Are wage and hour claims against cannabis businesses on the rise in Oregon? It appears so. Last week we highlighted a wage claim filed against CNH Labs by a former employee. That post highlighted some of the consequences cannabis employers can face when they fail to pay employees. But what about liability for failure to pay executive employees, including employees who are still employed by the cannabis company? A wage claim filed by Sara Batterby against HFV Enterprises is a great example of the liability a marijuana company can face against its own president and executive employee.
Ms. Batterby is the president and an executive employee of HFV Enterprises, Inc. (“HFV”) an Oregon corporation formerly known as HiFi Farms, a prominent cannabis producer. Ms. Batterby’s position did not stop her from filing a wage claim against HFV in Multnomah County. She alleges an employment contract required HFV to pay her $2,000 every two weeks beginning in October 2017. According to the complaint, HFV made one $2,000 payment but has since failed to pay her any wages. Ms. Batterby’s claim requests $46,000 in unpaid wages, 9% interest until the wages are paid, and attorney fees and costs. If this lawsuit goes for any length of time, the attorney fees will likely be much higher than the claim itself.
Ms. Batterby’s wage claim is brought under ORS 652.120, which requires employers to establish regular pay days not less than 35 days apart. Violation of ORS 652.120 is a Class A violation punishable by a fine of up to $2,000 for each violation. This means that each payday HFV missed could be punishable by a $2,000 fine.
Ms. Batterby’s claim is unusual not because she is an executive employee, but because of what it does not allege. For whatever reason, the lawsuit fails to request penalty wages under Oregon’s minimum wage statute, and it fails to bring a breach of contract claim. If this case is not settled quickly, it would not surprise us to see an amended complaint by Ms. Batterby, covering these standard claims.
As we discussed in our coverage of the CNH Labs case, employers are required to pay employees minimum wage. Because Ms. Batterby was not paid anything in violation of the minimum wage statute, she likely has a minimum wage claim. Had she requested penalty wages for the company’s failure to pay her minimum wage, she may have been entitled to an additional 30 days wages as a penalty wage. A month’s wages at $10.25 and hour amounts to something like $2,460.
Ms. Batterby also claims she had an employment contract with HFV Enterprises. She likely could have supplemented her wage claim with a breach of contract claim against HFV Enterprises. A breach of contract claim would provide similar relief to Ms. Batterby, including at least 9% interest on the unpaid amount and possibly more if the employment contract included a provision for interest on unpaid wages, as many employment contracts do.
Employees are an essential part of any successful marijuana business. With employees comes exposure to liability. Wage and hour claims can come from any employee at any level and the penalties will depend on the type of violation, as the HFV and CNH cases have shown. The best way to avoid wage and hour claims is to ensure employees are being paid according to state laws. If you aren’t sure, have an outside expert come in and review your practices, from your cannabis-specific employee handbook on down. And if your company does face a wage and hour claim, it’s best to hire an experienced employment attorney to defend the claims and reduce the exposure.