Cannabis firms must comply with federal overtime law, court rules

State-licensed marijuana businesses need to adhere to federal labor laws governing paying overtime to employees, an appellate court ruled, which is a decision that could have broad implications for the MJ industry.

A three-judge panel of the U.S. Court of Appeals for the Tenth Circuit in Denver affirmed a decision by a lower court in the case against Helix TCS, a Denver-based company that provides security and infrastructure services to the marijuana industry.

Helix announced it disagreed with the ruling, and is exploring all of its options, including a possible appeal to the U.S. Supreme Court.

Key facts of the case include:

  • Robert Kenney, a former security guard of Helix, alleged that between February 2016 and April 2017, he and other security guards regularly worked more than 40 hours a week without receiving paid overtime in violation of the Fair Labor Standards Act (FLSA).
  • Helix argued that the FLSA didn’t apply to its workers because Colorado’s recreational marijuana industry is in violation of the federal Controlled Substances Act.
  • Senior Judge Stephanie Seymour wrote that the lower court, the U.S. District Court in Colorado, “correctly reasoned and case law has repeatedly confirmed that employers are not excused from complying with federal laws just because their business practices are federally prohibited.”

However, the appellate panel said it wasn’t making any conclusions about the merits of Kenney’s specific claims.

The decision allows Kenney’s case against Helix in U.S. District Court to proceed, pending possible appeal.

“We are disappointed in the court’s ruling and believe they got it wrong,” Jordan Factor of Allen Vellone Wolf Helfrich & Factor, the attorney for Helix, wrote in a statement.

“Congress did not intend to guarantee overtime to workers in the federally illegal marijuana industry.”

To read more about the case, click here.

For the full statement by the Helix attorney, click here.

Helix trades on the over-the-counter markets as HLIX.

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

Jeff Smith can be reached at [email protected]

Latest Headlines

2 comments on “Cannabis firms must comply with federal overtime law, court rules
  1. Seth tyrssen on

    Why? They’re not complying with the federal law regarding cannabis, which is still illegal on the national level. Yeah I know, that’s being nit-picky.

    Reply
  2. Michael McFarland on

    Seems pretty slimy to me. The security company, by their own definition, is operating illegally. If they want to continue operating — and benefiting from trading on the stock exchange — they need to abide by federal labor laws. The federal classification of marijuana as illegal is a separate issue altogether. Do they also claim that they do not owe federal income taxes because they’re operating an illegal business? What about the mandatory withholding from their employees’ paychecks? Are they not required to pay that as well? They’re making it sound like they’re exempt from all other federal laws because they’re operating an illegal business (guarding marijuana and its distribution). Yeah, I don’t think so, either.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *