Megan is an experienced employment law attorney who works in Harris Bricken's Portland office. Her practice is focused on employment advising, employment and labor litigation, and business litigation.

marijuana employment cannabis
This might not be true in California anymore.

Thirty states and the District of Columbia have laws that legalize marijuana for adult recreational use and/or medical use. Many of those states also protect employees’ off-work use of medical marijuana. However, some of those states, including California, Oregon and Washington, have statutes or case law allowing employers to terminate employees for off-work use of marijuana– even employees legally using it under the state’s medical marijuana laws. Oregon recently tried to pass legislation protecting off-work use of marijuana, but the bill failed to gain traction and fizzled at the committee level. California is the latest state to attempt to pass legislation to protect employee’s off-work use of medical marijuana. Let’s hope it happens!

California Assembly Bill 2069 (AB 2069), introduced last week, proposes to protect medical marijuana patients’ off-work use of marijuana. AB 2069 would amend California’s anti-discrimination statute by expanding the list of protected classes to include medical marijuana patients. This means that if an employer discovered that an employee or potential employee was a medical marijuana patient, or that the employee had tested positive for marijuana, it would be illegal for the employer to:

“refuse to hire or refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment or to bar or to discharge the person from employment or from a training program leading to employment or to discriminate against the person in compensation or in terms, conditions, or privileges of employment”.

California’s proposed bill is similar to other states that have successfully passed legislation to protect off-work use. AB 2069 also includes an important provision to protect employers who would lose money or licensing related benefits under federal law or regulations. Because marijuana remains a Schedule I substance under the federal Controlled Substances Act, companies that contract with the federal government must ensure a drug-free workplace. Under the proposed bill, such companies would not violate AB 2069 for terminating employee’s off-work marijuana use. This important safe harbor makes it seem more likely the bill will pass.

Note that AB 2069 would not provide protections for employees who use medical marijuana on the premises, or employees who are intoxicated while working, if company policy prohibits these things. Regardless of whether AB 2069 becomes law, it is important to be clear with your employees when it is acceptable to use marijuana and when it is not. Those rules, along with other employment-related requirements, must be spelled out in the cannabis business’s employee handbook.

Marijuana will continue to be legalized across the country in 2018. California has been on forefront of medical marijuana policy since Proposition 215 over 20 years ago, so it’s fitting that the Golden State may be next to protect off-work medical marijuana use by patient employees. AB 2069 is to be heard in committee next month, and we expect this bill to get some traction. Make sure to write your representative. And if you want to track this bill going forward, go here.

In the meantime, for more on employees and off-duty cannabis use, check out the following posts by our attorneys:


marijuana oregon cananbis
Follow the rules or risk having to close your doors–permanently.

Recreational cannabis is highly regulated. In Oregon, the Oregon Liquor Control Commission (OLCC) is the agency tasked with implementing and enforcing the recreational cannabis rules. The rules are complex and frequently change (see posts on that here, here, here, and here) meaning compliance can be difficult even with the best of intentions. For that reason, marijuana businesses should set up a comprehensive compliance plan to avoid violating OLCC rules. But what happens when a rule is violated?

When the OLCC determines a cannabis business or its employee has violated a rule, it issues what is known as a “charging document.” The charging document will list what rule has been violated and the penalty the OLCC plans to assess. The rules identify six categories of violations. The categories identify different levels of egregiousness and the OLCC, while not required to assess a penalty, has adopted guidelines for the kinds of penalties cannabis businesses can expect:

Category I: These are considered the most egregious violation and can result in license revocation. These violations include things like failure to verify the age of a minor, intentional false statements made to the OLCC, or intentional destruction or concealment of evidence

Category II: These are violations that create a present threat to public health or safety and include things such as being under the influence of intoxicants while on duty or failure to permit a premises inspection. These violations can result in a 30 day suspicion of a license or up to $4950 penalty.

Category II(b): This is a special category reserved for the unintentional sale of marijuana to a minor. It results in either a 30 day license suspension or up to $4950 penalty.

