Funeral Home and Former Employee Sued for Trade Secret Misappropriation

Misappropriating trade secretsAn Ohio funeral home sued another funeral home and its former employee for alleged trade secret misappropriation. The plaintiff is also suing for defamation and tortious interference with its business expectancies.

As to the trade secret claim, reporting from the Tribune Chronicle, by Renee Fox, indicates the plaintiff funeral home alleges its client list meets the statutory definition for a trade secret. The suit goes onto claim that the list was used by its former employee to contact plaintiff’s customers (presumably those customers who had not already used the plaintiff’s services).

What is a “trade secret?” 

Since 2001, I’ve collaborated with clients on trade secret issues and litigation. And it is always interesting the learn what clients or opposing parties consider “trade secrets.” But simply saying information is a “trade secret” does not make it so.

Instead, a true “trade secret” requires meeting certain statutory requirements. For example, under Michigan law (for anyone looking for free legal research, that law is MCL 445.1902(d)), a party claiming information should be classified as a “trade secret” must show it:

  1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
  2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

And there are risks for asserting a party has misappropriated information claim to be “trade secret.” Returning to Michigan law, if a party makes a trade secret claim in bad faith, that party could be subject to sanctions in the form of paying attorney fees.

For example, we represent several parties sued for allegedly misappropriating trade secrets. In one case, we have a pending motion arguing the misappropriation claim was brought in bad faith and entitles our client to their attorney’s fees. As to the other cases, we are pursuing discovery likely to support similar motions.

This is not to suggest that the funeral home has made a bad faith trade secret claim. However, it is important to understand that factual issues may undercut the ability to satisfy the statutory definition of a trade secret. Those issues should be addressed before pursuing litigation.

So what should your company do about trade secrets?

Before pursuing trade secret misappropriation claims, it is important to know whether you can meet the statutory definition for a trade secret. Ideally, this determination will have been made in advance of suing for misappropriation.

In this regard, management should take steps to audit their company information to determine what can and cannot be protected as a “trade secret.” From here, you can assess whether appropriate steps to protect the secrecy of the information have been taken. If not, you will need to address what additional protections should be implemented.

Use this link to contact Michigan attorney Jason Shinn, if you have questions about this article, trade secret protection, or litigating misappropriation claims.

Is Interference from Over Agressive Noncompete Litigation to Blame for Slow Wage Growth?

Rigged Labor MarketDespite a strong jobs report on May 3, 2019, wage growth continues to be a disappointment. See Axios post, “The Mystery of Sluggish Wages.”

I don’t have all the answers, but I can point to at least a partial explanation for this mystery; the employment market is often contractually rigged by employers using overbroad contractual restrictions to artificially suppress wages.

Offer Employees Better Compensation; Get Ready to be Sued.

My law firm was recently retained to represent individuals sued by their prior employer. They were sued for allegedly “violating” a broadly worded provision concerning the hiring of plaintiff’s employees. This restriction is similar to no-poaching agreements that have been the target of federal scrutiny.

Under the subject agreement, a former employee cannot for two years:

… directly or indirectly … recommend for hiring, solicit or attempt to solicit any [Company] employee for the purposes of leaving [Company’s] employment and working for any customer, competitor or business that is engaged in similar operations as the [Company].

Notably, this case does not involve any claims that confidential or trade secret information was used to solicit customers. Rather, the cornerstone of the suit seeks damages. Those damages, or so the story goes, were incurred because the plaintiff was “forced” to offer in the form of more compensation to retain certain employees. These employees were purportedly contacted about job opportunities by their former colleagues.

Non-compete Restrictions Have Legitimate Purposes in Business; Suppressing wages is not one.

As as an attorney, I frequently advocate for employers for protecting legitimate competitive interests, confidential information, and trade secrets. An important tool for this protection is using tailored non-compete and non-solicitations. When properly drafted and used, such restrictions serve legitimate business purposes.

But they can also be used for improper purposes. In this case, no company asset has been misappropriated. Instead, a cynical but accurate explanation for plaintiff’s lawsuit is that if the restrictive covenant had not been violated, the plaintiff could have continued to pay wages below market or not in line with the value the employee(s) who were allegedly solicited provided to plaintiff.

