subpart E – Violations of This Part and Consequences
• Subpart F – Definitions

Under Subpart B of 2 CFR 182.200. there are two general requirements that must be followed:

(a) First, you must make a good faith effort, on a continuing basis, to maintain a drug-free workplace. You must agree to do so as a condition for receiving any award covered by this part. The specific measures that you must take in this regard are described in more detail in subsequent sections of this subpart. Briefly, those measures are to (1) Publish a drug-free workplace statement and establish a drug-free awareness program for your employees; and (2) Take actions concerning employees who are convicted of violating drug statutes in the workplace.

(b) Second, you must identify all known workplaces under your Federal awards.

The “specific measures” referred to above do not create any additional obligations. Instead, they simply provide guidance on complying with the obligations set forth in the DFWA, such as the distribution of the drug-free workplace statement, identification of workplaces, and actions that must be taken concerning employees convicted of drug violations in the workplace.

The takeaway from all of this is that neither the DFWA nor its implementing regulations require employee drug testing or mandate that an employee be disciplined on account of a drug test revealing the presence of cannabinoids. The courts have additionally recognized that drug testing is not a requirement of the DFWA. See e.g., Chamberlain Mfg. Co. v. Local Lodge No. 847, 474 F. Supp. 2d 682, 691 (M.D. Pa. Feb. 13, 2007); Parker v. Atlanta Gas Light Co., 818 F. Supp. 345, 347 (S.D. Ga. Apr. 13, 1993). While such practices are certainly consistent with the employer’s obligation to make a good faith effort to maintain a drug-free work environment, they are not legal requirements under the DFWA.

Turning back to the interplay between the CREAMMA and DFWA, compliance with the CREAMMA does not jeopardize federal funding or contracts because it does not require conduct that goes against the DFWA. To the contrary, the CREAMMA is consistent with the DFWA through its creation of a two-step drug testing procedure to determine employee on-duty or on-site cannabis impairment. This is, after all, exactly what the DFWA intends to prohibit—drug use in the workplace.

Conclusion

Ultimately, employers should not fear the loss of federal funding or contracts by complying with the provisions of the CREAMMA. The DFWA and CREAMMA operate in harmony, and the CREAMMA expressly recognizes the legitimate needs of employers to maintain a drug-free work environment and comply with all federal requirements for the receipt of funding or contracts.

Lawrence M. Teijido is an associate with Scarinci Hollenbeck in Lyndhurst. He is a member of the firm’s Public & Education law practice group, where he works with public clients on a broad range of civil litigation matters.