A federal appeals court in Denver has held that protections under the Fair Labor Standards Act apply to “all workers” — including those in the cannabis industry. The ruling sets an important precedent, boosting efforts to unionize the new legal industry.
Workers in the cannabis industry are entitled to the same protections under federal law as those in any other industry — regardless of the fact that they work with a Schedule I drug, a federal appeals court has ruled.
The U.S. Court of Appeals for the Tenth Circuit in Denver held in a Sept. 20 decision that provisions of the Fair Labor Standards Act, or FLSA, apply to “all workers,” including those in the cannabis industry. The FLSA, landmark New Deal legislation first passed in 1938 and amended many times since then, sets a nationwide minimum wage and standards for overtime pay, as well as protections against child labor and other abuses.
The case concerned Robert Kenney, a former employee of Helix TCS, a company that provides security services for businesses in Colorado’s state-legal cannabis industry. Kenney sued the company for misclassifying him as exempt from the FLSA’s rules on overtime pay. Kenney claimed that he and other security guards employed by the company regularly worked more than 40 hours per week — and were therefore entitled to overtime.
In a motion to dismiss the case, Helix argued that it isn’t required to follow FLSA rules, because its business is in conflict with federal law. But the Tenth Circuit didn’t buy it.
“Denying FLSA protection to workers in the marijuana industry would consequently encourage employers to engage in illegal markets where they are subject to fewer requirements,” the court said in its decision.
The court held that the language and legislative intent of the FLSA make clear that employers are not exempted from complying just because their business practices are federally prohibited.
The overtime case is now greenlighted, and Kenney is set to pursue his claim in federal district court. “The hard part is over now,” Kenney’s attorney Rex Burch told Colorado Public Radio.
His former employer, of course, contests this. “Helix pays all of its workers fairly and lawfully,” Jordan Factor, an attorney for the company, retorted in a statement. “We are disappointed in the court’s ruling and believe they got it wrong. Congress did not intend to guarantee overtime to workers in the federally illegal marijuana industry. We are exploring all of our options, including an appeal to the U.S. Supreme Court.”
Colorado Public Radio also spoke to Curtis Graves, a lawyer at the Employers Council, which handles a variety of human resource issues. “We work with a lot of marijuana businesses, and I don’t know of any trying to get out of paying overtime,” Graves said. “To the contrary, they tend to be super-cautious about all employment laws, because they don’t wish to call attention to themselves, at all.”
But, in fact, another such case is pending in Oregon. Cannabis Law Blog notes that in January, Michael Garity, a former employee of cultivator WRD Investments, filed a wage and hour claim against the company under the FLSA.
According to the complaint, Garity was hired to provide expertise and labor in support of WRD Investments’ cannabis grow near Junction City. Garity claims he was a “non-exempt” employee, and that WRD Investments was required to pay him at least minimum wage for all hours worked and overtime rates for all hours worked over 40 hours per week. In the complaint, he alleges that in 2016 and 2017, he worked approximately 2,500 hours without any compensation — and that he frequently worked over 40 hours per week without overtime pay.
Whether Garity prevails on the merits remains to be seen. But the decision in Kenney’s case seems to preclude a motion to dismiss.
Good News for Cannabis Unionization Push
The Tenth Circuit ruling also provides a general boost for efforts to unionize the cannabis industry. At the forefront of this drive is the United Food & Commercial Workers International Union (UFCW), which has launched a Cannabis Workers Rising campaign.
The Teamsters and United Farm Workers of America are also supporting the campaign, and it has won some key victories. A law passed in California this year requires cannabis businesses with 20 or more employees to enter into a “Labor Peace Agreement” with a “bona fide labor organization.” This mandates that businesses remain neutral in worker organizing efforts. The Labor Peace requirement for the City of San Francisco applies to cannabis businesses with 10 or more employees.
In Washington, UFCW Local 21 and the Have a Heart dispensary chain in August 2018 signed the state’s first contract between a union and an adult-use cannabis retailer.
The first such contracts between the UFCW and dispensaries were signed in Colorado in 2011, for the medical marijuana market, before the state’s legalization initiative passed the following year.
And organized labor is poised to be on board from the start in Illinois, which passed a law to legalized cannabis this June. Illinois politics website Capitol Fax reports: “Unions like the United Food and Commercial Workers Local 881 and Service Employees International Union Local 1 had been at the negotiating table for months working on the marijuana legalization bill.”
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