Best practice noncompete enforcementA recent non-compete related law in Oregon caught my attention. Specifically, Oregon law (HB 2992), provides that noncompete agreements entered into after January 1, 2020, will only be enforceable against Oregon employees if the employer provides the departing employee with a signed copy of the agreement within 30 days after the employee’s date of termination.

For more information about this Oregon law, see attorney Lindsey Reynolds’ coverage, New Requirement for Noncompetition Agreements in Oregon.

A Law that Should not be Necessary but is Needed

This amendment to Oregon’s noncompete statute caught my attention because it is both a law that should not be needed but is. Let me explain:

First, giving a departing employee a copy of his or her non-compete or other post-employment restrictions should be every employer’s practice. This “reminder” should be provided at or shortly after the employee’s exit interview and documented in writing. But for numerous practical and strategic reasons, companies should already do this without legal compulsion.

Second, this law is needed, because in reality companies do not consistently provide this notice.

Third, individuals often forget (intentionally or otherwise) that they signed a non-compete agreement or lose the copy of the agreement by the time they depart. This is understandable; an individual joins a new employer and signs various documents and acknowledgments at the beginning of the employment relationship. But then years later, that individual departs for another opportunity. By this time, their copy of the agreement is often misplaced or forgotten.

Fourth, Oregon has several other statutory requirements that employers must follow to have an enforceable non-compete agreement. But this addition seems to add a harsh result that doesn’t fit the crime; Why should a signed and otherwise enforceable, permissible agreement that was (presumably) provided to the employee at one point now be rendered unenforceable simply because it is not provided to one party after their employment ends? It would seem a more appropriate penalty for failing to follow this notice requirement would be to exclude any damages during the time the individual was not provided notice.

Closing Thoughts

Oregon’s recent efforts to tinker with its non-compete laws is part of the trend we discussed in an earlier post. See Employees Are Winners in Push-Back Against Non-compete Restrictions. In that article, we discussed various State initiatives to add hurdles or outright restrict the enforcement of non-compete agreements.

In regard to Michigan, there have been no amendments to its non-compete statute, which allows for such restrictions if certain threshold requirements are met. Thus, any impediment to enforcing a non-compete restriction remain in the hands of Judges to parse out whether an employer met its burden for establishing an enforceable non-compete agreement.

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.

employee mobilityPush-back by State Attorney Generals and state lawmakers against n0n-compete agreements may mean improved wages for employees.

Specifically, the Wall Street Journal, by Harriet Torry, reported on May 18, 2019, that Resistance to Noncompete Agreements Is a Win for Workers. To support this conclusion, the WSJ article cited various state initiatives, including:

  1. Washington passing a law making noncompetes unenforceable for certain workers, including employees earning less than $100,000 a year;
  2. In 2015, Hawaii banned non-compete agreements for technology jobs. The State reasoned such restrictions discouraged entrepreneurship;
  3. Earlier in 2019, New Hampshire’s Senate passed a bill banning noncompete agreements for low-wage workers;
  4. Legislators in Pennsylvania and Vermont proposed to ban noncompetes with few exceptions; and
  5. Attorneys general in Illinois and New York have successfully challenged noncompete agreements so certain companies agreed to limit their use.

Noncompete Use and Abuse

Traditionally, non-compete restrictions have been the go-to resource from the company toolbox for protecting confidential and trade secret information. But these restrictions are now frequently imposed at all levels within a company (Remember Jimmy Johns’ requiring delivery drivers to sign noncompete restrictions?).

In our own experience, we’ve represented hair-dressers, massage therapists, and others in minimum-wage jobs who were sued over non-compete restrictions. These and similar lawsuits rarely involved the reasonable competitive interest appropriate for protection through non-compete restrictions.

Limiting Competition and Wage Growth

The WSJ article reaches similar conclusions we discussed in a May 4, 2019, post about slow wage growth being caused by non-compete enforcement. See Is Interference from Over Aggressive Noncompete Litigation to Blame for Slow Wage Growth?

And now with historic unemployment lows, non-compete restrictions are increasingly a means to avoid paying employees a higher wage. For example, NPR’s Planet Money recently discussed in the “Quit Threat,” how employees have leverage to negotiate higher wages.

When unemployment is low, workers can threaten to quit and their bosses have to take that threat seriously. That’s what leads to raises.

But that leverage does not exist if the employee can’t work within his or her field. See Running out the Clock in Non-compete Disputes: A Frustrating Reality for Employees. Bolstering this conclusion that post-employment restrictions suppress wages, a study found that after Hawaii enacted its ban employee mobility increased by 11% and wages for new hires increased by 4%.

Scaling Back Noncompete Use

Non-compete and similar post-employment restrictions serve a legitimate purpose in protecting company trade secrets, confidential information, and protecting against unfair competition. But increasingly they are used – either by design or as an unintended consequence – to suppress employee wages. And if employers are not careful about how they used non-compete restrictions more states may follow to limit their use.

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.

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.

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.

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.

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.

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.

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

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.

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.

“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.

“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.