How Cannabis is Changing Insurance in the Workplace

As laws change and more states begin to accept the legal usage of cannabis, employers will need to look at how they treat cannabis in the workplace as well. Colorado, Washington, Alaska and Oregon have all legalized recreational use of cannabis, but many questions have yet to be answered.

Questions on employee rights, drug testing post-hire and other human resources issues should always be handled by an experienced human resources professional or qualified labor attorney. In this article we aim to answer a few questions that an employer might have regarding cannabis use in the workplace and the affects on insurance, your policies and premiums. 

The Legalization of marijuana continues to expand across the country. In fact, California is voting on Proposition 64 this November. Due to these legislative changes, insurance carriers will likely begin asking more questions about drug free programs and marijuana usage on their applications for coverage as a part of underwriting. You can jump to gun on these related issues by having a strict company policy on marijuana usage. It would be wise to consult with a professional HR firm to make sure your employee handbooks are up to date with your state's specific and company specific guidelines. 

If you are an employer, your primary concern should be providing a safe work environment and providing the resources that allow your staff to do their job to the best of their ability in a timely manner. Recreational marijuana usage by employees may affect a company’s ability to do so.

HOW MARIJUANA RELATED CLAIMS MAY AFFECT YOUR INSURANCE:

Frequent and/or severe claims may result in a declination or non-renewal of coverage by liability insurance companies. Impaired employees can contribute to both of these, costing employers in increased insurance premiums for anywhere from 3-5 years from the date of loss.

How MARIJUANA may affect your workers' compensation insurance: 

Workers' compensation insurance is the sole remedy for on the job related injuries. Meaning that even if an employee was impaired on the job, workers' compensation will pay. In the event of a major injury or a series of minor injuries, the insurance company may send 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. OSHA may also get involved depending on the type and extent of the injury. 

One large claim or many small, frequent claims related to marijuana or other drug use can cause a policy to be non-renewed.  Finding alternate insurance carriers after a non-renewal may not be possible, leading an employer to seek coverage from the state compensation insurance fund.   This coverage can range anywhere from 50%-300% higher (or more) than in the private market.  

DO YOU NEED A DRUG FREE PROGRAM?

Insurance carriers typically offer a discount if you have a drug free workplace program. However, a carrier cannot refuse to insure an employer for lack of drug free program. Without these programs you may pay higher premiums.

should you allow marijuana usage?

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 wouldn't want to allow them to perform those duties while under the influence of marijuana.

Allowing impaired employees on the job could result in injuries and property damage that will most likely lead to 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.  These organizations have the authority to even shut your business down depending on severity of the injury or damage.

An employer’s first obligation is to provide a safe work environment for all employees. We recommend consulting with both an HR professional and and employment lawyer who can review your current employee handbook to specifically address marijuana usage in your workplace.