Recreational Marijuana Industry Workers Entitled to Overtime, 10th Circuit Rules

Author: Michael Cardman, XpertHR Legal Editor

October 2, 2019

Just because an employer - such as one in Colorado's recreational marijuana industry - may be in violation of the federal Controlled Substances Act (CSA) does not mean its employees are not entitled to overtime under the Fair Labor Standards Act (FLSA), a federal appellate court has ruled.

Employers are not excused from complying with federal laws because of their other federal violations, the 10th US Circuit Court of Appeals held in Kenney v. Helix TCS, Inc.

The defendant in the case, Helix TCS, Inc., provides security services for businesses in Colorado's state-sanctioned marijuana industry. One of its employees, Robert Kenney, alleged that he and other security guards regularly worked more than 40 hours per week without overtime pay.

Helix did not dispute the fact that Kenney worked more than 40 hours without overtime, nor did it try to argue that he was covered by one of the FLSA's many overtime exemptions. Instead, it argued that the FLSA was in conflict with CSA's purpose of "eliminating the commercial marijuana trade."

The 10th Circuit likened the situation to a 1931 trial in which jurors convicted the gangster Al Capone for failing to pay taxes on his ill-gotten income. Just as there was no reason then why the fact a business was unlawful should exempt it from paying the taxes it would otherwise have had to pay, the court said there is no reason today why a recreational marijuana company should be exempt from paying overtime just because it may be in violation of the CSA.