As previously reported, the Tenth Circuit created a buzz when it found that cannabis companies need to pay overtime under the FLSA even though marijuana is illegal under Federal law.
Since then, another case has emerged from the “weedwork” in the Northern District of California claiming that cannabis companies owe employees: overtime hours, expense reimbursements, and penalties for failing to provide compliant meal and rest breaks.
Given the rise of wage and hour litigation, cannabis companies need to implement proper practices to weed out wage and hour claims. Some things to consider:
- Classifying workers appropriately. In California cannabis companies who engage in deliveries must classify delivery workers as employees, not independent contractors. And now with AB 5 going into effect January 1, 2020, cannabis companies who want to use contractors for other parts of their business must ensure that they satisfy any of the enumerated exemptions.
- Overtime. Companies should pay overtime if employees work more than 40 hours in a work week (and more than 8 hours in a day and for the first 8 hours worked on the seventh consecutive day of work in a workweek if in CA). It is important to know the differences between the FLSA and California wage laws.
- No Off-The-Clock Work. Cannabis companies must compensate employees for all hours worked, implement policies preventing off-the-clock work, and ensure no off-the-clock work is occurring.
- Compliant Meal Periods. In California, companies need to provide employees who work more than six hours in a day but less than 10 hours, a full 30 minute duty-free meal period before the fifth hour worked. Employees who work more than 10 hours in a day are entitled to a second 30 minute meal break, unless a waiver is at play.
- Compliant Rest Periods. Companies operating in California also need to provide employees with at least 10 minute rest breaks for every four hours (or major fraction thereof) worked.