Proof for a Rigged Labor Market

As Alan B. Krueger, a Princeton economics professor described in an interview with Conor Dougherty of the New York Times puts it, this sort of use of noncompete provisions and other restrictive employment contracts create a “rigged” labor market in which employers “act to prevent the forces of competition.” See How Noncompete Clauses Keep Workers Locked In (5/13/2017).

The lawsuit we are defending was only recently filed. And there are several issues the plaintiff company will need to overcome if it were to “win” its suit, including responding to anticipated counter-claims. But the unfortunate reality is that Plaintiff has already won in that some individuals it sued have been let go from their new employer.

This also illustrates the other negative effect overaggressive noncompete litigation has on the economy; such restrictions impede employee mobility and prevent firms from growing their business by freely hiring experienced and successful candidates. In fact, the plaintiff is an established player in the relevant market with a highly successful and accomplished team, which went after the “new kid” on the block and its new hires. No doubt this strategy makes for good business strategy for plaintiff. But that does not mean it is good for the broader business economy.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, Michigan non-compete law, or litigation enforcing or defending against non-compete claims. Since 2001 he has represented companies and individuals in drafting, negotiating, and litigating non-compete disputes.

Michigan’s Attorney General Announces New Unit to Crack Down on Payroll Fraud

Misclassification On April 22, 2019, Michigan Attorney General Dana Nessel announced she will establish a Payroll Fraud Enforcement Unit to investigate wage theft. More specifically, this Unit will also investigate the misclassification of workers as independent contractors and the nonpayment of overtime.

The Detroit News reported the AG’s new unit will focus primarily on the misclassification of employees as self-employed independent contractors. Such misclassification allows an employer to avoid paying overtime, health benefits or worker’s compensation that may otherwise be due to an employee, but not an independent contractor. And such misclassification has a significant financial impact on Michigan businesses and taxpayers. For example, according to a Michigan State University study misclassifying employees as independent contractors deprives those workers and Michigan taxpayers of hundreds of millions of dollars in lost wages, benefits and tax revenues every year. Building on this loss, the Attorney General is promoting her Payroll Fraud Unit as a means to help honest employers; In playing by the rules, these honest employers are disadvantaged by companies who misclassify their workforce to obtain (unlawfully) lower labor costs.

In our experience, employers often mistakenly classify individuals as independent contractors without realizing the mistake. But equally as often, there are companies that intentionally try to get away by misclassifying individuals as contractors to save on labor.

Regardless of the reason for the misclassification, there is no “honest mistake” defense. Further, companies are not necessarily limiting their liability in making an independent contractor classification. For example, we recently reported on a Michigan Court of Appeals decision involving the extension of Michigan’s anti-discrimination employment statute to an independent contractor.

Each employee/independent contractor situation is unique. But if your “independent contractor” performs services that can be controlled by your company (e.g., what will be done and how it will be done), then you should carefully evaluate the relationship; You may have a misclassification issue waiting to happen. Bolstering this concern, Michigan’s AG is encouraging individuals who suspect payroll fraud and misclassification issues to report it to the new enforcement unit (here is the AG’s link) or by calling (833) 221-1099.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.

Michigan Anti-Employment Discrimination Statute Extends to Independent Contractors

IC AgreementMany businesses owners (wrongly) assume they can limit their company’s liability for employment discrimination claims by entering into an independent contractor agreement. But that is not always true as shown by a recent Michigan Court of Appeals decision. Specifically, this decision provides a reminder that companies must focus on compliance with employment laws for its entire workforce, including contractors.

Michigan discrimination laws: “Independent contractor” versus “employee.”

In Cook v. Farm Bureau Life Ins. Co. of Mich. (Mich. App. 2019) the plaintiff began working as a Farm Bureau “employee insurance agent” in 2000. Later, he became an independent contractor for the defendant in 2013. The company fired the plaintiff in 2016.

