As Cannabis Businesses Grow, So Do Applicable Employment Laws

california cannabis employee
More employees. More laws.

In this article:

Cannabis companies are subject to both state and federal employment laws and regulations. Certain employment laws only kick in once your cannabis business employs a certain number of employees. We will explore when different employment laws take effect, relative to the size of your workforce.

California’s Sexual Harassment Requirements

As we have discussed in the past, sexual harassment policies and training are very important for every cannabis business. California’s anti-discrimination and harassment statutes and implementing rules are some of the most comprehensive in the country. California has strict anti-harassment requirements and is one of the few states that require certain private-sector employers to provide sexual harassment training for managers and supervisors. The anti-discrimination and harassment statute has different requirements depending on the size of the employee workforce.

California’s Fair Employment and Housing Act (“the Act”) requires all California employers to take reasonable steps to prevent discrimination and harassment from occurring. This requirement means that employers have to: 1) distribute the Department of Fair Employment and Housing’s brochure on sexual harassment (or a writing that complies with statutory requirements); 2) post an anti-discrimination poster and; 3) develop and distribute a written harassment, discrimination, and retaliation prevention policy. The requirements of the anti-harassment and discrimination policy are extensive and specific. In general, the policy must prohibit discrimination and harassment; create a complaint process; create an investigation process; and make clear that employees will not be exposed to retaliation for reporting discrimination or harassment. To put it simply—an expert should draft your anti-harassment policy.

California cannabis businesses that employ at least 50 employees must provide at least two hours of sexual harassment training every two years to each supervisor employee and to all new supervisor employees within six months of the assumption of a supervisory position. The training must be “effective interactive training” and includes: in-person instruction; e-learning; webinars; or using audio, video, or computer technology with any of those training methods. The trainer must be a qualified trainer which is defined as “attorneys, professors or instructors, HR professionals or harassment prevention consultants.”

The California Department of Fair Employment and Housing enforces the Act and its rules. DFEH can impose a civil penalty on any employer that fails to follow the above requirements. Those penalties can range from the moderate to the severe, depending on the violation and attending circumstances. Suffice it to say that you do not want to be caught up in a state-level enforcement action.

Although Act provisions go take effect at the 50-employee threshold, any new cannabis company should have an anti-discrimination and harassment policy in place as soon as it intends to hire its first employee. As the cannabis business grows, additional requirements are placed on them. California’s requirements are strict and it’s best to get in front of these requirements before it’s too late.

Federal Family Medical Leave Act Requirements for Marijuana Businesses

Although marijuana is a federally controlled substance, cannabis businesses are subject to federal employment laws like any other business. The Family Medical Leave Act (“FMLA”) is one of those laws. The FMLA is a complicated piece of legislation and frequently trips up employers, especially ones without a human resources department.

To determine if FMLA applies, employers need to ask themselves two important questions: 1) Do we have enough employees for FMLA to apply?; and 2) Does FMLA apply to this particular employee?

FMLA only applies to employers who have at least 50 employees in 20 or more work weeks in the current or previous year. If the employer meets this, then FMLA applies as to the employer.

Only eligible employees are entitled to FMLA leave. An eligible employee is an employee who:

  1. Works for a covered employer;
  2. Has worked for the employer for at least 12 months;
  3. Has at least 1,250 hours of service for the employer during the 12-month period immediately preceding the leave; and
  4. Works at a location where the employer has at least 50 employees within 75 miles.

Employees who meet all of those criteria may take up to 12 work weeks of leave in a 12-month period for any of the following reasons:

  • The birth of a child or placement of a child with the employee for adoption or foster care;
  • To care for a spouse, son, daughter, or parent who has a serious health condition;
  • For a serious health condition that makes the employee unable to perform the essential functions of his or her job; or
  • For any qualifying exigency arising out of the fact that a spouse, son, daughter, or parent is a military member on covered active duty or call to covered active duty status.

If an employee is eligible and uses FMLA leave, the employee must be restored to their original job or an equivalent job with equivalent pay, benefits, and other terms and conditions of employment. Like all employers, cannabis employers cannot punish employees for using FMLA leave.