Category III: These violations create a potential threat to public health or safety and include things such as allowing a minor to enter a prohibited area or permitting sales by an employee without a marijuana workers’ permit. Category III Violations can result in a 10 day suspension or a $1650 fine.

Category IV: These violations create a climate conducive to abuses associated with the sale or manufacture of marijuana items and include operating a business after lawful hours for the sale of marijuana or removal of required signs and notices. These violations can result in a 7 day suspension or a $1115 penalty.

Category V: These are the least egregious violations and include things such as permitting marijuana items to be given as a prize or failure to notify the commissions of temporary closure of a licensed business. Category V violations can result in a 3 day suspension or up to a $495 penalty.

The OLCC determines the proper sanction by taking into account the egregiousness of the violation, the number of violations in the past two years, and any mitigating factors. Mitigating factors include: (1) making a good faith effort to prevent a violation and (2) extraordinary cooperation in the violation investigation, demonstrating the licensee or permittee accepts responsibility.

If you ever receive an OLCC charging document, it is important to understand that the inquiry has only just begun. The OLCC charging document is not a final finding. The business has the opportunity to contest the charging document and request an administrative hearing. If the charging document alleges a category I or a category II violation, a written answer must be filed along with the request for hearing. The written answer requires more than just a general denial and should specify specific defenses to the allegation in the charging document. It is absolutely critical to make this submission timely, and to be comprehensive and persuasive in reply.

Contested case hearings are similar to trials but not quite as formal. The parties are allowed to be represented by attorneys. Evidence can be submitted and witnesses can be called to the stand. Administrative law judges (ALJs) preside over the contested case hearing. After the hearing is completed, the ALJ will issue a proposed order. The proposed order will include a evidentiary background and findings about whether the cannabis business has violated a rule. The OLCC will review and issue a final order. The final order either adopting the ALJ’s findings or rejecting the findings. The cannabis business can appeal the final order to the Court of Appeals. The final order will include information regarding appeal procedures and timelines.

Rule violations can and do occur. Cannabis businesses should have comprehensive plans in place to stay in compliance at all times. When a rule violation does occur, know that qualified attorneys can help you navigate the administrative hearing process.

employee marijuana cannabis
Employee or contractor? Make sure you get this question right.

We receive a lot of questions regarding employment relationships versus independent contractor relationships in the marijuana industry. Independent contractors are an excellent way for cannabis businesses to bring on individuals or companies with specialized skills to perform services or provide goods. The trick is making sure the person or company you hire will actually be viewed as an independent contractor by relevant state agencies, the IRS, and the new hire themselves. If not, you could be headed for trouble.

When done correctly, independent contractor relationships provide important benefits to both parties. Generally, employers are not responsible for independent contractors. This means that the employer does not have to worry about payroll taxes, wage and hour laws, and a myriad of other employment laws. Whether an employment agreement or an independent contractor agreement is created becomes significant when compliance with the law is in question. Not properly entering into an independent contractor agreement can cost employers a lot of money defending the relationship, and ultimately, in monetary civil penalties if there has been a violation of laws. An independent contractor relationship should not be created on the fly, and instead should be reduced to written contract drafted by a specialist.

The distinction between independent contractors and employees is not always clear (take the case of Uber drivers, for example). Courts typically examine multiple factors in order to determine if an employment agreement or an independent contractor agreement was entered into — regardless of what the parties actually called the agreement. Here are a six of the big considerations: (1) the employer’s right to control; (2) the furnishing of equipment; (3) the method of payment; (4) the right to fire; (5) economic independence of the individual; and (6) the character of the person’s work and the business. No one factor is controlling, and the court will look at the totality of the circumstances to make a decision.

