An employee of a marijuana dispensary in Colorado filed a claim in federal court alleging that he was not paid overtime in violation of the federal Fair Labor Standards Act (FLSA). The dispensary attempted to dismiss the case by arguing that its business is illegal under federal law and, therefore, typical legal protections are unavailable to its employees. The district court rejected this argument. Relying on a prohibition era case, the court explained that employers are not excused from complying with federal laws, including the FLSA, simply because their business practices may violate federal law. Thus, despite its admission that it is an illegal enterprise under federal law, the dispensary is still subject to the suit and must incur the expense of litigation. Moreover, as an employer the dispensary carries the burden of establishing that the employee was not entitled to overtime. If it cannot meet that burden, then the employee is entitled to his back pay, an equal amount of liquidated damages, and his attorney’s fees and costs.

The takeaway is that the Controlled Substances Act may not shield dispensaries and other marijuana businesses from the FLSA or other claims from their employees. Therefore, such businesses must ensure that their policies and practices comply with both federal and state employment laws.

Please read the full text of the opinion here.

For more information on developments in this area, please get in touch with Melissa Ferrara at mferrara@reedsmith.com or the Reed Smith lawyer with whom you normally work.