Plaintiff sued for age discrimination under Michigan’s  Elliott-Larsen Civil Rights Act (ELCRA). The trial court decided in favor of the defendant employer. In reaching this decision, the court concluded the plaintiff could not sue under ELCRA because he was an “independent contractor,” and not an “employee.”

Control and Not the Label of the Employment Relationship Matters.

The Court of Appeals reversed this decision. In reaching this decision, the Court reasoned:

In pertinent part, [ELCRA] provides that, ‘[a]n employer shall not . . . [f]ail or refuse to hire or recruit, discharge, or otherwise discriminate against an individual with respect to employment, compensation, or a term, condition, or privilege of employment, because of . . . age[.]’

Notably, the above does not state that an employer is prohibited from engaging in acts of discrimination only against its own employees. Rather … one may bring an action under the ELCRA against an employer if the individual can establish that an employer affected or controlled a term, condition, or privilege of his or her employment.

We find that the trial court erred in pronouncing that plaintiff’s status as an independent agent disqualified him from ELCRA protection, without first inquiring into the amount of control Farm Bureau asserted over the terms, conditions, and privileges of plaintiff’s work.

In applying the law, the Court wasted no time in concluding the independent contractor agreement established that Farm Bureau affected or controlled a term, condition, or privilege of plaintiff’s employment.  This was especially true as it related to compensation. However, this reversal was short-lived; the Court went on to decide the plaintiff failed to establish a claim for age discrimination.

HR Compliance Remains Priority for “Employees” and “Independent Contractors.”

Where a true independent contractor relationship is appropriate, it has advantages. But it is never a silver-bullet against employment discrimination claims. Instead, compliance with Michigan or federal employment laws must remain a priority for the entire workforce. And this compliance is needed regardless of whether you are employment W2 employees or contractors.

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article, or complying with Michigan or federal employment laws or litigating claims under both. Since 2001, Mr. Shinn has represented companies and individuals in employment discrimination claims under federal and Michigan employment laws.

Inconsistent Non-compete Restrictions Limits Employer’s Protections

Kent County Michigan Circuit CourtA common mistake employers make in protecting their business interests is poorly drafted non-compete agreements. And frequently that mistake involves drafting inconsistencies. As explained below, inconsistencies provide a foundation for challenging the scope or outright enforceability of a company’s non-compete restriction.

In this regard, we recently defended against Christian Financial Insurance/Christian Insurance Group, Inc.’s motion for injunctive relief. The motion was filed against its former sales agents. After raising concerns about Christian Insurance Group’s business practices and sales tactics (let’s just say the agents did not believe customers were treated very Christian-like), these agents began competing against it. The suit was filed in Grand Rapids, Michigan and sought to enforce the agency’s non-compete restriction.

Differing geographic restrictions.

Enforcement problems quickly arose; One agreement called for a state-wide band on selling insurance. The other agreement called for a 65-mile restriction from the agency’s Grand Rapids office. There was no dispute the agents signed their respective non-compete restrictions and continued to sell insurance after leaving the Christian Insurance.

The non-compete restrictions (we later learned) had not been drafted by legal counsel. They were either found or recycled by Christian Insurance’s principal. And this was evident in the language and lack of consistency.

Two main arguments were made attacking the motion for injunctive relief:

  • First, Christian Insurance’s claim a state-wide band was reasonable and necessary to protect its business interests was easily undermined by the other restriction calling only for a more limited 65-mile restriction. The Court agreed and refused to enforce the state-wide band.
  • Second, the broad language of the non-compete restriction also doomed its enforcement. The prohibition on the agents selling any insurance – in or out of the restrictive area – was rejected. Instead, the Court, after some very good lawyering by Christian Insurance’s counsel, was persuaded to grant a limited injunction. That limited injunction prohibited the defendant agents from soliciting former customers and employees/independent contractors of the Plaintiff agency. It also restricted them from selling a specific insurance product Plaintiff claimed to have niche expertise in selling called “final expense insurance. But this restriction was limited to the narrow 65-mile restriction – not the state-wide band Plaintiff had sought.

Not a good return on investment when it comes to non-compete enforcement.