The Right to Control

If an employer controls the manner and means by which the results of work is accomplished, it is more likely an employment relationship is entered into. For example, let’s say a cannabis processor contracts with a cannabis producers to supply a certain type and quantity of product. If you require the grower to grow at a certain location, use a certain type of equipment, and direct how to cultivate, then you are controlling the way the grower fulfills the agreement. Under this scenario, the grower is most likely an employee rather than an independent contractor. However, if the grower has control over these factors, he or she is an independent contractor.

Furnishing of Equipment

Using the same example above, if you contract with a grower but supply all of the equipment to grow and cultivate, it is more likely the grower is an employee rather than an independent contractor. The bottom line is that independent contractors should have their own equipment and tools to complete the services.

Method of Payment

Independent contractors are typically paid a lump sum. Employees are typically paid hourly or salaried and paid at regular intervals. Independent contractor payment structures should be distinct and different from that of employees.

The Right to Fire

Employer’s have the right to terminate at-will employees at any time for any reason, as long as the reason is non-discriminatory. Independent contractor agreements should include terms for ending the relationship, or have a termination date in place.

Economic Independence

Employees typically rely on one employer for income. Independent contractors usually obtain their income from multiple places. Using the grower example again, if the grower’s only income is from your dispensary, it is more likely the grower is an employee rather than an independent contractor.

Character of the Person’s Work

If the individual’s work is distinct from the services the employer supplies, it is likely the individual is an independent contractor rather than an employee. For example, if you hire an individual to serve as a budtender in your retail store, it is more likely they are an employee rather than an independent contractor, because a budtender is central to a retail store.

Independent contractor relationships can be an important and useful tool in your cannabis business. They should not be looked at as a way to avoid compliance with employment laws or liability, however, or to avoid any other law or regulation. Courts and regulators will see through a mere title of “independent contractor.” Comprehensive agreements outlining expectations and creating protections for cannabis businesses should be used any time an independent contractor relationship is considered.

employment cannabis marijuana
One of the most important books your cannabis company can have is an employee handbook.

The cannabis industry continues to grow. Each year we see additional states legalize recreational marijuana. Along with more legalized weed, comes more cannabis employees. And more employees means more employment litigation.

We recently hosted a litigation webinar where I spoke about employment litigation and ways to protect your marijuana business. One of the tools I mentioned was documentation. When it comes to that, one of the most important documents your cannabis business can have is an employee handbook. This is true whether you have one employee or 100.

An employee handbook plays many roles. This post will discuss some of the more important reasons to have a comprehensive employee handbook.

Communication and Orientation

An employee handbook serves as an important communication tool between employees and employers. A well drafted employee handbook will contain a mission statement, along with the values, goals, and expectations of the company and its employees. This communicates a sense of belonging to employees and provides them with an understanding of the goal they are working towards achieving.

The handbook will also communicate the benefits to which employees are entitled as cannabis business workers (free pot is not one of them). A good handbook will explain to employees can question about company benefits. This will save you time as an employer because you won’t have to answer the same questions over and over.

Guidelines and Expectations

One important aspect of an employee handbook is that it creates a uniform set of rules for employees. Employees need to know what is expected of them and when. Employee handbooks should cover everything from attendance requirements to dress requirements and drug use policies. Handbooks should also lay out discipline that can be expected if these policies are violated.

Employee handbooks should provide guidance to employees when problems arise. The employee will know who to talk to and, if properly drafted, supervisors will know how to handle situations.

Legal Protection for Employers

The most important aspect—at least from a lawyer’s point of view—is the legal protections a well drafted employee handbook can provide. In most states, employer employee relationships are “at will”, meaning the relationship can be terminated at any point by either party, as long as there is no discrimination at play. An employee handbook makes it clear that the relationship is “at will” and that other agreements cannot change that relationship.

Employee handbooks also provide the basis for defense in a harassment claim. As previously discussed,  a valid defense to harassment claims if proof of an anti-harassment policy and a complaint procedure. Employee handbooks should outline both a policy and a complaint procedure.

