U.S. Appeals Court Holds Wage and Hour Law Applies to Marijuana Industry


As many Americans know, wage and hour laws help govern the wage rates an employer can pay and the hours for which an employer must compensate its employees. The most well-known wage and hour regulations apply to minimum wage laws and overtime laws. Though one would think these laws and regulations are fairly standard across the board for any industry, the burgeoning legalization of marijuana has led to a substantial grey area when it comes to proper wage regulations. Recently, however, a U.S. Appeals Court affirmed a decision that would make the wage and hour law applicable to the marijuana industry moving forward.

In Kenney v. Helix TCS Inc., No. 18-1105 (10th Cir. 2019), the 10th U.S. Court of Appeals in Colorado held federal law requiring workers be paid both a minimum wage and overtime applies to employees working in the marijuana industry. The decision comes as many states have moved toward either decriminalizing or legalizing medical and/or recreational use of marijuana and marijuana products. Additionally, the Court noted the protections of the Fair Labor Standards Act (FLSA) should apply to “all workers,” regardless of whether the business they are working for is illegal under federal law.

The ruling comes as the first appellate opinion to address the issue of proper wage and hour standards within the marijuana industry. Other courts have held businesses engaged in illegal or unlawful activities, such as gambling or employing illegal immigrants, should still be subject to FLSA.

This decision comes after Colorado-based Helix TCS Inc., a business that provides security services to marijuana businesses, believed its guards were not subject to overtime regulations because they worked within a federally illegal industry according to the federal Controlled Substances Act.

In the 10th Circuit’s decision, the court determined denying wage protection to those employed within the marijuana industry would likely encourage employers to engage in illegal markets and/or give them an unfair advantage over other legal businesses. In addition, the court also noted Congress has repeatedly amended the FLSA to exempt specific groups of workers; and, now that list includes those within the marijuana industry.

Texas Employment Law Attorneys

Managing your workforce is a complex and ever-changing challenge. Relationships between employers and employees are constantly changing. Both Texas and federal law control how employers must treat employees, including wage and hour law regulations. At MehaffyWeber, our experienced attorneys have years of first-hand experience formulating practical solutions to potential employment problems for large and small employers on a wide range of employment law matters. If you believe your business could use legal guidance regarding employment law, contact us today for more information.