Whether this injunction will remain in place after the litigation dust settles remains to be seen. But Christian Insurance spent a lot of time and resources (e.g., money) in seeking to restrict its former sales agents from competing against it. It came upon short in stopping that competition. And the value of the limited injunction was later eliminated. This happened when Christian Insurance moved its office from Grand Rapids to Lansing, but Grand Rapids remained the epicenter for the 65-mile injunction.

So, what’s the takeaway for employers? If you are going to spend time, money, and other resources in having your work-force sign a non-compete agreement, spend the time, money and other resources in getting the agreement properly drafted.

Use this link to contact Michigan attorney Jason Shinn, if you have questions about this article, Michigan non-compete law, or litigation enforcing or defending against non-compete claims. Since 2001 he has represented companies and individuals in drafting, negotiating, and litigating non-compete disputes.

Governor Snyder Limits Scope of Voter Approved Measures for Increasing Minimum Wage and Requiring Paid Sick Time

Michigan Amendments Paid Sick LeaveDepending upon your perspective, Michigan voters were given a big lump of coal or Michigan businesses got an early Christmas present.

Specifically, this week Governor Snyder signed bills to delay and limit the scope of voter-approved ballot measures that would have increased the minimum wage and required employers to provide paid sick time to their employees.

Citizen groups previously collected enough signatures to put the proposals on the November ballot. However, under a procedural mechanism, the Republican-controlled legislature agreed to make the ballot initiatives Michigan law. By doing so, it opened the door for Republicans to amend the initiatives during a lame-duck session.

Again, depending upon your perspective, Republicans gutted the voter-approved employment laws or they saved businesses from job-killing initiatives. Here’s a breakdown of what Michigan voters had approved for the ballot initiatives (on the left) and what the Republican-controlled legislature delivered (on the right):

Voter Approved Ballot Proposals (Public Act 337 of 2018) Adopted by Legislature

Legislative Changes to Adopted Ballot Proposals (SB 1171)

$12 minimum wage

Increases from $9.25 per hour as follows:

  • 1/1/2019:  $10/hour
  • 1/1/2020:  $10.65/hour
  • 1/1/2021:  $11.35/hour
  • 1/1/2022:  $12/hour
  • 1/1/2023:  Increases by the rate of inflation
$12 minimum wage 
Increases from $9.25 per hour as follows:

  • 3/31/2019: $9.45/hour
  • 1/1/2020:  $9.65/hour
  • 1/1/2021:  $9.87/hour
  • 1/1/2022:  $10.10/hour
  • 1/1/2023:  $10.33/hour
  • 1/1/24:  $10.56/hour
  • 1/1/2025:  $10.80/hour
  • 1/1/2026:  $11.04/hour
  • 1/1/2027:  $11.29/hour
  • 1/1/2028:  $11.54/hour
  • 1/1/2029:  $11.79/hour
  • 1/1/2030:  $12.05/hour
Inflation 

The minimum wage would be indexed to the rate of inflation beginning in 2024 (i.e., put on autopilot). Tipped minimum wage tied to the rate of inflation beginning on 1/1/25.

Inflation
No inflationary increases.
Tipped Minimum Wage 
Increases from $3.52 per hour (38% of the minimum wage) as follows:

  • 1/1/2019:  48%
  • 1/1/2020:  60%
  • 1/1/2021:  70%
  • 1/1/2022:  80%
  • 1/1/2023:  90%
  • 1/1/2024:  100% of the minimum wage
Tipped Minimum Wage*

The minimum wage remains tied to 38% of the regular minimum wage rate.

* Under the law, all tipped employees are guaranteed to make at least the minimum wage. If their tips plus the tipped employee minimum wage does not equal or exceed the regular minimum wage, the employer must pay any shortfall to the employee or face fines and fees.

Governor Snyder also signed into law the amendments that revised the paid sick time ballot proposal that was adopted as law in the lame-duck session. The voter-approved initiative provided for workers to receive one hour of sick time for every 30 hours worked up to a maximum of 72 hours a year. This was also adopted as law in the lame-duck session in order to amend it.