Handbooks also provide protection in wrongful termination cases. Wrongful termination is a broad term used to describe cases brought by former employees against employers alleging the employee was terminated for some illegal reason—for example, discrimination. An employee handbook laying out attendance requirements can be used to show that an employee was terminated for violating a clear policy rather than for other, illegal, reasons. If an employer does not have a clear policy, it will be hard to prove the employee violated any such policy.

Employee handbooks can also serve as means to inform employees of required information. Both state and federal laws require employees be informed of their rights under certain acts such as Family Medical Leave Act. Every employee handbook should have an acknowledgement page to be signed by the employee, proving they were provided with the information.

Employee handbooks are not “one size fits all.” Each cannabis business is unique and has a different mission and goal. Further, employment laws are state specific and at times, location specific. There are many drawbacks to pulling a generic employee handbook from the web. A specialist familiar with the state and local laws should draft or review handbook, or the handbook could become a liability rather than an asset.

Handbooks should also be reviewed and revised at least once every two years. Many states, including California and Oregon, have seen an uptick in state employment regulations offering more protections to employees as of late. Laws change quickly and it could mean your employee handbook is out of date and non-compliant if it is not updated frequently.

marijuana california employment union
Labor Peace Agreements can save you from strikes.

We recently hosted a webinar discussing cannabis disputes and litigation. Over 1,000 people signed up to learn about the different types of litigation that can occur, how to avoid disputes, and, if necessary, how to prevail when litigation is unavoidable. During the presentation, I covered employment litigation and received quite a few questions. Several people were curious about labor peace agreements in particular, which are an important topic for the California cannabis industry. Because we ran short of time during the webinar, however, I will address those agreements here.

California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) requires adult use cannabis and medicinal cannabis licensees with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, a labor peace agreement. In other words, once your business reaches a certain size, you will not be able to operate in California without a labor peace agreement. But, what is a labor peace agreement?

In short, a labor peace agreement is an agreement your cannabis business enters into with a union that represents cannabis workers. The agreement includes obligations for both the union and the cannabis employer. This types of agreements are highly specialized.

As a preliminary matter, the cannabis employer must agree to remain neutral regarding unions and their representation of employees. This means the employer cannot make any statement opposing or advocating for unionization and cannot retaliate against any employee for discussing joining a union or disparaging unions. Employers are responsible for ensuring all managers and supervisors are aware of the neutral requirements of labor peace agreements.

Usually, labor peace agreements include a provision that requires employers to provide a list of the name and contact information of all non-supervisory employees. Employers typically are required to provide these lists at the request of the union, although most labor peace agreements include a limit on the frequency of the requests the union may make (i.e., no more than once a week). A labor peace agreement also grants the union the right to contact the cannabis business employees. However, this right must not disrupt normal business and productivity activities.

Unions also have obligations under Labor Peace Agreements. The union is required to be neutral in its communications with employees. The union cannot disparage the company and cannot paint the cannabis employer in a bad light to employees or to the public. The union must also agree to not disrupt or interfere with the employer’s operations or businesses, and cannot encourage or engage in a strike, slowdown, or picketing of the company.

In addition for individual obligations for both employer and the union, labor peace agreements also typically contain provisions related to collective bargaining if the cannabis employees decide to unionize. The collective bargaining agreement requires the parties to bargain in good faith, and it usually includes a provision about how to resolve an impasse if the parties cannot reach an agreement.

Labor peace agreements may seem intimidating or burdensome but they are nothing more than an agreement to work with your local union and allow the union access to your cannabis employees. In return, the union agrees to not disrupt your business practices in contacting employees, and agrees to not strike or to cause a labor strike.

Ultimately, when looking to enter into a labor peace agreement, your foremost concern should be entering into the agreement with a union that is easy to work with. The union should be open to your ideas and open to negotiations in the labor peace agreement. In the end, you will have options over what union you choose to enter the agreement with, but you will always need a labor peace agreement if your California cannabis business has more than 20 employees.

