Workforce Shortages Continue

Even before the 2020 COVID-19 pandemic, Kentucky was experiencing workforce shortages in multiple industries. In addition to nursing shortages, there were teacher and other public school position shortages, social worker shortages, and childcare staffing shortages throughout the state. Since Governor Andy Beshear took office in late 2019, 870 private-sector new location and expansion projects totaling approximately $26 billion have been announced. While this robust job creation has been accompanied by rising wages across the Commonwealth of Kentucky (“the Commonwealth”), the workforce shortages continue. Now, in 2023, the governor of Kentucky has announced several initiatives to address the state’s steadily increasing workforce needs to help develop and retain a highly skilled workforce.

The first program, “Education First Employers”, seeks to align employers with Kentucky’s provider of workforce training, Kentucky Community and Technical College System (KCTCS). This program will assist companies in not only filling open positions, but also retaining quality workers, and continuing to advance the skillset of the Kentucky workforce. In order to achieve the Education First Employer designation, employers must provide tuition assistance, flexible scheduling, and offer competitive wages. The companies must also actively partner with KCTCS local colleges to develop students’ employability skills, and better position graduates for higher earning potential in today’s economy. Currently, over 50 companies from across the Commonwealth have signed on to this initiative. Businesses interested in pursuing the Education First Employer distinction can visit KCTCS.edu/efe.

Additionally, in August of 2023, Governor Beshear approved nearly $2 million in incentives to provide workforce training for nearly 7,000 potential Kentucky employees. Governor Beshear had previously announced over $10 million in funding for 115 corporate applicants throughout the state to train approximately 35,000 workers for the fiscal year 2023. These incentives are made in connection with programs like “Bluegrass State Skills Corporation” (BSSC).

More specifically, the BSSC’s Grant-in-Aid program assists employers throughout the state by providing cash reimbursements to businesses providing occupational and skills training at various Kentucky businesses.  The BSSC also has a state income tax credit program for companies, to offset the cost of sending workers for approved training programs. The BSSC incentives are available to a wide variety of industries including manufacturing, non-retail services or technology, state-licensed hospital operations, agribusiness, alternative fuel, renewable energy production, and carbon dioxide transmission pipelines.

The program’s goal is to continue investing in Kentucky’s workforce training to maintain the economic upward momentum in the state. It is anticipated that workforce shortages will continue over the foreseeable future, but with creative initiatives such as those identified above, the goal of attracting, training and retaining a highly skilled workforce is moving forward in Kentucky.

Medical Cannabis

Executive order

On November 15, 2022, Kentucky Governor Andy Beshear signed an executive order, which under certain circumstances, grants a “full, complete and conditional pardon” to individuals who are accused of possession of marijuana under KRS 218A.142. Governor Beshear’s executive order notes that a total of 37 states, including the District of Columbia, Guam, Puerto Rico, and the US Virgin Islands allow cannabis use for medical issues, by certain qualified individuals. The executive order became effective January 1, 2023.

In general, the executive order provides that the pardon applies, “…if, and only if, all of the conditions outlined are satisfied”. There are six conditions to satisfy including that:

• the cannabis be lawfully purchased in the United States, but outside of Kentucky;
• the individual has a written receipt with specific information regarding the purchase;
• the amount purchased must be the legal amount under the state law;
• the amount cannot exceed eight ounces;
• the individual must have a written certification specifically for that individual from a licensed healthcare provider that the individual has been diagnosed with one of the specific conditions allowed; and
• the certification is not a prescription.

There are also definitions for the purposes of the Order.

The good news for Kentucky employers is that this should not impact on an employer’s right to establish and enforce a drug testing policy which would currently be applicable to medical marijuana. The executive order applies only to criminal convictions under limited circumstances. Kentucky employers will still be allowed to:

• conduct pre- and post-hiring drug tests, as a condition of initial or continued employment, or the basis for adverse employment actions;
• discipline employees who use medical marijuana in the workplace, or who work while under the influence of medical marijuana; and
• enforce any and all federal regulations such as the US Department of Transportation drug and alcohol testing regulations.

The executive order does not:

• create a private cause of action by an employee against an employer; or
• affect, alter or otherwise impact workers’ compensation premium discounts available to employers who establish a drug-free workplace program in accordance with KRS 304.13-167(6).

It is anticipated that one challenge an employer may face is an employee’s request for use of medical marijuana, away from work, as an accommodation for a disability under the Kentucky Civil Rights Act. This is particularly true if the employee is not in a safety-sensitive job. Many things could come into play in that situation, including whether the employer receives federal funds, or has contractual requirements with clients or vendors.

The federal government has not legalized medical marijuana as of this date, although on October 6, 2022, President Biden issued a presidential proclamation that pardons federal convictions for simple marijuana possession offenses. The proclamation applies only to federal convictions. In addition, the Medical Marijuana and Cannabidiol Research Expansion Act to grow studies on marijuana is headed to President Biden’s desk as the first standalone cannabis reform bill to pass both the US House of Representatives and the US Senate. The bill aims to eliminate red tape that’s slowing cannabis research for new treatments.

Current Kentucky Legislation

In late March 2023, Governor Beshear signed a bill into law allowing the use of medical cannabis within the state. The bill charges the Cabinet for Health and Family Services (“the Cabinet”) to establish a structure to regulate the entire medical cannabis program, including but not limited to, medical practitioners prescribing medical cannabis, cultivators, dispensaries, processors, and procedures for issuing identification cards to patients and caregivers. Under the law, a “qualified patient” with a “qualified medical condition” or their designated caregiver can legally possess up to a 30-day supply of medical cannabis products or raw plant material. Some of the qualifying medical conditions include post-traumatic stress disorder, multiple sclerosis, epilepsy, chronic and debilitating pain, and cancer.

