Marijuana 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.

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Jeff Smith can be reached at [email protected]