Nevada Supreme Court sides with Employer in Marijuana Dispute

Demonstrating the challenges of differing state and federal laws with regard to marijuana, the Nevada Supreme Court dismissed a complaint filed by an employee terminated for a positive marijuana test.

A table games dealer at Palace Station, Danny Ceballos worked for more than a year without any performance or disciplinary issues. Toward the end of his shift on June 25, 2020, however, he slipped and fell in the break room.

Palace Station security responded, first assisting him and then requiring him to submit a drug test. The test came back positive for marijuana, and Palace Station terminated Ceballos.

Ceballos sued, relying on NRS 613.333, which created a private right of action in the state in favor of an employee who is discharged from employment for engaging in “the lawful use in this state of any product outside the premises of the employer during the employee’s nonworking hours.”

Because recreational use of marijuana is legal in Nevada and Ceballos used it on his own time at home more than 24 hours before his shift, he claimed his termination violated the statute.

The trial court granted Palace Station’s motion to dismiss, and the state’s highest court affirmed.

Nevada decriminalized adult recreational marijuana use by voter initiative effective January 1, 2017, the court acknowledged.

“But marijuana possession remains illegal and federally prosecutable under the federal Controlled Substances Act (CSA),” the court wrote. “So, we must decide what the phrase ‘lawful use in this state’ means for purposes of NRS 613.333(1)—does it mean lawful under state law, or does it mean generally lawful, under both state and federal law?”

Applying the general terms canon, the court refused to infer that the drafters of NRS 613.333 intended an exception for federal illegality.

“‘Lawful’ means ‘legal; warranted or authorized by the law; having the qualifications prescribed by law; not contrary to nor forbidden by the law; not illegal,’” the court said. “The prepositional phrase ‘in this state’ is not synonymous with ‘under state law’—when the legislature means to specify state law, it does so.”

The phrase “lawful ... in this state” is general and encompasses state and federal law applicable to conduct occurring within the state, the court added. “Acts committed in Nevada that violate federal law are not ‘lawful … in this state’ under the general phrasing in NRS 613.333(1).”

Nor was the court persuaded to permit Ceballos’ common law tortious discharge claim to move forward.

In Nevada, tortious discharge actions are “severely limited” to those rare and exceptional cases where the employer’s conduct violates strong and compelling public policy, the court said, such as firing an employee for refusing to work under unreasonably dangerous conditions or for engaging in illegal conduct.

Considering the public policies Ceballos identified—including his statutory right to engage in marijuana consumption—the court found his claim fell short.

“Even setting aside its federal illegality, this asserted right is personal to Ceballos,” the court wrote. “It does not concern employer-coerced criminal activity, workers’ compensation for an on-the-job injury, or public service, like jury duty or whistleblowing. …

“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,” the court held. “It did not.”

To read the opinion in Ceballos v. NP Palace, LLC, click here.

Why it matters: The decision highlights the challenges in states where recreational marijuana is legal, despite remaining illegal under federal law. The court was clear that although Nevada has legalized marijuana, state law does not require employers to accommodate employees using it outside of the workplace who test positive at work.