Oregon cannabis employment law issuesIf you’re an Oregon cannabis business owner, you likely employ hourly employees entitled to either paid or unpaid sick leave. Oregon passed comprehensive sick leave legislation in 2015. To put it mildly, the legislation was confusing and employers were unsure how to properly implement its requirements. In July 2017, the legislature amended the act to clear up some of the confusion. This post is aimed to give you some understanding of how the Oregon sick leave laws apply to cannabis businesses that employ a variety of employees.

The Oregon sick leave law requires almost all Oregon employers to provide 40 hours of sick leave per year. Employers that employ at least 10 employees in Oregon (six employees if the employer has operations in Portland) must provide 40 hours of protected paid sick leave. Employers that employ less than 10 (six in Portland) must provide 40 hours of protected unpaid sick leave. Protected sick leave means the employee is permitted to be absent from work without disciplinary consequences or a reduction in benefits. If the sick leave is paid, the employee must be compensated at the employee’s regular rate of pay.

Employees are allowed to use sick time for any of the following purposes:

  • For the employee’s own or an employee’s family member’s mental or physical illness, injury or health condition, need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition, or need for preventive medical care;
  • To care for an infant or newly adopted child or newly placed foster child within 12 months after the birth or placement of the child;
  • Absences associated with the death of a family member;
  • Absences related to domestic violence, harassment, sexual assault or stalking;
  • To donate accrued sick time to another employee.

Although an employee can use the sick time for the above reasons, employers cannot ask for verification unless the employee takes more than three consecutively scheduled work days of sick time. The employer must pay for any costs associated with obtaining verification of the use of sick time.

There are two ways employers can award the 40 hours of sick time. Employers can either “front-load” the 40 hours at the beginning of the year by giving its employees all of the hours at once or they can require employees accrue the leave as they work. If an employer chooses the accrual method, an employee must accrue one hour of sick time for every 30 hours worked or 1-1/3 hours for every 40 hours worked. Employers can cap accrual at 40 hours or allow the employees to continue to accrue after the 40-hour milestone has been reached. Employers have to allow employees to accrue from the first day they begin working but may require an employee to have worked 90 days before using accrued sick time. Employees can carry over up to 40 hours of unused leave from one year to the next.  An employee may have up to 80 hours of sick leave in one year. An employer can limit actual time used to 40 hours per year.

Employers are required to maintain records of the hours worked, the paid sick time accrued and used by each employee, and provide quarterly written notification to each employee of the amount of accrued and unused paid sick time available for use.

As you can tell, there are a lot of moving parts involved with Oregon’s sick leave laws. For ease of accounting, it may be best to front-load your employees with 40 hours of sick leave at the beginning of the year (a year can be an annual period and does not have to be at the beginning of the calendar year). If you go with the accrual method you will need to track each of your employee’s hours and provide them with one hour of sick time for every 30 hours they work. For many of our Oregon cannabis clients — most of whom employ a variety of hourly and salaried employees — this is just too much work. Regardless of the method you choose for awarding sick time, you must at least quarterly give each of your employees with a written statement of sick time accrued and unused sick time available for use at least quarterly.

Cannabis employment lawyerFederal wage and hour laws apply to cannabis businesses as they would to any other business. Federal wage and hour laws are governed by the Federal Fair Labor Standards Act (FLSA). The FLSA requires employers pay overtime compensation to non-exempt employees who work more than 40 hours per week. Generally, employers are required to pay overtime wages to workers who earn less than $455 per week ($26,600 annually). The FLSA provides the minimum salary requirement for paying overtime. States are allowed to enact additional protections. If the state’s protection results in higher pay for the worker, the state protections are enforced over the FLSA. Many states have additional protections and you should always check your local jurisdictions to determine overtime compensation requirements.

In May 2016, at the direction of President Obama, the Federal Department of Labor (DOL) raised the salary threshold for overtime pay to $913 per week ($47,476). Meaning employers had to pay overtime wages to workers who were making less than $913 per week. The changes caused panic among employers and employees. Employers faced significant increased labor costs because employers would now have more employees eligible for overtime compensation. Employees were afraid employers would decrease their hours to avoid the new salary minimum.

Before the changes could go into effect, several states and business advocate groups asked for a preliminary injunction to stop the changes. A Federal judge granted the injunction on November 22, 2016 and the changes never took effect. The DOL appealed the decision to the Fifth Circuit, but recently asked the Court to stay the appeal to allow the current administration to pass new rules.

In July 2017, the DOL asked for public comment concerning the wage threshold limitation. The DOL received more than 14,000 comments. On October 30, 2017, the DOL confirmed new overtime rules were coming. It is expected the new salary level will be in the low $30,000 range.

If the projections are accurate, employers will be required to pay overtime wages to non-exempt employees making under $30,000. The increased minimum threshold salary will increase the number of employees eligible for overtime compensation. The expected changes are not as drastic as the ones passed in May 2016 but they may create additional labor costs—especially in retail businesses with hourly employees. Cannabis employers who employ hourly employees should evaluate their labor expenses now to determine if their risk for increased labor costs if the minimum salary threshold is increased. Employers should make a plan now to deal with increased labor costs, keeping employees happy, and keeping their cannabis business running smoothly.

Oregon cannabis employeesWant to know what a competing Oregon cannabis business is paying its employees? Don’t ask job applicants.

