Nevada Supreme Court Rules Employee’s Off-Duty Recreational Marijuana Use Not Protected Under “Lawful Use” Law

The Nevada Supreme Court’s recent decision in Ceballos v. NP Palace, LLC provides important clarification to Nevada employers navigating the differing state and federal regulations applicable to marijuana use. In Ceballos, a table games dealer with no performance or disciplinary issues slipped and fell in an employee breakroom. Security personnel responded, first assisting the employee, then requiring a drug test. After the test returned positive for marijuana (due to off-duty recreational use), the employee was terminated. The employee sued his employer, alleging he was terminated for lawful off-duty conduct in violation of NRS 613.333 and Nevada’s public policy protecting marijuana use. 

In a favorable ruling for employers, the Court determined that: (1) NRS 613.333, known as Nevada’s “lawful use law” or “lawful off-duty conduct” law, does not protect off-duty adult recreational marijuana use because marijuana remains illegal under federal law, and (2) an employee terminated for recreational  marijuana use does not have a common-law tortious discharge claim because NRS 678D.510(1)(a) authorizes employers to prohibit or restrict recreational marijuana use. The Court affirmed the district court’s dismissal of the employee’s complaint for failure to state a claim.

NRS 613.33 – Lawful Use Claim
NRS 613.333 creates a private right of action in favor of an employee who is discharged for engaging 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.” Employees may bring a civil action against the employer and seek damages for lost wages and benefits. 

The Court in Ceballos considered whether adult recreational marijuana use qualifies for protection under NRS 613.333. As the Court explained, although Nevada decriminalized adult recreational marijuana use by voter initiative effective January 1, 2017, marijuana possession remains illegal and federally prosecutable under 21 U.S.C. § 844(a), the Controlled Substances Act. The Court ruled that because federal law criminalizes the possession of marijuana in Nevada, its use is not “lawful . . . in this state” and does not support a private right of action under NRS 613.333.  

In addition to its own reasoning, the Court cited a similarly decided 2015 Colorado Supreme Court case, which also involved an employee’s marijuana use that was legal under Colorado state law but illegal under federal law. 

Public Policy Wrongful Termination Claim
Nevada law prohibits employers from terminating an employee for a reason that offends the state’s public policy. Given Nevada’s strong presumption of at-will employment, the Nevada Supreme Court has previously recognized such “public policy” exceptions only in extreme situations, including termination for refusing to work under unreasonably dangerous conditions, refusing to engage in illegal conduct, performing jury duty, and for filing a workers’ compensation claim.

In Ceballos, the Court declined to find that termination for recreational marijuana use presented sufficiently extreme circumstances to justify an exemption to Nevada’s presumption of at-will employment. The Court noted that NRS 678D.510(1)(a) specifically authorizes employers to adopt and enforce workplace policies prohibiting or restricting recreational use of marijuana. “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,” ruled the Court.

Key Takeaways

Notwithstanding the Court’s ruling, employers must pay close attention to:

• Ongoing legislative and regulatory developments at the intersection of employment law, adult recreational use of marijuana, and potential legalization of marijuana use at the federal level.
• Potential changes in Nevada laws that would provide stronger protections to adult recreational use, which might alter the Court’s analysis where an employee is terminated based on marijuana use.
• It remains illegal in Nevada to deny employment to job applicants on the basis of testing positive for marijuana in pre-employment drug screening tests, except when applying for statutorily defined jobs related to public safety.  NRS 613.132.

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