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Cannabis Industry Must Pay Overtime, Tenth Circuit Rules

Cannabis Industry Must Pay Overtime, Tenth Circuit Rules

Marijuana Sales Might Violate Federal Law, but Sellers Should Follow Labor Rules

Federal appellate courts have recently held that individuals working in the cannabis industry are entitled to recover overtime under federal wage laws, even though cannabis is still illegal under the federal Controlled Substances Act (CSA). This question was raised in Colorado, where cannabis sales have been legalized and many employees have found jobs in the growing sector. Unfortunately, some business owners have tried to sidestep labor law using the excuse that nothing they do is legal. The Tenth Circuit Court of Appeals gave their opinion on the matter just last month.

Kenney v. Helix TCS: How Far Do Worker Protections Extend?

Kenney v. Helix TCS, filed on behalf of a security guard who worked for various cannabis industry clients of his employer’s, asked the court to award compensation for unpaid wages. The plaintiff “regularly worked more than 40 hours a week,” but his employer failed to pay the required time-and-a-half rate for his overtime. On September 20, 2019, the Tenth Circuit Court of Appeals held that the employee was entitled to proceed on his claims for overtime compensation pursuant to the Fair Labor Standards Act (FLSA).

The defendant in Kenney, a security, inventory control, and compliance firm providing services to the marijuana industry in Colorado, argued that the FLSA did not apply to employees in the industry. Extending protections to cannabis workers, the defendant asserted, “would require the Court to find that Congress intended to both forbid (under the CSA) and reward (under the FLSA) the same conduct: drug trafficking.” The Court rejected this argument and determined that the “case law is clear that employers are not excused from complying with federal laws” because of their other federal violations.

Labor Law Isn’t About Anything Other Than Labor

The FLSA, which provides a wide range of protections for employees, exempts certain employees based on occupation and base wage​but does not include provisions regarding the legality of the work. If it did, the court ruled, businesses would be more likely to violate laws if they wanted to duck regulatory measures. In fact, labor laws are mainly meant to govern employer conduct—not that of employees. Ultimately, the decision from the Tenth Circuit Court of Appeals firmly stands for the proposition that employers are not excused from complying with federal laws just because their business practices are federally prohibited.

What Will the Future of the Cannabis Industry Look Like?

Without federal guidance on marijuana marketplace law, states must decide how to regulate this new industry on their own. The increase in cannabis-friendly legislation has resulted in a new area of litigation that will likely grow in the coming years. Colorado’s laws on the matter are still evolving as new questions arise—though it should be noted that SB19-224 explicitly instructs employers that either the FLSA or Colorado’s Labor Peace Act protections apply to all workers in the industry. Our legislators clearly intend to extend existing legal regulations to cannabis employers despite the federal line on marijuana sales.

If you are working in the cannabis industry, and you are not being paid 1½ times your regular hourly rate when working over 40 hours per week, contact our legal team at USA Employment Lawyers for a free consultation today. We can also help with cases of discrimination, sexual harassment, retaliation, and other common labor law questions—no matter your position or industry.

Free Consultation with USA Employment Lawyers

If you believe you are facing discrimination because of your race, color, religion, sex, or national origin, please contact our results-driven employment attorneys at USA Employment Lawyers today. We are committed to helping employees and businesses achieve favorable case resolutions in a variety of employment law issues.

USA Employment Lawyers are licensed to practice in Florida, Illinois and Colorado. Contact USA Employment Lawyers at (954) 266-0908 to arrange your free consultation.

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