Practitioners and Advanced Practice Registered Nurses authorized to prescribe controlled substances must apply for an authorization from a Kentucky licensing board in order to provide written certification to patients for the use of medical cannabis. After a patient receives a written certification from their approved medical practitioner, the patient must apply to the Cabinet for a registry identification card. These applications must be approved or denied within 30 days.

With respect to medicinal cannabis cultivators, processors, producers, transporters, or dispensaries, those entities must also secure a license from the Cabinet. The Cabinet is required to approve or deny a cannabis business license within 45 days of receiving a completed application. Licensed cannabis business owners are required in part to conduct criminal background checks on all owners, principal officers, board members, agents, volunteers, or employees before that person can begin work. In addition, no licensed cannabis business can employ any person convicted of a disqualifying felony offense, or anyone under the age of 21. Security measures must also be implemented to deter and prevent the theft of medical cannabis, and such a business cannot be located within 1,000 feet of an existing elementary or secondary school or daycare center.

The law does not take effect until January 1, 2025, and the Cabinet is working to establish the administrative regulations regarding the procedures related to issuance of a registry card, a cannabis business license, and rules governing inventory control, security, employment, and training requirements. As such, the governor’s November 15, 2022 executive order remains in effect.

Federal Update

On August 29, 2023, less than one year after President Biden’s directive to federal officials mentioned above, the US Department of Health and Human Services (HHS) submitted a letter to the US Drug Enforcement Agency (DEA) recommending a change in cannabis’s classification under the federal Controlled Substances Act (CSA).

Specifically, the HHS is recommending that the DEA reclassify cannabis from a Schedule I drug, the most restrictive tier under the CSA reserved for drugs with no accepted medical use and a high potential for abuse, to a Schedule III drug, a tier reserved for drugs with a moderate-to-low potential for physical and psychological dependence. The final determination regarding cannabis classification rests with the DEA, and there is no timetable by which the agency needs to render its decision.

Rescheduling cannabis as a Schedule III drug would likely, however, open up more avenues to research cannabis – allowing cannabis businesses to secure federal banking services more freely – and permit cannabis businesses to take certain credits and tax deductions under the Internal Revenue Code.  Any rescheduling of cannabis to a Schedule III drug would not federally legalize state-legal programs.

Diversity, Equity and Inclusion Update

On September 5, 2023, The Courier-Journal (based in Louisville) reported that Kentucky’s Attorney General Daniel Cameron is one of five Republican attorney generals who recently sent a letter to the top 100 largest law firms in the United States, putting them on notice that they must stop using race-based hiring decisions, or the law firms will be held accountable. In addition, the letter denounces any diversity training that discusses “bias” or “implicit bias” regarding race. The letter cites the June 29, 2023, ruling by the United States Supreme Court, Students for Fair Admissions, Inc v President and Fellows of Harvard College, which struck down race-based affirmative action admissions policies by colleges and universities receiving federal funds. The five attorney generals assert that the ruling should also extend to private employers.

No lawsuits have been filed by any of the five attorney generals. However, on Tuesday August 22, 2023, Edward Blum, the conservative activist fighting against affirmative action race-based hiring programs, filed two lawsuits against two Am Law 100 law firms, regarding a section of the firms’ DEI programs. Blum asserts that the law firms are violating the law by using skin color as a factor in awarding paid fellowships to law school students they hire. The lawsuits were filed in the Southern District of Florida against Morrison & Foerster LLP and in the Northern District of Texas against Perkins Coie LLP. Morrison & Foerster and Perkins Coie are listed as the 34th and 29th largest law firms, respectively, in the United States according to the National Law Journal.

There are no Am Law 100 firms headquartered in Kentucky. However, the five largest law firms in Kentucky in 2023 (ranked by number of attorneys) all have DEI programs and initiatives, with several having similar diversity scholarships as the AM Law firms sued above. Moreover, Kentucky’s state government has an Office of Diversity, Equity and Training which promotes policies for statewide workforce management involving affirmative action, retention, diversity, and inclusion. Kansas also has a Department of Administration’s Diversity, Equity and Inclusion (DEI) Initiative.

In “A Call to Action: Stay Calm and Carry On (Legally) in the Wake of Anti-DEI Directives”, first published on June 30, 2023 on The American Lawyer website, and later on Law.com, the authors note that while the US Supreme Court decision was not unexpected and unfortunate, there is no reason for law firms to panic. Organizations with properly administered DEI efforts are not breaking the law. Accordingly, law firms should consider auditing their DEI programs and initiatives to ensure there is an evidence-based case for the program’s effectiveness. The authors make a call to action and request that law firms join as advocates for continued DEI programs. “We encourage organizations to stay the course, not be deterred by legislation, policies, or protocols that overlook or ignore the organizational advantages conferred by DEI objectives, and keep pushing to ensure that our workplaces and communities are inclusive and equitable”.

Attorney General Daniel Cameron is currently involved in a heavily contested gubernatorial race in Kentucky against Governor Beshear. If Mr Cameron is successful in his run for governor, Kentucky employers, including law firms, will need to watch for any additional developments on the topic of DEI in Kentucky. This is especially true given that the Kentucky legislature has historically been heavily Republican.