The Cost of Non-Compliance

State mandatory law compliance and state marijuana law issues are certainly concerns that company program managers must deal with. However, ADA issues may be far more problematic.

• By Bill Judge
• Sep 01, 2017

$482 Million¹: The cost of non-compliance paid by employers in just one year—and just for ADA violations!

Let's be honest—we are all in this business to make money. Whether you're a TPA, an employer, a laboratory, a clinic, or a lawyer, to survive we must make money. But the ever-evolving and complicated compliance issues we face can undermine our goals.

For service providers and employers in particular, the cost of non-compliance is becoming an unmanageable issue. In the more than 40 years since workplace drug testing began in this country, we have grown from about 12 state laws and approximately 100 court cases to more than 600 state laws and regulations and more than 12,000 court and agency decisions that impact what we do. Certainly, not all of these statutes, regulations, and court or agency decisions affect your business. But some do!

For example, consider . . .

1. The cost of state law (including marijuana laws) non-compliance;

2. The cost of ADA non-compliance;

3. The cost of OSHA non-compliance;

4. The cost (lost opportunity) of state unemployment defense non-compliance;

5. The cost (lost opportunity) of state workers’ compensation claim defense non-compliance;

6. The cost of NLRA (onion) law non-compliance;

7. The cost of state human rights law non-compliance.

Overwhelming? Yes, it is. And this doesn't even consider other federal rules you may be obliged to follow.²

If you fail to comply with the rules that apply to your organization, it could cost you. We have seen judgments, settlements, jury awards, and consent decrees ranging from $30,000 to well over $1.5 million.

How do you avoid the cost of non-compliance? How do you keep up with the fast-changing world of compliance? The key is information, information, information. Each of the areas of compliance listed above has rules to follow. If you follow the rules, you will minimize your losses. Sure, some of the issues listed above are extremely detailed and complicated, but they are your blueprint for protection.

Start by knowing the rules that apply to you. You don’t have to go to law school to understand and comply with these rules. But, at least in general terms, you do have to take the time to be aware of those rules that apply to your operation. What follows is a small example of some of these rules.

Unfortunately, we only have enough space in this article to address state law non-compliance and some ADA (prescription drug) issues.

State Law Non-Compliance
Just about every state has some rule, law, or regulation that impacts your operation. States are described as:

1. Mandatory, meaning if you wish to conduct drug testing, you must do so per state rules.

2. Voluntary, meaning if you want the benefits provided by a state law or program you must test per state rules.

3. Required, meaning if you have certain job functions, you must test.

4. Immunity, meaning if you test per state rule, you are immune from liability.

5. Marijuana, meaning a state authorizing medical/personal use of marijuana.

6. Open, meaning there are no state-specific rules.

Mandatory States: You Must Follow These Rules
There are currently 22 mandatory states: AZ, CA, CT, DE, HI, IA, LA, MA, MD, ME, MN, MT, NC, NE, NJ, NV, NY, OK, OR, RI, VT, and WV (AZ, DE, and NY are considered mandatory due to restrictions in their medical marijuana laws).

The mandatory state statutes can be extremely detailed, such as Iowa, Minnesota, or Oklahoma, or as "simple" as California's statute that, aside from some training and procedural requirements, limits random testing to safety-sensitive and security-sensitive jobs.

Voluntary States—Financial Opportunities
Voluntary states provide financial opportunities to employers—provided you follow the rules. There are two types of "voluntary" states, both related to workers’ compensation: states that provide a Rebuttable Presumption of Intoxication Defense and states that offer a Workers' Compensation Premium Discount, provided you follow the rules.

The "discount states" may be attractive to you, depending on whether the benefit of compliance is worth the effort. Some state rules are very complicated. But if you are in a "rebuttable presumption state," you must seriously consider complying with the rules. The financial reward will be worth the effort.

Here are the voluntary states:

Four states (MN, NM, NY, and WI) provide various reductions/credits to employers with drug-free workplace programs.

Examples of Violating Mandatory State Rules: Cost of Non-Compliance
Connecticut (mandatory state)
In Tomick v. United Parcel Service. Inc., et al., 2010 Conn. Super LEXIS 2389,3 an employee injured his back and eleven months later reinjured it while delivering a package. The initial injury occurred in January 2003 and the re-injury was in November 2004. He received medical attention following the November 2004 injury and was released to full duty. The employee continued to suffer severe pain. He got into several confrontations, which included yelling and swearing by both men, with Kevin Trudelle, the business manager at the facility where the employee worked.₄

Trudelle decided that the employee must get a fitness-for-duty examination and a drug test. The employee refused. The employee, however, did go for additional treatment, and the treating physician reported to the company that a drug test was not needed. The employee was released back to work but when he returned to work, he was fired.