The U.S. cannabis industry employed roughly 165,000 workers as of last summer. By 2020 that number is expected to jump to 250,000 employees, which is more jobs than the expected jobs from manufacturing, utilities or governments sectors. It is no wonder that we have seen a significant uptick in cannabis industry employment claims over the past year or so in our Washington and Oregon offices. These claims can be very difficult to deal with for a business without basic employment safeguards, like a handbook and conscientious employment practices.

We have written two previous posts in this series on how to protect your marijuana business from the bad acts of your employees. You can find them here (negligent hiring and retention) and here (hostile work environment / harassment).  Today, we expand on the latter topic, providing some advice on how to investigate harassment claims.

employment cannabis marijuana
Investigating sexual harassment claims is critical. Pipe and magnifier, optional.

Ideally, sexual harassment would not occur in any business or professional seeing. Unfortunately, it does, and it is important your cannabis business is ready to properly investigate a sexual harassment claim when it arises. As previously discussed, a proper complaint procedure and investigation is important not only for legal protection against sexual harassment claims, but also to enhance your company’s credibility.

But how should an investigation be completed? While every investigation will be unique given the unique complaints and individuals involved, the procedures outlined below are good starting points to incorporate into your employee handbook and company practices, as appopriate.

Written Complaint

An employee may provide either a written or verbal complaint to the person designated in your sexual harassment policy. If the complaint was given verbally, the employer should request a detailed written complaint from the accuser. The complaint should include the name of the employee, the name of the accused, the unwanted actions by the accuser, the date, time and place of the actions, and any witnesses. If the original complaint was written, ensure it includes sufficient details to begin an investigation. A request for additional information should always come with an assurance of confidentiality and that the information will only be used for the purpose of investigating the complaint.

Assign an Investigator

After a complaint is received, an investigator should be assigned. A good investigator will objectively investigate the complaint without bias. Sometimes the investigator can be an existing employee of the company, such as a human resources manager or person previously designated as an investigator of sexual harassment complaints. Sometimes, in smaller cannabis companies, there simply is not an available existing employee that is able to objectively investigate the complaint. When that is the case, a neutral third-party investigator such as an attorney or a human resources specialist should be used. No matter what investigator you use, you must be able to trust their ability to keep the investigation and all employee information confidential.


An investigator should plan on interviewing the accuser, the accused, and any witnesses as soon as possible. Typically the employee should be interviewed first, followed by the accused and witnesses. Interview questions should be planned before the interviews begin and be based on the written complaint. The EEOC provides a list of suggested interview questions (Section V). Interview questions may need to be revised following the interviews and the investigator should be allowed to interview employees multiple times as more information is revealed. The interviewer should record the interviews and draft detailed notes of findings after each interview such as inconsistent statements and credibility.

Obtain Evidence

The investigator should be allowed access to the accuser and the accused’s personnel files. Further, the investigator should obtain any documentation of the harassment from the accuser, accused or witnesses. Examples of documentation may include voicemails, texts, emails, photos, or video surveillance.

Evaluate all the information

The investigator should refrain from making a decision based on any one piece of information. The investigator should evaluate all avilable information once the interviews are completed and all evidence is obtained. The investigator should prepare a written report of findings and whether the accused violated any company policies or committed harassment. The written findings should include support for the conclusions.

Make a Decision 

Sometimes the investigator has decision making power for the employer. Other times, for instance, if you hired a third-party investigator, the investigator does not have that power. Regardless, the investigators findings should be used to determine if corrective action is appropriate and if so, what that corrective action should be. Corrective action can include requiring the accused to take training classes, suspension, and even termination.


The investigator’s findings should be shared with both the accuser and the accused. The employer should also follow up with the accuser regarding the investigation process to determine if the accuser felt the investigation was thorough and unbiased. Following up with the employee can provide a couple of benefits. First, if the accuser has remaining concerns, you can address them. Second, feed back from the employee can lead to more thorough investigations later.

