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.

Interviews

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.

Follow-Up

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.

Oregon Cannabis Labor LawsThe Oregon legislature enacted several significant labor and employment laws in 2017. Some of the laws have already gone into effect while others will become effective as of January 2018. This post discusses several of the new laws that will likely impact your cannabis business.

OSHA Penalties for violations increasing

Senate Bill 92 allows the Oregon Department of Consumer and Business Services (DCBS) to increase civil penalties for any violation of the Oregon Occupational Safety and Health Act. The act removes the previous $7,000 cap on serious violations and repeat or willful violations. DCBS can assess a civil penalty up to the maximum penalties allowed under federal OSHA. This means, every time federal OSHA civil penalties increase, DCBS has the power to assess those same penalties without state-level legislation or rule changes. Review your workplace safety standards to ensure your cannabis business is compliant with Oregon OSHA before January 1, 2018, or you could face hefty penalties.

Oregon Paid Sick Leave

Oregon passed a comprehensive paid sick leave act in 2015. The act was confusing and employers found it difficult to apply. In 2017, the Oregon Legislature amended the 2015 act to clarify accrual requirements. For more information on the Oregon paid sick leave act, check out our blog post on that here.

 Changes to EITC Notices

In 2017 the Oregon Legislature passed Senate Bill 398 requiring employers issue Earned Income Tax Credit (EITC) notices. Employers are required to provide a written annual notice to each employee about state and federal EITC. The notice must be sent by regular mail or e-mail, contemporaneously with federal form W-2. BOLI issued template notice language is available here.

Fair Work Week Act

The Fair Work Week Act only applies to retail, food service, and hospitality employers with 500 or more employees worldwide. If you are one of the few cannabis businesses to which this applies, you must:

  • Provide good faith estimates of your employees’ work schedules seven days in advanced
  • Provide predictability pay when schedules change
  • Provide a right to rest between shifts
  • And provide extra compensation for hours worked when there has been fewer than 10 hours between shifts.

Pay Equity Act

The Pay Equity Act went into effect on October 6, 2017. This act extends equal pay protections to people in protected classes, including race, color, religion, sex, sexual orientation, national origin, marital status, disability, age, and veteran status. The Pay Equity Act is sweeping legislation that could negatively impact your cannabis business if you aren’t compliant. For more information about how to comply with this act, see our blog post here.

False Employment Records

It may seem obvious, but don’t falsify employment records and don’t force employees to do so on your behalf. Beginning January 1, 2018, employees have a private right of action if they are compelled, coerced, or otherwise induced by their employer to create, file or sign wage and hour documents the employer knew to have been false.

 

Ignore harassment complaints and face liability.

If you have a successful cannabis business, you likely have employees. Whether you have a few or many employees, your cannabis business can be liable for the actions of those employees. This post (the first in a series) will explore the various ways your cannabis business could be liable for the actions of your employees and the ways you can protect against such liability.

We recently discussed the importance of your cannabis business having a sexual harassment policy. A sexual harassment policy is important to establish a workplace that is safe for all employees but it is also an important tool to protect your cannabis business from liability for sexual harassment claims.

There are two types of sexual harassment: Quid pro quo and hostile work environment. Quid pro quo harassment is committed when some type of employment benefit or employment decision is made contingent on sexual advances or favors. Examples of quid pro quo harassment are when a supervisor fires an employee after the employee refuses the supervisor’s sexual harassment or if the employee does not receive a deserved bonus after refusing sexual advances. Only supervisors can commit quid pro quo harassment. Employers are automatically liable for quid pro quo harassment that results in a tangible job detriment.

A hostile work environment occurs when there are frequent or pervasive unwanted sexual comments, advances, requests, contact, conduct, or other similar conduct. Any employee can create a hostile work environment. Unlike quid pro quo harassment, employers are not automatically liable for employee actions that result in a hostile work environment. An employer is not liable if it can prove that it (1) exercised reasonable care to prevent the sexual harassment, (2) remedied the harassment and (3) that the aggrieved employee unreasonably failed to take advantage of those preventive and remedial measures.

An employer can demonstrate reasonable care to prevent sexual harassment by having a comprehensive non-harassment policy and complaint procedure in place. Merely having the policy in place is not enough. The employer must actually follow the policy. For instance, if the employer has a complaint procedure policy that requires employees to report the harassment to a specific person but that person is never available, the complaint procedure is not reasonable.

The employer must also have taken remedial action once it knew of the harassment. Remedial action includes a comprehensive investigation into the allegation and disciplinary action to ensure the harassment stops. If these procedures are in place, but the aggrieved employee unreasonably failed to take advantage of the preventive and remedial measures, an employer may not be liable for the alleged harassment.

If an employer knew or reasonably should have known about harassment, it can be found liable even if the employee victim does not follow the complaint procedure. For example, if a supervisor or someone else with decision-making power views an employee harassing another employee and does not investigate further, the employer may be liable for the bad acts of the employee.

The bottom line is that your cannabis business should create a strong no-harassment policy and complaint procedure and carefully follow it. You also should perform investigations when sexual harassment complaints arise and take disciplinary action as necessary. You cannot control the actions of your employees at all times, but you can take steps to protect your cannabis business from the bad acts of your employees. For more on drafting a strong anti-harassment policy and following the policy, view our post here.

 

Avoid wage and hour violations or be shocked by the penalties assessed.

We have written recently about labor expenses related to cannabis businesses (here and here) and litigation (here, here, here and here). Though litigation and labor expenses are a part of doing business these days, there are things you can do to limit expenses and to avoid certain types of litigation. The case of Oregon’s Legacy Emanuel Medical Center provides an important lesson to cannabis business owners on how to do that.

Beginning in 2015, Legacy Emanuel employees began filing wage and hour complaints with the Oregon Bureau of Labor and Industries (BOLI), contending the hospital was not accommodating employee breaks, such as unpaid lunch breaks and paid shorter breaks throughout the day. BOLI launched an investigation and discovered over 4,400 meal and rest period violations for the hospital between 2015-2017 alone. BOLI discovered some employees had not been granted a break for their entire tenure with the hospital—up to 18 years in one nurse’s case.

Oregon BOLI did not hold back against Legacy and fined the hospital $276,680 for the violations—the largest assessment of civil penalties in the agency’s history. These penalties might be the beginning for the health care provider as BOLI has launched an investigation into Legacy’s other facilities throughout Oregon.

BOLI made several important findings during its investigation that are important to complying with wage and hour laws. First, it is important to note that Oregon wage and hour laws require employers provide 30-minute unpaid lunch breaks to any non-exempt employee who works more than six hours and paid 10-minute breaks for every four hours worked. BOLI found that though Legacy was encouraging its employees to take breaks, it was not actually providing its employees the means to do so. Specifically, employees did not have someone providing them with relief coverage during break times and therefore they did not take a break or the employees were interrupted with work during their breaks. BOLI found these practices violated wage and hour laws.

In whatever state you are operating your cannabis business, wage and hour violations are easy to avoid if you know the requirements. As Legacy Emanuel proves, egregious violations can come with a hefty civil penalty. Your job as a cannabis business owner is to make sure you provide your non-exempt cannabis employees with meaningful breaks. In other words, ensure your employees have coverage if necessary and have somewhere to go where they will be uninterrupted by work. If an employee is interrupted by work during one of their legally required breaks, the break no longer counts as the required break. Complying with wage and hour requirements can save you a lot of money in the long run.

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.