The amendments (SB 1175) reduced the ballot proposal to one hour for every 35 hours worked and capped the maximum at 40 hours per year. Governor Snyder also signed this into law late Thursday.

Legal Challenges on the Horizon?

So essentially, the people – or enough of them to get it on the ballot where it was expected to pass – said one thing, and their government said, thanks but no thanks, we’ll take it from here.

But the Detroit Free Press reported that organizers of the ballot initiatives would sue in response to the above circumstances. In this regard, they argue what the Republican legislature did was unlawful under Michigan law. This is because there is a 1964 legal opinion (written by the Michigan Attorney General Frank Kelley) that specifically addresses the current situation. In response to a legislator’s question in 1964 about the new constitution, Kelley wrote that the legislature could not amend an adopted initiative law in the same legislative session.

I think it is likely there will be a legal challenge to the above amendments. Whether the 1964 legal opinion or other arguments will carry the day is anyone’s guess.

Pilot Grounded after Marijuana Edibles Found in his Plane

“It wasn’t intentional. It wasn’t deliberate. And it wasn’t reckless.”

This defense was made in response to three chocolate bars labeled “Lab tested to 100 mg of THC” (THC refers to tetrahydrocannabinol, the psychoactive chemical in cannabis) found on a private pilot’s plane after it made an emergency landing in October 2016.

According to the National Law Journal (by C. Ryan Barber), the Federal Aviation Administration (FAA) issued an emergency order in February 2018 that revoked the pilot’s certificate for having these marijuana edibles on his plane. This decision was initially changed to a suspension by an administrative law judge. However, the National Transportation Safety Board (NTSB) later reinstated the FAA’s revocation of the pilot’s license. This reinstated revocation is now on appeal (Here is a link to the appeal brief) before the U.S. Court of Appeals for the D.C. Circuit.

The pilot was not alleged to have been under the influence of cannabis and a passenger (who is now the pilot’s wife) admitted she packed the bars without the pilot’s knowledge.

While this case involves transportation safety rules applicable to pilots, it also highlights the tension between states like Michigan that have legalized marijuana and the federal government, which has not.

As we previously covered (See The Buzz About Michigan Marijuana Legalization and the Workplace) it is also an issue Michigan employers must be ready to face after a November 2018 ballot to legalize recreational marijuana. That law went into effect on December 6, 2018.

We will follow this case. But in the meantime, here is an overview of the issues implicated by recreational marijuana that employers and employees will likely face.

For more information, about best practices and recommendations for updating the workplace to handle the legalization of marijuana, contact Jason Shinn.

Since 2001, he’s worked with companies to address workplace issues. This experience includes working with companies who operate across the United States, including with operations in states that have legalized marijuana.

The Buzz About Michigan Marijuana Legalization and the Workplace

“Smoke ’em if you got ’em.” Recreational marijuana is officially legal today in Michigan. However, there are a host of budding issues that employers and employees must address with this legalization.

For background, Michigan voted in November to legalize recreational use of marijuana by adults who are 21 or older. About ten years earlier, Michigan voters approved the legalization of marijuana for medical purposes.

To help cut through the haze of confusion surrounding Michigan’s law, here is a snapshot of certain issues relevant to companies and employees:

  1. How much pot? Individuals who are 21 or older can possess or transport up to 2.5 ounces of marijuana. They can also grow up to 12 plants if they are not in public view. They may also share 2.5 ounces with others, but not for payment.
  2. Can a Drug-Free Workplaces Harsh a Buzz? Yes. Michigan law does not override employers policy for maintaining a drug-free workplace. Employers can (and should) adopt and enforce workplace policies on marijuana; have policies that prohibit marijuana use or influence on the job by employees and applicants; they must continue to comply with state or federal laws restricting the use of marijuana, and comply with marijuana restrictions in federal contracts or grants.
  3. Must Employers Accommodate Medical Marijuana? Employers generally do not have to accommodate any use of marijuana in the workplace. But be careful. We covered a court opinion that went against an employer who failed to accommodate a medical marijuana user. See Refusing to Hire Medical Marijuana User Found to be Unlawful Employment Discrimination. However, this decision is not binding on Michigan courts. And case law applicable to Michigan employers has generally found no legal obligation to accommodate medical marijuana use.
  4. Legal but still Illegal. While Michigan legalized marijuana, it is still illegal under federal law. This was a major concern when President Trump’s former Attorney General Jeff Sessions reversed Department of Justice policy to make marijuana prosecutions priority (so much for state’s rights). However, with Sessions gone it is unclear what focus if any, federal authorities will place on marijuana prosecutions. Practically, you would hope law enforcement officials will not expend taxpayer resources in going after recreational, low-level users.

