Labor & Employment Law I NOVEMBER 18, 2019

Marijuana Law Intersects with Employment Law

Robert Kenney used to work for Helix TCS, Inc. Helix provides security services for marijuana businesses in Colorado. Kenney filed a lawsuit against Helix under the Fair Labor Standards Act. Kenney alleged security guards regularly worked more than forty hours per week. Helix classified these workers as exempt employees under the FLSA and paid them a salary instead of overtime. Helix moved to dismiss Kenney’s claim based on the Federal Controlled Substances Act. While this argument was clever, it was unsuccessful.

Helix took the position that Kenney’s employment activities, though lawful under Colorado law, were in violation of the CSA and were therefore not entitled to FLSA protection. The district court denied Helix’s motion to dismiss the complaint, and the case was appealed.

In the appeal, Helix asserted that the FLSA does not apply to workers such as Kenney because Colorado’s recreational marijuana industry is in violation of the CSA. According to Helix, extending overtime benefits in the case would require the Court to find that Congress intended to both forbid (under the CSA) and reward (under the FLSA) the same conduct: drug trafficking.

The court of appeals observed that Helix in effect proposed that the court interpret the CSA as implicitly repealing the FLSA’s overtime mandate for employers in the marijuana industry.

The court was not buying this argument. The case law is clear that employers are not excused from complying with federal laws because of their other federal violations. Employers are not excused from complying with federal laws just because their business practices are federally prohibited. Helix failed to address an Oregon District Court case that was directly on-point. Greenwood v. Green Leaf Lab LLC, 2017 WL 3391671 (D. Ore. (July 13, 2017)).

The district court in Greenwood relied on a legal advice memo written for the National Labor Relations Board to conclude that any possible violations of the CSA are not relevant to whether the FLSA’s protections apply to workers in the marijuana industry.

The case is Kenney v Helix TCS, Inc. 939 F.3d 1106 (10th Cir. 2019).