Marijuana Businesses Increasingly Face Wage and Hour Lawsuits

As Los Angeles attorneys focusing our practice on both California marijuana law and employment law, we’ve seen that the intersection of these two has never been more apparent. Many of these cases focus on the right of an employee/ user of marijuana (particularly for medical purposes) to use legally-obtained drugs on their own time, so long as it doesn’t interfere with the safety or efficiency of their job performance. The results of those claims have been mixed, though as the American Bar Association notes, the trend has been courts siding with employees.

Now though, our marijuana business attorneys are seeing a new type of claim cropping up among cannabis companies: Employment litigation pursued by workers within the cannabis industry. One of the most recent is a marijuana employment lawsuit filed in the U.S. District Court for the District of Oregon.

Plaintiff was previously employed to provide expertise and labor to an investment company that owned a marijuana grow operation in Junction City. He alleges that despite being a non-exempt employee, in turn requiring the company to pay at least minimum wage plus overtime for all hours worked over 40 in a given week (which he claims he did frequently), the company failed to pay him for approximately 2,500 hours worth of pay. He further alleges the cannabis company failed to provide him itemized pay statements or establish a regular pay day, both in violation of state employment laws. He also incurred numerous expenses on behalf of the company, such as using his personal vehicle for work purposes with no reimbursement. 

He’s seeking actual damages for unpaid minimum wages, overtime, travel reimbursement, penalties, attorney’s fees and costs. Although no specific number is cited, this amount could be well over $40,000, just based on claims related to violations of the U.S. Fair Labor Standards Act alone.

The outcome of this case could be influenced by another marijuana FLSA decision pending in the U.S. Court of Appeals for the Tenth Circuit, Kenney v. Helix TCS, Inc., originally weighed in the U.S. District Court for the District of Colorado. Although the Oregon case was filed within the Ninth Circuit, which isn’t obligated to follow the precedent in the Tenth Circuit, sister courts often do take rulings in similar cases to heart.

In the Kenny case, plaintiff previously worked for a company that provided security services to marijuana businesses and was classified as an exempt employee. That meant the security firm didn’t pay him overtime, as required by FLSA. Plaintiff alleges he was misclassified, should have been paid overtime and sued for it. The employer moved to dismiss the case, arguing the worker wasn’t entitled to federal labor law protections because marijuana was expressly forbidden by the U.S. Controlled Substances Act. The federal judge denied the motion, but then certified the question to the U.S. Court of Appeals for the Tenth Circuit: Are employees of cannabis companies entitled to federal labor law protections even though they are essentially engaged in drug trafficking, which is expressly forbidden by federal law?

California cannabis lawyers know these kinds of cases are increasingly going to arise so long as the drug is barred by federal law.

Generally speaking, it’s just good practice as an employer of a marijuana business – or any business – to make sure you’re properly labeling your employees (easier said than done as employee misclassification is California is tricky even when you’re trying to get it right). Consulting with an experienced Los Angeles marijuana business attorney with specific experience in employment law will help make sure you aren’t vulnerable to employment litigation – which will save you more in the long run.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Kenney v. Helix TCS, Inc., Jan. 15, 2018, U.S. District Court of Colorado

More Blog Entries:

Los Angeles Marijuana Lawyers Highlight 2018: Cannabis’ Biggest Year Yet, Dec. 31, 2018, Los Angeles Marijuana Attorney Blog