Our recommendations:

The main piece of advice we are giving our business clients is to decide whether the business can remain “drug-free.” If there are no legal, contractual, regulatory or other restrictions, then decide whether it will maintain a “zero-tolerance” policy or allow legal recreational use by employees and job candidates and under what circumstances. Practically speaking, we understand many businesses are finding it impossible to fill positions or retain employees with a zero-tolerance policy.

Next, look at your company’s policies and procedures. You will likely need to update or clarify them. Here are a few areas of consideration:

  1. Clearly identify your company’s policy when it comes to legal, recreational marijuana use, especially in its hiring procedures. Because marijuana may be detected for weeks after use, one thing you want to avoid is wasting time interviewing and conducting pre-employment drug screening on a candidate who has consumed marijuana in the last couple of weeks.
  2. Remind employees that even if legal recreational marijuana use is permitted, employees must ensure that their on-the-job performance is not are not impaired. This is especially true for jobs covered by DOT regulations or involving the operation of equipment. And clarify that employees in positions covered by state or federal drug restrictions must continue to comply with those restrictions.
  3. Clarify when and under what circumstances the company may drug test. Also, make it clear anyone using alcohol or illegal drugs while on the job will be immediately disciplined up to and including termination.
  4. Educate managers and supervisors about their responsibilities for maintaining a safe and productive work environment. This education should include procedures for identifying and reporting concerns about drug use and impairment.
  5. Consistently apply your recreational marijuana policy. Otherwise, you may open your company up to an unlawful discrimination claim.

If you are a company that needs advice for how the legalization of marijuana affects your workplace, contact Michigan employment attorney Jason Shinn. Since 2001, he has represented clients, both individuals, and companies, in addressing federal and Michigan employment law issues, including issues involving medical marijuana and accommodations.

Michigan Lame-Duck Session Fast-Tracks Proposals for Altering Awards of Attorney Fees

Two bills are being fast-tracked through a Michigan lame-duck legislative session that would fundamentally alter the State’s legal system regarding awarding attorney fees to a prevailing party.

Specifically, the two bills were introduced on November 8, 2018, and are:

  1. SB 1182 Civil procedure; costs and fees; attorney fees; require the award to the prevailing party. Amends 1961 PA 236 9MCL 600.101 – 600.9947) by adding sec. 2443; and
  2. SB 1183 Civil procedure; costs and fees; attorney fee awards in frivolous civil actions; modify. Amends secs. 2442 & 2591 of 1961 PA 236 9MCL 600.2445 & 600.2591) & adds sec. 2446.

The State Bar Board of Commissioners is expected to discuss the proposals on December 4, 2018.

To greatly simplify what these two bills would accomplish, they would move Michigan’s legal system from the “American Rule” to something closer to the “English Rule.”

Under the “American Rule,” litigants are generally required to pay their attorney fees, unless a statute, contractual provision, or other source provides for the shifting of attorney fees to the losing party. In contrast, the “English Rule” defaults to the party who loses a court case must pay the other parties legal costs.

Thoughts on the proposed legislation.

As an attorney whose defended many clients in questionable lawsuits, including suits later to be deemed frivolous, the concepts embodied in these bills deserve serious consideration. I say this while presently litigating two cases that are dangerously close to crossing the file line regarding being frivolous.