After a six-day trial, a jury ruled in favor of the employee and awarded him $950,000. This sum included awards for violating Connecticut’s drug testing law, negligent infliction of emotional distress, disability discrimination, and punitive damages. Additionally, back pay, $233,720 in attorney's fees, and $3,729.54 in costs were also awarded to the employee.

Significantly, the supervisor was found personally liable for $50,000!

The case and its numerous appeals lasted until Dec. 30, 2016. In the end, the punitive award of $500,000 was reversed, but the jury determination that the state mandatory drug testing law was violated was affirmed against both the company and the supervisor.

The jury and the courts made it clear that, in Connecticut, there must be reasonable suspicion before a drug test can be required. In this case, no evidence of reasonable suspicion was presented, and the jury concluded that the supervisor's multiple threats to fire the employee if he didn't take a drug test "was a scheme concocted to provide just cause to terminate his employment." (135 Conn. App. 589).

In another Connecticut case, Doyon v. Home Depot U.S.A., Inc., No. 2:92-CV-980 (JAC), 850 F.Supp. 125 (1994), the company's nationwide "substance abuse policy" required mandatory drug testing of any employee involved in a "serious work-related accident," including those that cause property damage in excess of $200. If a test was positive for any employee with less than two years of continued service, the employee would be fired.

Plaintiff worked at a store in Southington, Conn., for less than two years. While operating a forklift, he turned a corner, the load shifted, and a few bags of mulch fell onto a customer's car, causing more than $200 in damage.

Doyon's drug test was positive for marijuana, and he was fired. He sued, arguing the policy violated Section 31-51x, which allows testing only when there is reasonable suspicion that the employee is under the influence of drugs. Home Depot argued that an accident was itself suspicious, citing government statistics of the number of accidents that involve drug use.

The court agreed with Doyon. Citing legislative history, the court noted that Section 31-51x is based on the Fourth Amendment to the United States Constitution concept of individualized suspicion. The court held that an accident by itself does not suffice—individualized suspicion of drug use is required. A summary of a few other state mandatory law non-compliance cases (cited cases are only examples of the many cases in each state):

California

• 2015: $31,001 paid by a California employer for violating mandatory state law. Employer's problems included that: 1) there was no notice of the random, unannounced drug tests; 2) LRLO had no individualized suspicion of drug use by Aro and O'Toole; 3) when they objected to the testing, they were told that they would be suspended; 4) they were required to stand in line and sign a consent form in the presence of other employees; 5) they were observed while providing urine samples; 6) the plaintiffs felt threatened and intimidated because they complained about unpaid overtime; and 7) they were never given the results of their drug tests. Aro v. Legal Recovery Law Offices, Inc., 2015 I.E.R. Cas. (BNA) 180703, 2015 WL 1577597 (Cal. App. 4th Dist. 2015).
• 2000: Employee was reinstated with back pay and attorney's fees, where court concluded off-duty follow-up tests were an invasion of privacy in violation of the state Constitution. Edgerton et al. v. State Personnel Bd., 83 Cal. App. 4th 1350 (2000)
• 1997: Settled following summary judgment for employee (amount unknown), where company had no reasonable suspicion to require a drug test. Kraslawsky v. Upper Deck Company, 56 Cal. App. 179 (1997)

