by Jonathan A. Massimino, Associate

Two cases were recently decided that will alter a contractor’s employment practices on projects in California.  These cases directly affect a contractor’s ability to provide a safe working environment at construction projects, as well as a contractor’s obligations to a union, even at a project where the contractor is not utilizing unionized employees.  In reaching these decisions, the courts in both cases substantively changed and/or clarified confusing and somewhat controversial laws already on the books.  As such, it is important for all contractors, California contractors especially, to take these cases into account in regulating the workplace in the future.

Employer Drug Policies Do Not Have To Accommodate The Use Of Medical Marijuana

Ever since California voters approved The Compassionate Use Act in 1996, which allows an individual to legally use marijuana if prescribed by a physician for medical purposes, there has been some debate regarding whether a California employer had to accommodate its employees’ use of this controlled substance.  The matter is further complicated by federal law, which absolutely bans the use and possession of marijuana for any purpose.  After the passage of the medical marijuana law, employers that took adverse employment actions against individuals using marijuana for medical purposes ran the risk of facing disability discrimination and wrongful termination lawsuits from those affected employees.  These employees were generally represented by so-called safe access groups looking to defend their clients’ rights to utilize marijuana without consequence.  Employers with marijuana-using employees in safety sensitive positions were placed in an especially difficult position, as they had to weigh the risk of an employment lawsuit against that of potential injuries caused by these individuals.  The California Supreme Court took up these issues in Ross v. RagingWire Telecommunications, Inc., and resolved these conflicts.

In Ross, the plaintiff was permanently injured and suffered from back strain and muscle spasms.  In 1999, after traditional pain medications proved ineffective, Ross began using marijuana on a medicinal basis as prescribed by his physician.  In 2001, RagingWire Telecommunications offered Ross a position.  As a part of its employment practices, RagingWire required its prospective employees to take and pass a drug test.  When Ross appeared at the clinic for his drug test, he produced a copy of his physician’s prescription for marijuana.  Ross began work for RagingWire, and was suspended six days later for failing the drug test, despite informing RagingWire of his marijuana prescription.  RagingWire terminated Ross soon thereafter.

Ross filed a lawsuit against RagingWire, alleging that his former employer had failed to accommodate his disability, and that he had been wrongfully terminated.  The lawsuit was dismissed in its early stages by the trial court, and the Court of Appeal affirmed the trial court.  Ross then appealed to the California Supreme Court.

The California Supreme Court theorized that the accommodation Ross requested was to be allowed to use marijuana despite the RagingWire’s policies against employee drug use.  Ross argued that, because of California’s law permitting the medical use of marijuana, the use of this drug was no different from the use of other prescription drugs, which would generally be tolerated.  The California Supreme Court pointed out that marijuana, despite its quasi-legal status in California, was not like other prescription drugs in that it remained illegal under federal law.  Moreover, the Court found that the Compassionate Use Act was not intended to have any effect on the rights and obligations of employees and employers.  Specifically, the California Supreme Court held that California law “does not require employers to accommodate the use of illegal drugs,” and that The Compassionate Use Act did not “eliminate marijuana’s potential for abuse or the employer’s legitimate interest in whether an employee uses the drug.” Ultimately, the California Supreme Court upheld the dismissal of Ross’ disability discrimination and wrongful termination claims against his former employer.

With this opinion, the California Supreme Court affirmed the ability of a California employer to enforce its employee drug policies, even against those with a legal right to use marijuana.  Previously, employers were conflicted about allowing an employee, a crane operator for example, to continue to perform his or her duties after producing a medical marijuana prescription.  In the litigious atmosphere of California, taking adverse action against this employee would have most likely resulted in a lawsuit very similar to the one filed by Ross.  While there is always the possibility that the California State Legislature or voters may impose requirements upon employers in regard to those legally using marijuana, for now at least employers can enforce their employee drug policies, and provide a safe work environment to all concerned.  However, well-crafted workplace policies are critical to enabling your company to make consistent and effective employment decisions.  Review your workplace policies to ensure that they comply with California law and effectively allow you to control your operations and manage your risk.

Union Requirements May Extend To Non- Union Employees

Unions can be a complicating factor for any project.  Even the best efforts to fully comply with all of the various regulations and requirements imposed by unionized workforces can result in frustration, extra costs, and unfortunately, lawsuits.  A recent opinion issued by the U.S. Court of Appeals for the Ninth Circuit serves as a crucial reminder of the complications a union presence can impose on a project, and the importance of fully understanding the language of the governing collective bargaining agreement before agreeing to those terms.

In Trustees Of The Southern California IBEWNECA Pension Trust Fund v. Herman Flores d/b/a BHF Electrical Contractors, BHF worked as an electrical subcontractor on a project for the Los Angeles Unified School District.  BHF signed a subscription agreement with the local chapter of the International Brotherhood of Electrical Workers, which required BHF to make pension trust fund contributions on behalf of its employees.  This agreement also required BHF to hire all of its project workers, excluding its core employees, from the union’s referral system, unless that system did not fulfill BHF’s requests within 48 hours.  BHF subsequently made requests to the union for workers, but these requests went unfulfilled for approximately two months.  BHF utilized its own non-union workers on the project until the union finally provided unionized workers.  BHF made no contributions to the pension trust fund for its non-union workers during this two month period.

The Trustees of the pension trust fund discovered this upon a later audit of BHF’s certified payroll, and filed suit against BHF to collect delinquent contributions.  The trial court sided with BHF, finding that contributions were not required for non-union workers.

The Ninth Circuit reversed this decision on appeal.  The Ninth Circuit interpreted the BHF subscription agreement to require pension trust fund contributions for all of its “covered workers” on the project.  Specifically, the Ninth Circuit found that the agreement covered all BHF employees, unionized or not, in certain job classifications, and that the agreement included a recognition clause, which provided that the agreement covered all project workers regardless of union status.  BHF argued that the requirements of the subscription agreement were not triggered until the union had actually provided union workers, but the Ninth Circuit found that the trust fund contribution requirements were independent of BHF’s obligation to utilize referred union workers, and that BHF was bound by the terms of the agreement as soon as it was executed by BHF.

While the amount in controversy in this case was relatively low, it is not difficult to imagine a situation where a contractor could be given a huge bill for unpaid union fees after the completion of a long project because of one incorrect assumption regarding the provisions of the operative collective bargaining agreement.  Furthermore, while it is easy to assume that an employer has no union-related obligations to its non-union employees on a public project, the Ninth Circuit just served a stark reminder that this is not necessarily the case.  As the Ninth Circuit interpreted federal law in this case, the impact of this particular opinion arguably reaches beyond California.  As such, it is advisable to review carefully any union-related agreements before agreeing to the terms provided therein.


The information or opinion provided in this article is the author's own and not necessarily that of Watt, Tieder, Hoffar & Fitzgerald, LLP. The author is solely responsible for the information and opinion that he or she has provided. The information contained herein does not replace seeking specific legal counsel to directly address individual client needs.
 
Watt, Tieder, Hoffar & Fitzgerald is one of the largest construction law firms in the world, with a practice that encompasses all aspects of construction contracting, claims and disputes resolution, and transactional legal services. WTHF principally represents large general contractors, design firms, and sureties throughout the country and internationally.