In the last two years, more jurisdictions have passed laws providing employment protections to applicants and employees using cannabis on their free time, including in New York, Washington, DC, and California. Recently, however, the Supreme Court of Nevada upheld dismissal of an employee’s lawsuit, which claimed that his termination for testing positive for recreational cannabis violated the state’s lawful off-duty product law. (Ceballos v. NP Palace, LLC, Aug. 11, 2022.)

The plaintiff worked as a table games dealer at a casino for more than a year without incident. After he slipped and fell in the employee breakroom, the employer required him to submit to a drug test, which came back positive for cannabis. As a result, the employer terminated the plaintiff.

The plaintiff sued, claiming a violation of the state’s law prohibiting employers from taking action against employees who engage “in the lawful use in this state of any product outside the premises of the employer during the employee’s nonworking hours, if that use does not adversely affect the employee’s ability to perform his or her job or the safety of other employees.” Because the state decriminalized recreational cannabis in 2017, the plaintiff argued that his employer could not terminate him for his off-duty use of the drug. He also sued for wrongful discharge. The district court dismissed the complaint in its entirety.

The Supreme Court of Nevada upheld the dismissal. The court framed the issue as whether “lawful use in this state” means “lawful under state law” or “generally lawful, under both state and federal law.” After analyzing the text of the statute, reviewing it in conjunction with other state cannabis laws, and citing to the Colorado Supreme Court’s 2015 decision in Coats v. Dish Network, LLC (which addressed a similar issue), the court disagreed with the plaintiff’s arguments. Specifically, it concluded that by using the phrase “in this state,” rather than “under state law,” the legislature intended for the law to require that the product be legal under both state and federal law. The court also rejected the wrongful discharge claim because it did not involve one of the “rare and exceptional cases” where Nevada courts have recognized such a claim. The court found it important in resolving both claims that the state’s decision to decriminalize cannabis in 2017 expressly preserved to employers the right to enforce workplace policies prohibiting or restricting employees’ recreational cannabis use:

If the Legislature meant to require employers to accommodate employees using recreational marijuana outside the workplace but who thereafter test positive at work, it would have done so.”

While the decision is somewhat favorable to Nevada employers concerned about maintaining a safe and drug-free workplace, Nevada employers must still be mindful of state laws that restrict their ability to test job applicants for cannabis, except in narrow circumstances, and arguably provide employment protections to medical cannabis users.

Nevada Supreme Court Holds Recreational Cannabis is Not a “Lawful” Off-Duty Product