As cannabis legalization sweeps across the country, those who use the substance are applauding. However, those who employ these users are now left wondering how to navigate the minefield of legal usage of a substance that was once illegal.
Questions about employee rights, the legality of drug testing post-hire and other human resources issues should always be handled by an experienced HR professional or qualified labor attorney. While Hayes Brokers are not legal professionals, we can advise on the insurance aspects of cannabis use in the workplace.
Here is how marijuana usage on the job may affect your insurance policies and premiums:
Can You Get Insured or Bonded?
Liability insurers and bonding companies typically do not ask for evidence of drug-free employees before insuring a business for liability. However, an employer’s main concern should be providing a safe work environment that also allows for the completion of projects in a timely manner pursuant to contract.
Bonding companies may nonrenew bonds or decline to insure contractors who habitually fail to perform their contractual obligations. Liability insurance companies may also nonrenew or decline to write policies for any business that has large or frequent claims. Impaired employees can contribute to both of these, costing employers in increased insurance premiums for years to come.
As the legalization of marijuana continues across the country, insurance companies may begin to include questions about drug free programs and marijuana usage on applications as part of the underwriting process. A strict company policy on these issues will make these questions easier to answer.
How Will Your Workers Compensation Coverage Be Affected?
Workers Compensations pays claims on a no-fault basis. If an employee is injured on the job, the policy will pay even if that injury is due to impairment. In the event of a major injury (or a series of minor ones) the insurance company will deploy loss control consultants to your business. These consultants will determine any safety hazards that contributed to the injuries and make recommendations for changes to make a safer workplace.
A private insurance company cannot refuse to insure an employer if they do not have a drug free program, but they can nonrenew a policyholder based on claims. A large claim or many small, frequent claims related to drug use can cause a policy to be nonrenewed.
Finding other coverage in the private market after nonrenewal may not be possible, leading an employer to seek coverage from the state insurance fund. This coverage is sometimes 200%-300% higher (or more) than in the private market. In states where the state insurance fund is the only workers compensation insurer, premiums may also be heavily surcharged.
The Bottom Line
There is a fine line between protecting the rights of the employer and the rights of the employee. Allowing impaired employees on the job can result in higher insurance premiums in the event of claims. Bodily injury and property damage caused by impaired employees can also result in fines by OSHA and/or other safety organizations. Your workplace may even be shut down, depending on severity of the injury or damage.
The legalization of marijuana changes the workplace far less than you might imagine. If you wouldn’t allow an employee to perform their job duties under the influence of alcohol or while taking mind-altering prescription medications, then you won’t allow them to perform those duties while under the influence of marijuana, whether it was consumed recreationally or medicinally.
An employer’s first obligation is to provide a safe work environment for all employees. An HR professional or employment lawyer can review your current employee manual to specifically address marijuana usage in the workplace.