State Family Leave Acts

Many states, including Oregon, Washington, and California, where recreational marijuana has been legalized, have state family leave acts that are substantially similar to the FMLA.

The Oregon Family Leave Act (OFLA) applies to employers with at least 25 or more employees working in the state of Oregon. Oregon employees become eligible for OFLA leave after 180 days of employment if they averaged 25 hours per week during the 180-day period. OFLA allows eligible employees to use OFLA leave for the employees own serious health condition; a family member’s serious health condition; the birth or adoption of a child; the non-serious health condition of a child requiring home care; and bereavement leave for a family member. If an employee qualifies for both FMLA and OFLA leave, the leave runs concurrently, meaning the employee still only gets 12 weeks of protected leave. Employers are not required to pay employees for the leave under either act.

The Washington Family Leave Act (WFLA) mirrors the FMLA. Employers are covered if they employ more than 50 employees in Washington and employees are eligible under the same requirements as FMLA.

The California Family Rights Act (CFRA) allows eligible employees 12 weeks of leave in a 12-month period. CFRA kicks in for employers with at least 20 employees within a 75-mile radius. Similar to FMLA, to be eligible, employees must have worked at least one year and worked at least 1,250 hours for the employer.

Cannabis companies continue to grow and need to be aware of laws like the FMLA and their state equivalent. Cannabis companies should have a leave policy that meets the requirements of the FMLA and the state equivalent in their employee handbook. It’s best to have an expert familiar with the laws draft a leave policy.

Age Discrimination Laws

Federal ADEA

Federal and state age discrimination laws vary greatly, so it is important to know both the federal requirements and the state requirements. Both will apply to your cannabis business. The Federal Age Discrimination in Employment Act (ADEA) only applies to employers who employ at least 20 employees. The ADEA only protects employees over the age of 40. Under the ADEA, employers are prohibited from discriminating against employees in any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, benefits, and any other term or condition of employment.

Employment claims under the ADEA typically arise when younger employees are frequently promoted over older employees or when an employee is terminated and replaced by a younger person for the same position. So if your cannabis business has at least 20 employees and some of those employees are over the age of 40, be careful!

State Age Discrimination Laws

Oregon

Oregon’s anti-discrimination statute is one of the broadest in the country. Unlike the federal ADEA, the Oregon statute applies to any employer who employs at least one person. Further, the Oregon statute protects all employees 18 and over. Like the federal ADEA, the Oregon act prohibits employers from taking adverse employment actions against employees based on their age. Employers are allowed to set bona fide occupational qualifications necessary for the normal operation of the employer’s business. An example of a lawful bona fide occupational qualification would be cannabis companies refusing to hire anyone under 21.

As previously discussed, Oregon recently passed equal pay legislation. The equal pay legislation extends to pay discrepancies based on age. Employees performing substantially similar work must be paid the same, regardless of their age, unless one of the exceptions described in the act is met. Age is likely to play a big role in the equal pay legislation since older employees likely have more experience and earn more than new hires in the same position.

Washington

Washington’s anti-discrimination statute has similar parameters to the federal ADEA. The Washington statute applies only to employers with at least eight employees and prohibits discrimination against employees aged 40 and over. Like the ADEA, all employers, including cannabis employers, are prohibited from taking adverse employment action against an employee because of that employee’s age.

California

California prohibits employers with at least five employees from discriminating against employees aged 40 and over. Like the other states, employers are prohibited from discriminating against employees in any aspect of employment, including, hiring, firing, pay, job assignments, promotions, layoff, training, benefits, and any other term or condition of employment.

Age discrimination lawsuits can come with hefty awards. It is important to know the local and federal statutes and even more important to include an anti-age discrimination statement if your employee handbook. The best bets are to review pay practices, hiring, promoting, and termination practices to ensure you are complying with both federal and state requirements. Often times an outside expert can provide a neutral analysis of your practices and how to improve in weak areas.