Document, Document, Document

The most important part of any sexual harassment investigation is documentation. Every sexual harassment complaint could turn into legal action in court. It is important to document everything in a sexual harassment investigation and complaint procedure. Documentation will provide evidence of the steps taken to investigate and remedy the situation. It will also prove you took the situation seriously and provide a basis for any actions taken as a result of the investigation.

cannabis marijuana employment tax
Look out for a change in tax deductions for employer provided benefits — at least for some businesses.

President Trump signed the Tax Cuts and Jobs Act (the “Act”) into law on December 22, 2017.  The Act contains several sections that will impact companies that work with cannabis businesses and provide important indications of where states might be going with taxes in the coming year. As for the Act itself, its sweeping provisions went into effect on January 1, 2018.

Note that much of the Tax Act’s deductions and credits won’t apply to cannabis businesses due to IRC 280E, but these deductions and credits are still important to many ancillary businesses that serve the industry, and which may not be subject to 280E (we recommend that anyone with questions as to where they fall seek advice from their CPA or cannabis tax attorney). If these credits and deductions prove to be popular we may see states enact similar changes that will directly affect cannabis business themselves.

On the employment front, many cannabis businesses obtain employees through staffing agencies. Those agencies should will be subject to these new tax deductions and credits. We may see an influx of agency recruits, or a decrease, depending on how the recruitment companies take advantage of these deductions and how the new laws remove deductions for benefits provided to employees.

Sexual Harassment Settlements

Prior to 2017, we didn’t hear much about sexual harassment in the workplace. One reason for this is because a majority of sexual harassment settlements contain nondisclosure agreements. A nondisclosure agreement typically prohibits the employee from discussing the sexual harassment suit, its result or even the fact that harassment was ever alleged. Currently, employers are allowed to take a tax deduction for settlements paid out for sexual harassment and sexual abuse, regardless of the terms of the settlement agreement. That’s finally changing.

Going forward, employers cannot deduct settlement payments related to sexual harassment if the settlement agreement contains a nondisclosure agreement. Employers can receive a tax deductions on sexual harassment settlements that do not contain nondisclosure agreements. Payments in sexual harassment suits can be huge–meaning the tax deduction can also be huge. (Bill O’Reilly paid $32 million to one female accuser.) This will force employers to carefully consider how sexual harassment suits are settled, which is a welcome change. States might follow suit. Plan now how to handle sexual assault cases so you don’t have to make this decision.

Paid Leave Credit

Paid family and medical leave is a significant benefit for cannabis employees. Providing paid family and medical leave can attract highly qualified employees and help retain those employees. In what has been described as the first step towards a “nationwide paid family leave policy”, the Act provides employers incentives to provide paid family and medical leave—admittedly in a very complicated fashion.

Employers can qualify for up to a 25 percent tax credit for providing paid leave for qualifying employees under the Family Medical and Leave Act (FMLA). Employers qualify for the credit by providing at least two weeks paid leave equal to at least 50 percent of the employee’s regular wages. At a minimum, employers will receive a 12.5 percent tax credit for providing paid leave. The credit incrementally increases based on the percentage of regular wages the employee receives. The paid leave credit is only applicable to employees who earn less than $72,000 and have been employed at least one year. Paid leave must be provided separately from vacation leave, personal leave, or other medical or sick leave.

The Paid Leave credit expires in 2019 unless extended by Congress. Some congressional members have suggested Congress is considering enacting separate legislation that requires paid leave. Paid sick leave requirements are already in effect in several states, including those with cannabis laws.

Pay attention to expenses related to paid leave, and consider whether this a feasible option for your cannabis business. Several states already have paid leave and more are likely to follow. If your state does not already have paid leave that applies to your cannabis business, you should assume they will enact similar tax incentives soon.

ACA Individual Mandate

The Act removes the Affordable Care Act individual mandate to purchase health insurance. At first glance, this does not seem like it would affect your cannabis business, but staffing agencies employing more than 50 full time employees. are required to purchase healthcare for their employees. Employees that are recruited to your cannabis business are considered employees of the staffing agency. The ACA’s individual mandate was designed to work with the employer mandate to provide health insurance. The employer mandate is still in place. Employers with 50 or more full-time employees are still required to provide health insurance.  Without the individual mandate, it is likely insurance premiums will continue to rise unless Congress acts to reform health care.

