Workplace Drug Policy

Cannabis Shift Impacting Employers

Decisions on marijuana policy are shifting, leaving employers concerned about maintaining safe and drug-free workplaces.
By: | July 28, 2017 • 4 min read

Marijuana policy made headlines twice in one week, on matters that may be potential game changers for employers.

On July 17, Massachusetts’ Supreme Judicial Court ruled in favor of a woman fired for using medical marijuana in Barbuto vs. Advantage Sales and Marketing. She will be able to sue her former employer for discrimination. One week later, the head of Maine’s Department of Labor reported to a legislative panel that state employers would be hamstrung by a prohibition on drug testing once the new recreational marijuana bill goes into effect.

Massachusetts: A Closer Look

In 2013, medical marijuana became legal to use in Massachusetts. In the summer of 2014, Cristina Barbuto was offered an entry-level position at Advantage Sales and Marketing so long as she passed a mandatory drug test. Barbuto informed Advantage that her test would come back positive because she required medical marijuana to help with her Crohn’s disease, a debilitating gastrointestinal condition.


The supervisor at Advantage told Barbuto that her medical marijuana use would not be a problem. Barbuto went through training, received her uniform and was assigned a location for her employment. After one day of work, Advantage’s human resources representative informed Barbuto she was terminated after testing positive for marijuana. The rep said the company followed federal law, which prohibits the substance in all forms, and not the state law.

Barbuto filed a complaint of discrimination against Advantage. The company argued that Barbuto could not allege she qualified as disabled, because her only accommodation — use of medical marijuana — was a federal crime. Additionally, her termination directly stemmed from failure to pass a drug test and not from her supposed handicap.

The court ruled that under Massachusetts law, use and possession of medical marijuana was “as lawful as the use and possession of any other prescribed medication,” and that the federal illegality of the drug did not make it unreasonable as an accommodation.

The court also took issue the company’s knee-jerk decision to terminate Barbuto.

“Even if the accommodation of the use of medical marijuana were facially unreasonable, which it is not, the employer here still owed the plaintiff an obligation under [Massachusetts law] before it terminated her employment, to participate in the interactive process to explore with her whether there was an alternative, equally effective medication she could use that was not prohibited by the employer’s drug policy,” the court said.

Failure to explore a reasonable accommodation alone is sufficient to support a claim of discrimination, it said.

The employer will have to prove Barbuto’s use of the medication caused undue hardship to the business in order to justify her termination.

Meanwhile, in Maine …

As was the case in many states during last year’s political race, legal use of recreational marijuana was up for debate in Maine. In November, the state passed the bill. Now, Maine is working to set up the parameters on the recreational drug, diving into how employers will be affected.

On July 24, Julie Rabinowitz, the state’s Department of Labor director of policy, operations and communications, addressed the state legislative committee formed to create the regulatory framework surrounding recreational use of marijuana. She argued employers were getting the short end of the stick.

The court ruled that under Massachusetts law, use and possession of medical marijuana was “as lawful as the use and possession of any other prescribed medication,” and that the federal illegality of the drug did not make it unreasonable as an accommodation.

Businesses won’t be able to reject applicants for testing positive for marijuana because the applicant might use it for medicinal purposes, she explained. Likewise, employers won’t be able to fire an employee for a positive drug test. Instead, the employer will have to prove the employee was impaired on the job.

Rabinowitz went on to discuss how employers in other states with legalized marijuana have more rights, citing Massachusetts, California and Colorado as examples. She urged Maine’s legislative committee to change the law to give employers more rights when it comes to the hiring and discharge of employees who test positive for marijuana.

The final decision was deferred to the legislature’s labor committee and will be a hot topic until the law goes into effect in February 2018.

What This Could Mean Long-Term

The tides are turning on how cannabis is perceived by the general population. Massachusetts and Maine aren’t the only states updating marijuana laws; 29 states and the District of Columbia have legalized the use of medical marijuana. Of those, eight states have legalized the use of recreational marijuana — four in the last year alone.


Other states have enacted decriminalization laws for possession of the substance, which treats an offense like a minor traffic violation — no threat of jail time and a reasonable fine.

In workers’ compensation, numerous cases debating whether an employer should accommodate for medical marijuana have been brought to the fore. The most significant sticking point has been the discrepancy between federal and state laws. Prior to Barbuto, courts tended to defer to the supremacy of federal law. Barbuto, however, establishes a precedent for courts to take a different approach.

Employers wishing to review their own state’s medical and recreational laws can do so here.

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of He can be reached at