How to ensure your cannabis business can clear wage-compliance hurdles
As the cannabis industry continues to grow, it is important to stay on top of wage and hour issues that could upend a growing company.
The Fair Labor Standards Act (FLSA) is the federal wage and hour law, which dates to 1938 and has numerous strict and confusing requirements for employers.
While some employers in the marijuana industry recently tried to argue the FLSA should not apply to cannabis-related employers, given its status under the U.S. Controlled Substances Act, several federal courts have uniformly rejected that theory.
For the cannabis industry at large, this means you must be educated on federal and state wage laws and ensure that you are in compliance.
Only last month, Theory Wellness, a Massachusetts cannabis company, was ordered to pay nearly $300,000 in restitution for failing to pay retail employees premium pay for work on Sundays and certain holidays under Massachusetts’ archaic “blue laws.”
While only two states – Massachusetts and Rhode Island – still require such premium pay, these laws underscore the importance of compliance with both federal and state law and how compliance in one jurisdiction might not necessarily be compliance in another.
Here are some FLSA “hot topics” that cannabis companies should be aware of to avoid fines or other sanctions:
Local, state or federal: Which applies?
At the outset, keep in mind that employers are subject to an ever-expanding web of overlapping, yet inconsistent laws.
The FLSA covers employees throughout the country. But many states have additional, more stringent wage and hour requirements.
If you operate in multiple states, you might have varying obligations toward the same class of employees.
For example, most states have unique minimum-wage laws that are more generous than the federal minimum wage.
Additionally, several states, such as California, have meal-break requirements, while others might not.
Make sure you are aware of any additional requirements for any states in which you operate.