New Jersey Court Rules Employers Can Be Sued Over Cannabis Hiring Bias

Appellate Division Extends CREAMMA Protections to Job Applicants

The three-judge panel held that CREAMMA's anti-discrimination provisions apply to applicants, not only current employees. Employers had exploited this loophole since the law took effect in February 2021. The statute prohibits adverse employment actions based on an employee's lawful off-duty cannabis use, but the text doesn't explicitly mention applicants. The court ruled the legislative intent and statutory language encompass hiring decisions.

The case started with a 2023 lawsuit filed by a candidate who was offered a warehouse position contingent on passing a drug test. After testing positive for THC, the offer was rescinded. The plaintiff argued the rejection violated CREAMMA Section 48, which bars employers from refusing to hire or discharge any individual because that person uses cannabis off the job and away from the workplace.

Implications for Pre-Employment Drug Screening Policies

New Jersey employers who conduct pre-employment drug tests must now redesign screening protocols to exclude cannabis or face litigation under state employment law. The ruling doesn't affect federally mandated testing for safety-sensitive positions covered by Department of Transportation regulations or roles requiring federal security clearances. But the vast majority of private-sector employers in New Jersey have no federal testing mandate.

Employment attorneys estimate that fewer than 30% of New Jersey companies updated their drug-testing policies after CREAMMA's enactment. Many continued to screen applicants for THC under the assumption that the law's protections didn't extend to the hiring phase. Today's decision kills that assumption.

The appellate court's interpretation aligns New Jersey with Maine and Nevada, where similar statutory language has been construed to cover applicants, not just employees already on payroll.

What Employers Must Do Now

Immediate policy revision is required for any employer using pre-employment drug panels that include cannabis metabolites. Counsel recommends these steps:

• Remove THC from standard pre-employment drug panels or adopt oral-fluid testing that detects recent impairment rather than metabolites from days-old use.
• Revise offer letters to eliminate language conditioning employment on passing a drug test that includes cannabis.
• Train HR staff on CREAMMA's protections and document the reason for any adverse hiring decision unrelated to cannabis use.

Employers in federally regulated industries—commercial transportation, aviation, pipeline operations—remain exempt under CREAMMA Section 48(b), which preserves federal testing requirements. All other employers must comply. The alternative? Risk compensatory and punitive damages under New Jersey's Law Against Discrimination framework, which CREAMMA references for enforcement.

Legislative History and Statutory Text

CREAMMA, signed by Governor Phil Murphy on February 22, 2021, legalized adult-use cannabis and included employment protections modeled on laws in Illinois and New York. Section 48 states that no employer shall refuse to hire or discharge any individual or discriminate against any individual in compensation or terms of employment because that individual does or doesn't smoke, vape, aerosolize or otherwise use cannabis items. The statute exempts safety-sensitive positions and roles requiring federal clearance but doesn't define "employee" to exclude applicants.

The Appellate Division noted that the Legislature's use of "refuse to hire" in the same clause as "discharge" indicates applicants fall within the protected class. The court cited the New Jersey Cannabis Regulatory Commission's guidance issued in March 2022, which advised employers that the law applies at all stages of the employment relationship, including recruitment and hiring.

What to Watch

The state Supreme Court could review the decision if the employer petitions for certification. But employment law practitioners expect the ruling to stand. No circuit split exists among New Jersey's appellate districts, and the interpretation tracks guidance from the Cannabis Regulatory Commission. Employers should anticipate a wave of lawsuits from applicants rejected between February 2021 and today who can now assert CREAMMA claims retroactively within the two-year statute of limitations for employment discrimination actions.

For comprehensive background on cannabis employment protections in New Jersey, see the CannIntel topic hub on New Jersey Cannabis Employment Law. We'll be monitoring petition activity and any legislative response in the June session.