Further, given the mandates were designed to work together, there is a strong suggestion that Congress will start to undo the employer mandate. It will likely come in the form of fewer reporting requirements or a complete removal of reporting requirements. This means that staffing agencies may reduce the number of recruits they have out at a time to avoid the employer mandate of the ACA, meaning you will have less of a pool to pull from.

Oregon cannabis marijuana employment
More for the workers, less for the boss.

It’s 2018! That means your Oregon marijuana business will be subject to increased minimum wage requirements this summer. The new federal Tax Act has everyone considering money, so now is a great time to think about how the increase in state minimum wage will affect your business expenses.

In 2015 the Oregon legislature established a progressive series of annual minimum wage rate increases. The rate increases began on July 1, 2016 and continue through July 1, 2022. On July 1, 2023 the minimum wage rate will be indexed to inflation based on the consumer price index, which is a figure published by the United States Bureau of Labor Statistics.

The location of your Oregon cannabis business will dictate the amount of increase of the minimum wage for your non-exempt employees this July. (“Non-exempt employees” are employees who must be paid minimum wage and overtime, for any hours worked beyond 40 in a given week.)

Date Standard Portland Metro Nonurban Counties
July 1, 2016 $9.75 $9.75 $9.50
July 1, 2017 $10.25 $11.25 $10.00
July 1, 2018 $10.75 $12.00 $10.50
July 1, 2019 $11.25 $12.50 $11.00
July 1, 2020 $12.00 $13.25 $11.50
July 1, 2021 $12.75 $14.00 $12.00
July 1, 2022 $13.50 $14.75 $12.50
July 1, 2023 Adjusted annually based on the increase, if any, to the US City average Consumer Price Index for All Urban Consumers $1.25 over the standard minimum wage $1 less than the standard minimum wage

The Portland Metro rate applies to all employers located within the urban growth boundary. Metro has an Urban Growth Boundary tool to help determine if your cannabis business is within the Portland Metro area. The nonurban counties rate applies to: Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Marrow, Sherman, Umatilla, Union, Wallowa, and Wheeler. All other counties must pay the standard rate.

Both the state of Oregon and the federal government set minimum wage requirements. The federal minimum wage is and remains at $7.25. As you can tell, Oregon’s minimum wage is significantly higher than the federal minimum wage. When federal and state employment laws conflict, employers must apply whichever standard is most beneficial to employees. In the case of minimum wage, Oregon employers, including all cannabis businesses, must pay their employees minimum wage based on the Oregon rate. Start planning ahead.

Be thoughtful, and beware!

Sometimes, our clients are surprised to learn that a cannabis business can be held liable for the bad acts of its employees. This includes: 1) liability to the general public, and 2) state administrative sanctions, including license forfeiture. We previously discussed the importance of having a strong sexual harassment policy and action plan to avoid liability for harassment suits. But what about other bad acts committed by employees? Employers can be found liable under a few different tort theories. Today’s post will discuss the tort of negligent hiring and retention.

Negligent hiring or retention arises when an employee commits a bad act against another employee or a third party. The injured party, usually in addition to bringing suit against the bad actor, will bring a negligent hiring or retention claim against you, the employer. These claims are not always persuasive or even justified, but they can be stressful and expensive, so it is important to take precautions where possible.

To prevail on a negligent hiring or retention claim, the injured party must prove that the employer “knew or reasonably should have known” about the employee’s dangerous or untrustworthy character. For example, let’s say you are hiring a budtender who will have access to customer’s credit cards and will handle money. You find out that the applicant has a previous history of credit card fraud. If you hire that applicant and he or she later fraudulently uses a customer’s credit card, you could be held liable for the bad act of that employee. Even if you hired the employee without knowledge of the bad acts, but you easily could have found out about the bad acts, you could be held liable.