Iowa

• 2012: $40,000 paid by an employer for requiring an employee to take a drug test following treatment for carpal tunnel; appellate court said soft-tissue injuries do not meet the definition of an accident under state’s mandatory drug testing law. Skipton v. S & J Tube, Inc., No. 2-573/11-1902 2012 Iowa App. LEXIS 737 (2012).
• 2006: Kraft's motion for summary judgment denied after it failed to show that the employee received notice as required under the mandatory state statute. Munn v. Kraft Foods Global, Inc., No. 3:05-CV-00026-CFB, 2006 U.S. Dist. LEXIS 74445 (2006).
• 2003: Employee who tested positive for marijuana on a random drug test applied for unemployment, and the employer contested the award of benefits. The employer lost since it failed to follow the specific requirements regarding notification of a positive test in writing and delivery by certified mail. Harrison v. Employment Appeal Bd., 659 N.W.2d 581 (Iowa 2003).
• 2002: Employee tested positive for marijuana and was fired applied for unemployment, and the employer challenged his claim. The employee was awarded unemployment. The employer’s laboratory lost the sample and as a result, the employee was unable to challenge the initial test as required by the state's mandatory law. The employer was bound by the mistakes of the laboratory, and the former employee was eligible for unemployment. Artistic Solid Waste Systems, Inc. v. Employment Appeal Bd., No. 1-1012/00-2018 (IA App. 2002).

Oklahoma

• 2010: "But we didn't know" was essentially the employer's argument when it was found liable and the issue was sent to a jury to consider damages; the employee tested positive for phenobarbital, a Schedule IV drug, but under the state’s mandatory statute—Standards for Workplace Drug and Alcohol Testing Act (OKLA. STAT. tit. 40, §§551-565 (Testing Act), only Schedule I, II, or III drugs may be tested. Creekmore v. Pomeroy IT Solutions, Inc., 2010 U.S. Dist. LEXIS 97296; 31 I.E.R. Cas. (BNA) 435 (9-16-2010).
• 2009: An employer violated the notice and testing requirements of the Oklahoma Standards for Workplace Drug and Alcohol Testing Act and was found in "willful" violation. Estes v. ConocoPhillips Co., 2009 U.S. Dist. LEXIS 4082; 28 I.E.R. Cas. (BNA) 1156 (N.D. Okla. 2009).

Remember, there are 22 states with mandatory laws (plus Washington, D.C., for medical marijuana). These are just a few examples.

Marijuana at Work

Another state law issue causing great concern is marijuana at work. Twenty-nine states have now authorized the medical use of marijuana; eight have authorized personal use for anyone age 21 or older.

These state laws are not all the same. California was the first state to authorize the medical use of marijuana in 1996. As other states followed suit, the terms and limitations evolved. Some became more limiting of what employers could do, others more permissive of workplace disciplinary limitations.

There are currently eight states that limit employer action of any individual based on that person's "status" as an authorized medical marijuana patient (AZ, CT, DE, IL, ME, MN, PA, and RI). In eight states, employers can take action if an employee is found to be using or under the influence at work (AZ, CT, DE, IL, MN, NH, NY, and OH). But three state laws provide that a positive drug test for marijuana is not evidence of being under the influence (AZ, DE, and MN).

Twelve states specifically provide that employers need not accommodate a medical marijuana patient/employee's use at work. (AK, CO, ME, MI, MT, NH, NJ, OH, OR, PA, RI, and WA). Nevada and New York laws may require some accommodation by an employer. Nevada law states that:

". . . the employer must attempt to make reasonable accommodations for the medical needs of an employee who engages in the medical use of marijuana if the employee holds a valid registry identification card, provided that such reasonable accommodation would not:

(a) Pose a threat of harm or danger to persons or property or impose an undue hardship on the employer; or

(b) Prohibit the employee from fulfilling any and all of his or her job responsibilities."

New York's law, at S 3369(2), entitled "Non-Discrimination," provides, "Being a certified patient shall be deemed to be having a 'disability' under Article Fifteen of the Executive Law (Human Rights Law), Section Forty-C of the Civil Rights Law . . ." The New York statute goes on to state that, "This Subdivision shall not bar the enforcement of a policy prohibiting an employee from performing his or her employment duties while impaired by a controlled substance. The Subdivision shall not require any person or entity to do any act that would put the person or entity in violation of federal law or cause it to lose a federal contract or funding."

The Americans with Disabilities Act
State mandatory law compliance and state marijuana law issues are certainly concerns that company program managers must deal with. However, the issues associated with the Americans with Disabilities Act (ADA) may be far more problematic. The many complex issues related to the ADA are directly impacted by the prescription drug epidemic in this country.

It is pure foolishness to think that prescription drug abuse is not affecting your company. The CDC has called this "the fastest growing drug problem in America."⁵ It has reported that:

• 3 in 4 prescription overdoses are due to prescription opiate painkillers.
• There has been a 300 percent increase in pain prescription overdose deaths since 1999.
• There were 14,800 deaths attributed to opiates, more than cocaine and heroin combined.
• There were more than 475,000 emergency room visits related to opiate overdoses in 2009, doubling the count taken just six years earlier.