In one case in Federal District Court involving trade secret misappropriation and related claims, the Plaintiff admitted in responses to Request to Admit and through its corporate representative’s deposition that the alleged trade secrets identified in the complaint (a quote and proposal provided to a potential customer) were not trade secrets. But these admissions came after three amended complaints (each iteration making the same fraudulent trade secret assertion) and about a year after Plaintiff filed the initial complaint. A pending Motion for Summary Judgment explains why these false assertions should be the basis for awarding Defendants’ attorney’s fees, which the Judge will have considerable discretion in deciding the issue.

In another case pending in Oakland County Circuit Court, the adverse party counterclaimed against my client in a breach of contract action. At court-ordered case evaluation, my client received a very favorable award on his claim, which he accepted. The counterclaims, which sought many tens of thousands of dollars, however, received an award of “$1” (that’s right, one dollar). Under Michigan’s case evaluation system, an award of zero dollars means the action is frivolous and entitles a party to recover attorney fees. This case too will be the subject of a motion for judgment because the adverse party insist upon continuing the litigation.

However, even with these examples of arguably frivolous lawsuits, the bills, as drafted, are likely not the answer and the issues deserve a more reasoned analysis than a lame-duck session of politicians deciding a fast-tracked issue.

We will continue to monitor these bills. You can follow this link if you would like to submit comments or contact our law firm about doing so.

Refusing to Hire Medical Marijuana User Found to be Unlawful Employment Discrimination

Workplace drug testingAre Michigan employers at risk of being sued for violating rights of individuals who are authorized medical marijuana users? A case from Connecticut under that state’s law suggest the answer may be yes.

Specifically, a Connecticut federal court found an employer guilty of employment discrimination after it refused to hire a medical marijuana user.

The employer, SSC Niantic Operating Company LLC, offered the plaintiff a job contingent on her passing a pre-employment drug test. The plaintiff told SSC Niantic she was a registered qualifying patient under the Connecticut Palliative Use of Marijuana Act (PUMA) and used the drug since 2015 to treat post-traumatic stress disorder.

After the pre-employment drug test came back positive, the plaintiff was not hired. In refusing to hire her, SSC Niantic relied upon federal law providing that marijuana is illegal, irrespective of state law.

The plaintiff filed a complaint in state court. She alleged, among other claims, SSC Niantic violated PUMA’s anti-discrimination provision. The court eventually agreed ruling defendant’s rescinding of plaintiff’s job offer was contrary to her right not to be subject to discrimination because of her status as a qualifying medical marijuana patient under PUMA.

High Time for Michigan Employers to Reconsider Medical Marijuana?

Like Connecticut, Michigan’s voters adopted a medical marijuana law called the Michigan Medical Marihuana Act (MMMA) (yes, Michigan spelled “Marihuana” with an “h”) and yes our acronym is considerably less cool than PUMA, but I digress).

The Connecticut opinion, Noffsinger v. SSC Niantic Operating Co., LLC, discusses many defense arguments the court rejected and is worth discussing with your company’s employment counsel. But the main thrust of the company’s defense is that under federal law, except for limited and controlled research, all undertakings involving the cultivation, distribution, and use of marijuana are criminal acts. But again, this logic and associated defenses were rejected.

The significant points we will be discussing with our business clients are (i) how to respond to an employee with an authorized medical card; an (ii) whether they should continue to rely exclusively on federal law as a basis for making hiring and firing decisions or if Michigan law should also be considered.

Michigan’s medical marijuana act may not be construed to require an employer to accommodate the ingestion of the drug in any workplace or to accommodate any employee working while under its influence. However, the Connecticut Court appeared to reject a similar argument noting the Federal Drug-Free Workplace Act did not protect the employer because it did not regulate employees who use illegal drugs outside of work while off-duty.

Additionally, Michigan voters will decide in November whether to legalize marijuana under the ballot proposal titled the Michigan Regulation and Taxation of Marijuana Act (MRTMA). This proposal would authorize the possession and nonmedical use of marijuana by individuals aged 21 and older.

Accordingly, employers must be ready to understand how these laws affect their workplaces. For more on these issues, contact Michigan employment attorney Jason Shinn. Since 2001, he has represented clients, both individuals, and companies, in addressing federal and Michigan employment law issues.

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