Oregon passed expansive equal pay legislation in 2017 and a key provision banning employers from asking applicants about past salary and compensation went into effect this month. The Oregon Equal Pay Act makes it an unlawful employment practice for an employer to seek the pay history of an applicant. Similar to the “ban the box” legislation (discussed here), Oregon employers can inquire about past compensation only after making a job offer that includes an offer of compensation. Employers are also banned from seeking compensation history from an applicant’s past and current employers and from screening applicants based on past salary.

Oregon cannabis companies should review their applications and standard interview questions to remove any questions about past compensation and if you work with a recruiting agency, you should make sure their screening processes comply with the law as well.

The Equal Pay Act also expands Oregon’s equal pay requirements by prohibiting disparate wages for work of a “comparable character” for members of a protected class. Protected classes include persons distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age. Work of a comparable character does not simply mean the same job title or similar duties. Instead, it requires an analysis of the knowledge, skill, effort, responsibility and working conditions the position requires. The law though does allow for unequal pay for the performance of work of comparable character if the pay difference is based on any of the following:

  • A seniority system
  • A merit system
  • A system that measures earnings by quantity or quality of production, including piece-rate work
  • Workplace locations
  • Travel
  • Education
  • Training
  • Experience

The equal pay provision does not go into effect until January 1, 2019. This allows employers time to assess their compensation practices and adjust wages as necessary. Employers are not allowed to reduce the compensation of any employee to comply with the law.

Once the law goes into effect, employees can file complaints alleging violations with Oregon Bureau of Labor and Industries and BOLI may award up to two years of lost wages. Beginning January 1, 2024, employees can bring civil actions against their employers. Courts can award lost wages, attorneys’ fees and costs, injunctive relief, compensatory damages (money awarded to a plaintiff to compensate for a loss), and punitive damages (money awarded to a plaintiff to punish the defendant). Employers can avoid compensatory and punitive damages by showing they completed an equal pay analyses within three years before the date the employee filed the action.

If you are an Oregon cannabis business with employees, there is plenty you can and should do now to bring your company in line with existing  laws and to set yourself up for compliance with future laws. First and foremost, evaluate your hiring practices and ensure you are no longer asking your job applicants about their pay history. If you have friends in the cannabis business, limit discussions about what they pay employees. In preparation for enactment of the equal pay provision, analyze your pay practices. Are your employees in comparable positions being paid the same amount? If not, ask yourself whether there is a bona fide reason for the pay disparity and if there is not, consider raising the wages of the person with the lower wages before the law goes into effect.

There many questions you should ask before hiring someone as a budtender, grower, or trimmer for your cannabis business—but Oregon recently passed several laws banning certain questions. Oregon Cannabis employment lawToday’s post will discuss Oregon’s, and specifically, Portland’s, “ban the box” ordinances.

“Ban the box”—named for the box on employment applications asking about criminal history—ordinances became popular in the United States between 2007-2009. In general, ban the box ordinances prohibit employers from asking applicants about their criminal histories before an initial interview. Oregon enacted ban the box legislation in 2016. This means employers cannot ask on a job application whether an applicant has a past conviction, but they are allowed to ask about past convictions during the interview process and to consider that information when making a hiring decision. Certain employers, such as those required by federal, state or local law to consider an applicant’s criminal history, are exempt. If you are not required to conduct a background check, assume you fall under Oregon’s ban the box ordinance.

The city of Portland takes the state ban the box legislation several steps further. The Portland ordinance, effective as of July 1, 2016, applies to any employer with six or more employees and to positions that require work within Portland for more than half of the employee’s time. Portland employers cannot ask an applicant on an application about conviction history and cannot ask about convictions during interviews. A Portland employer may only gain information about an applicant’s criminal history after making a Conditional Offer of Employment (COE). The Portland employer must offer the position to the applicant conditioned solely on the results of an inquiry into the person’s arrest or conviction history. If the inquiry reveals a criminal history, the Portland employer can only rescind the job offer after an “individualized assessment” is done to determine if the prior conviction is “job related to the position in question and consistent with business necessity.” This requires consideration of the nature and gravity of the criminal offense, the time elapsed since the offense took place, and the nature of the employment held or sought. Examples include rescinding a job offer made to an applicant for an auto-dealership who has a prior conviction for auto theft or an applicant who will be in charge of handling money and has a prior conviction for money laundering.

What happens if you decide to rescind the offer after learning about a past conviction? The Portland employer must notify the applicant in writing of its decision and identify the relevant criminal conviction on which the decision is based. The applicant then has the opportunity to file a complaint with the Oregon Bureau of Labor and Industries (BOLI).  If BOLI determines the employer violated the Portland ordinance, it can assess up to a $1,000 fine. The Portland ordinance also allows the city to bring an action against employers that have demonstrated a pattern and practice of violating the ordinance. In such cases, BOLI may assess a penalty of up to $5,000 for each violation.

The ban the box legislation is especially important in the cannabis field. Cannabis was legalized relatively recently and many applicants for positions with cannabis businesses have convictions for past possession, sales, or distribution of marijuana. If you ask about past convictions on the job application or in any way prior to the initial interview you are in violation of the Oregon ordinance. Be careful when requesting background information from applicants—even asking about unexplained employment gaps may be considered requests for conviction history. If you requested conviction information before the initial interview you are in violation of the Oregon ordinance even if the applicant was not offered an initial interview for another reason. If you are a Portland employer, you may only ask about conviction history after a COE is made. Remember—you can only rescind the job offer after an individualized assessment has been completed.