A study released by the American College of Environmental and Occupational Medicine states that the use of opiate medicines increases "catastrophic claims" by four times the usual rate.⁶

• 2.6 billion: The number of drugs ordered or provided by physicians' offices in the United States⁷
• 48.7 percent: Number of individuals using at least one prescription drug in the past 30 days⁸
• 21.8 percent: Number of individuals using three or more prescription drugs in the past 30 days⁹
• 1 in 10 Americans suffer from chronic pain (25 million Americans per day)¹⁰
• 55 to 85 percent of injured workers receive narcotics for chronic pain relief¹¹
• $560-635 billion: Cost of pain in missed work days and medical costs¹²

So how do you address this problem in your workplace? What adjustments should you make to your drug testing program? You may be thinking that you should expand the substances you are now testing for to include more prescription drugs. And you may think that you should definitely require your employees to report medications that they are taking.

Both of these options have risks. The ADA and state human rights laws might limit your "expanded" drug testing and reporting program. How? Why? The "how" is easier to explain than the "why."

First, let's take a quick look at some ADA basics. A complete explanation of this subject is far beyond the scope of this article. But in general, the ADA prohibits discrimination against "a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment."¹³

In narrowing the focus to workplace drug and alcohol testing programs, several points must be made. Title I of The Americans with Disabilities Act¹⁴ as amended in 2008 provides definitions related to the workplace, such as:

To whom does this law apply?

Employer -
(A) In general. The term "employer" means a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, and any agent of such person, except that, for two years following the effective date of this subchapter, an employer means a person engaged in an industry affecting commerce who has 25 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding year, and any agent of such person.

What is a disability?
(A) a physical or mental impairment that substantially limits one or more major life activities of such individual;

(B) a record of such an impairment; or

(C) being regarded as having such an impairment¹⁵

How does the ADA deal with illegal drug use?
Section 12114 of the ADA provides:

(a) Qualified individual with a disability. - For purposes of this subchapter, a qualified individual with a disability shall not include any employee or applicant who is currently engaging in the illegal use of drugs, when the covered entity acts on the basis of such use.

(b) * * * Nothing in subsection (a) of this section shall be construed to exclude as a qualified individual with a disability an individual who-

(1) has successfully completed a supervised drug rehabilitation program and is no longer engaging in the illegal use of drugs, or has otherwise been rehabilitated successfully and is no longer engaging in such use;

(2) is participating in a supervised rehabilitation program and is no longer engaging in such use; or

(3) is erroneously regarded as engaging in such use, but is not engaging in such use; except that it shall not be a violation of this chapter for a covered entity to adopt or administer reasonable policies or procedures, including but not limited to drug testing, designed to ensure that an individual described in paragraph (1) or (2) is no longer engaging in the illegal use of drugs.

An employer is permitted to . . .
1) prohibit the illegal use of drugs and the use of alcohol at the workplace by all employees;

2) require that employees shall not be under the influence of alcohol or be engaging in the illegal use of drugs at the workplace;

3) require that employees behave in conformance with the requirements established under the Drug Free Workplace Act of 1988 (41 U.S.C. 701 et seq.);

4) hold an employee who engages in the illegal use of drugs or who is an alcoholic to the same qualification standards for employment or job performance and behavior that such entity holds other employees, even if any unsatisfactory performance or behavior is related to the drug use or alcoholism of such employee; and

5) with respect to federal regulations regarding alcohol and the illegal use of drugs, require that employees are required to abide by any applicable federal rule.

Additionally, a test to determine the illegal use of drugs shall not be considered a medical examination.¹⁶

If you imagine that the above language would be self-explanatory in practice, you would be wrong. There have been and continue to be lawsuits on nearly every word of the sections set out above. And these are just a few examples of what is contained in the ADA and its regulations.

