Looks like arguments seeking to dismiss FLSA wage claims under the guise that “cannabis is illegal under federal law” have gone up in smoke. The 10th circuit created a buzz in Robert Kenney v. Helix TCS, Inc., Case No. 18-1105, by holding that cannabis industry workers can claim overtime under the Federal Labor Standards Act (“FLSA”).

The FLSA requires employers to pay employees overtime if employees work more than 40 hours in a workweek.

In Helix, Kenney—a security worker in the cannabis industry—brought an action against his employer claiming that he was misclassified as exempt and sought inter alia overtime wages under the FLSA. Kenney argued that he and other co-workers routinely worked over 40 hours per week but were not compensated for any overtime in violation of the FLSA.

Helix moved to dismiss the action and argued that the FLSA did not apply because the marijuana industry is considered illicit under the Controlled Substances Act (“CSA”). Helix argues that allowing cannabis employees to receive protections under the FLSA would “create a clear repugnancy” between the FLSA and the CSA and “impermissibly render the two laws mutually inconsistent.” The district court denied the Motion to Dismiss, and the Appellate Court affirmed.

The Appellate Court retorted that “‘case law is clear that employers are not excused from complying with federal laws’ because of their other federal violations.” The court noted that a finding that pot workers are covered by the FLSA is in line with “both the plain reading and the overall purpose of the statute, and doing so does not require disavowal of the CSA” because congress has amended the CSA many times since the enactment of the CSA “without excluding employees working in the marijuana industry.” The court also held that both statutes seek to discourage companies from seeking an unfair advantage over legitimate employers and, thus, cannabis workers “are not categorically excluded from FLSA protections.”

Why is this important? Well, cannabis employers governed by the FLSA, will either need to schedule workers so that they do not work more than 40 hours in a workweek or pay workers overtime unless employers want to be subjected to a lawsuit. Moreover, cannabis employers in California, must take other precautions because California’s labor laws require employers to compensate employees who work: (1) more than 8 hours in a work day, and (2) more than 40 hours in a workweek. For more information regarding whether your company’s practices comply with both State and Federal law, please contact the author.