Using the same example, if you know the applicant has a history of credit card fraud, it does not mean you cannot hire the applicant. It just means that the applicant should not be placed in a position where they have access to money or credit cards. That may sound like common sense, but business owners often make these types of mistakes.

There are several easy measures you can take to ensure that you are aware of an applicant’s history and character. Pre-employment background checks can reveal past felony or conviction histories that will allow you to make informed hiring decisions. Pre-employment physicals can also be a good idea. If you are hiring for a position that required frequent lifting of heavy items, you want to ensure that the person can actually perform the heavy work. If they can’t, and they injure someone else because of it, your cannabis business could be liable.

If a pre-employment background check seems like too much, there are other less invasive ways to vet your applicants. Request references and follow up on past employment. This is an easy and efficient way to determine someone’s character and fitness for the position. Simply ask past employer’s if they would re-hire the person and if not, why not. This is not only a good idea to protect yourself from negligent hiring claims but also to ensure you are obtaining the best employees for your business. You can also validate academic credentials and places of employment to get a sense of truthfulness about your applicant.

Pre-employment background checks and thorough vetting are especially important for certain positions. Some states allow marijuana deliveries. A delivery driver is trusted with a lot: the safety of others on the road, the safety of the delivery purchaser, with product, and with money transactions. Ensuring a clean driving record could save you significant liability in the future.

Pre-employment background checks and general vetting can be done, as long as they adhere to “ban the box” requirements. Many states, including Oregon and California, are passing laws that prohibit employers from requesting information about past convictions prior to interviews or conditional job offers. If you are unsure about what questions you can ask, it’s better to reach out to someone knowledgable than to make a crucial error.

Finally, if you discover an existing employee has a history of endangering people in some way, consider whether it’s appropriate to move the employee’s position or to terminate the employment. Thorough investigation of applicants can not only protect you from negligent hiring claims, but also will result in selecting the highly qualified employees that fit your business model. After all, the last thing you want to worry about is risking it all due to someone else’s error.

California cannabis employment law
New year, new rules for California cannabis employers.

Beginning January 1, California employers with five or more employees will be prohibited from asking about an applicant’s conviction history and cannot consider an applicant’s criminal history until after a conditional job offer has been made. A conditional job offer is an offer made contingent on the completion of a background check. Only after the conditional job offer is made, can an employer inquire about conviction history.

This all holds true for cannabis businesses as well. Do not ask a potential employee about criminal history until after the conditional job offer has been made.

If criminal history turns up after the conditional job offer is made, the employer can rescind the job offer, but only after performing an individualized assessment. An individualized assessment requires the employer to consider:

  • the nature and gravity of the offense and conduct;
  • the time that has passed since the offense or conduct and completion of the sentence; and
  • the nature of the job held or sought.

If, after individualized assessment the employer decides the conviction history disqualifies the applicant from the position, the employer must provide written notice of its preliminary decision to withdraw the job offer.

And what is required in the “preliminary notice,” you may ask? That notice must name the disqualifying conviction or convictions, contain a copy of a conviction history report (if any), and notify the applicant that he or she has five business days to respond to the preliminary decision with evidence challenging the accuracy of the conviction record, or evidence of rehabilitation or mitigating circumstances. If the applicant informs the employer within five business days of an intent to respond, the employer must provide five additional business days before making a final decision. It’s quite the process.

Ultimately, if the employer decides to disqualify the applicant based on the conviction history, the employer must also notify the applicant of the final decision in writing and notify the applicant of his or her right to file a complaint with the Department of Fair Employment and Housing. Presumably, the landing page for that will be here.

The big takeaway here is that before you begin hiring for your California marijuana business, it is important to review your job applications and ensure they do not contain any questions regarding criminal history. If you plan to conduct job interviews, review your standard questions to root out any items about criminal history there as well. And then follow the job offer process to a tee.