These lawsuits have resulted in jury awards, judgments, settlements, and consent decrees, such as:

• 2017: M.G.H. Family Health Center d/b/a Muskegon Family Care agreed to pay $21,500 after an individual worked five weeks without incident as an outreach enrollment coordinator but then had a "medical specialist" place a medical hold on her file due to medications she was taking following a pre-employment physical.
• 2016: Georgia Power entered into a consent decree with the EEOC, which among other things required payment of $1,586,500. The company agreed to revise its policies and no longer take employment action based upon an individual's use of a "legal drug or medication prescribed to that individual unless and until [the company] has conducted an individualized assessment" of the person's ability to safely perform the essential functions of the job.
• 2016: Xerox State Healthcare, LLC paid $35,000 as part of a consent decree after it failed to reasonably accommodate an individual with end stage renal failure who was incapable of providing a urine sample as required for a pre-employment drug test.
• 2016: Randstad, UP, LP agreed to pay $50,000 after it withdrew an offer of employment after finding out an applicant was on supervised methadone.
• 2015: The Pines of Clarkston, LLC agreed to pay $42,500 after failing to enter into the required interactive reasonable accommodation process when an employee tested positive for marijuana being used medically to treat epilepsy.

There are many more examples that could be listed here.

State Human Rights Laws
A complete review of this subject is beyond the scope of this article. Please be aware that each state has some form of human rights law that in many ways follows or expands an employer's legal obligations beyond the ADA and its precedent. As an example, the recent Washington Appellate Court decision Clipse v. Commercial Driver Services, Inc. filed under "Washington Law Against Discrimination" (Chapter 49.60 RCW) upheld a jury verdict and award of more than $85,000. In that case, an individual was hired as a commercial vehicle driving instructor who was on a medically supervised methadone program. The methadone was taken for pain, but the employer "perceived" that he was an illegal drug user and fired him.

Don't overlook your state human rights law before you make employment decisions.

Conclusion
We have had only a chance to mention a small part of the compliance, state mandatory law, and ADA issues you might face. Many others impact your program every day. We hope you see that ignoring the rules is not a good solution. The cost of non-compliance is real, and it can be substantial. Yes, the rules can be complicated, but they are your blueprints for protection.

References
1. This is the total amount recovered by the EEOC in 2016 for employees discriminated against in the workplace. See EEOC Fiscal Data Report - 2016 at: https://www.eeoc.gov/eeoc/newsroom/wysk/2016_highlights.cfm
2. Failure to follow federal rules can also be very costly. For example, in 2016 in McCall v. Coastline Distributing, Inc., the jury returned a verdict of $2.1 million when the employer failed to enroll the driver in a drug testing program; the driver tested positive for methamphetamines and opioids after the accident.
3. This case began in 2003 and, after post-trial motions and several appeals finally ended on Dec. 30, 2016.
4. While working and in severe pain, Tomick called his wife and told her he would be home for lunch as usual. He added that the helper Trudelle had promised did not show at the appointed time and place. His wife called Trudelle and said her husband was in severe pain and she feared he was "going to have a nervous breakdown." When the employee called Trudelle, he was told that if he couldn't do the "f***ing job" to just bring the truck back.
5. http://www.cdc.gov/homeandrecreationalsafety/rxbrief/; Note that this is a problem worldwide. See https://www.mailman.columbia.edu/public-health-now/news/nonmedical-use-prescription-drugs-among-young-people-growing-global-concern, showing that, depending on the country, there has been as much as a 550 percent increase in non-medical use of prescription opioids.
6. Journal of Occupational and Environmental Medicine, August 2012.
7. https://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm; In 2012, 259 million opioid prescriptions were written, enough for every adult in America to have a bottle. https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm
8. https://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm
9. https://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm
10. https://nccih.nih.gov/research/statistics/NHIS/2012/key-findings
11.https://www.researchgate.net/profile/Xuguang_Tao/publication/229437059_The_Effect_of_Opioid_Use_on_Workers'_Compensation_Claim_Cost_in_the_State_of_Michigan/links/02e7e533ace8492624000000/The-Effect-of-Opioid-Use-on-Workers-Compensation-Claim-Cost-in-the-State-of-Michigan.pdf; Workers on opioids are also less likely to return to work. See, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4204477/pdf/nihms530252.pdf; also Deyo RA et al. Opioids for low back pain. BMJ. 2015 Jan 5;350
12. http://www.jpain.org/article/S1526-5900(12)00559-7/pdf
13. 42 U.S.C. Sec. 12112(a).
14. 42 U.S.C. Sec. 12111, Title I Employment.
15. 42 U.S.C. Sec. 12102(1).
16. 42 U.S.C Sec 12114 and Sec. 12210

This article originally appeared in the September 2017 issue of Occupational Health & Safety.