oregon cannabis salesperson representative

Outside sales people can be a great tool to sell your cannabis product. They may be invaluable to your company. In Oregon, outside sales people may be exempt from minimum wage and overtime requirements if certain requirements are met. Lately, we’ve seen more and more Oregon marijuana companies start working with outside sales people (sometimes called a “sales representative”, “account representative”, etc.) in order to get a leg up in the highly competitive Oregon industry.

As with any sort of employment-adjacent relationship, working with outside salespersons is covered by administrative rules, in this case through the Bureau of Labor and Industry (BOLI). As such, OAR 839-020-0005(4) defines an “Outside Sales Person” as:

an employee who is customarily and regularly engaged away from the employer’s place of business and the salesperson is employed for the purpose of making sales or obtaining orders or contracts for services or for use of facilities for which a consideration will be paid by the client or customer, and the person’s hours of work spent engaged in activities other than sales does not exceed 30 percent of the hours worked in the workweek by non-exempt employees of the employer.

That’s a mouthful: Let’s look at how that might work in practice. A producer could have an employee that travels to processors, wholesalers, or retail stores to induce them to buy the producer’s product. The employee may provide samples to the prospective buyer in accordance with Oregon Liquor Control Commission (OLCC) rules, and induce them to enter into a contract to purchase the producer’s flower. If the employee is performing this type of work, outside of the producer’s farm a majority of the time, they may legally be qualified as an outside sales person. If so, minimum wage and overtime laws would not apply to the outside sales person.

For practical purposes, this means you would not be required to pay the outside sales person the current Oregon minimum wage of $10.75 per hour, nor would you be required to pay the sales person time and half for when the person works over 40 hours in a week. However, if you employ an outside sales person, you shouldn’t take this as permission to pay them less than the current minimum wage. The exemption exists for outside sales persons because they are typically paid commission wages. Commission wages is typically a percentage of sales. If an outside sales person is unable to enter into enough contracts to obtain minimum wage based on their commission status, the exemption is there to protect employers from having to supplement their wages to ensure they are receiving minimum wage.

Because we are talking cannabis, things are more complicated, of course, especially where a cannabis employer chooses to pay an employee commission wages instead of hourly wages. Under OLCC rules, any employee that receives commission payments is considered a person with a “financial interest” in the business. Persons with a financial interest in a cannabis business must be disclosed to the OLCC, and in certain circumstances, the OLCC may require the person to undergo a background check.

What the take-away from this information? An outside sales person can be a great employee to have as a cannabis business in Oregon. In certain circumstances, you may not be required to pay the employee minimum wage, and instead, create a commission structure for the employee’s wages. However, before this is done, the employee should be disclosed to the OLCC as a person with a financial interest in the business. If you are ever unsure if an employee qualifies as an outside sales person or needs to be disclosed to the OLCC, it’s always best to consult an attorney before making any changes that could have legal consequences. And it’s very important to have the scope of the relationship in writing, in order to protect your business from BOLI and other claims.

This series of posts has been exploring Oregon Bureau of Labor and Industries (BOLI) proposed rules implementing Oregon Equal Pay Act and how it will affect cannabis businesses. Last week, I discussed what “work of a comparable character” means. The week before that, I explored what compensation is. This week, I’ll dive into the systems employers can implement to pay employees doing work of a comparable character different compensation.

The Oregon Equal Pay Act prohibits employers from paying employees performing work of a comparable character different compensation unless the entire compensation differential is based on a bona fide factor related to the position in question. The statute and rules only allow employers to consider certain “bona fide factors.” Employers may pay employees differential wages for work of a comparable character if it’s based on: 1) a seniority system; a merit system; a system that measures earnings by quantity or quality of production; 3) workplace location; 4) travel requirements; 5) education; 6) training; and 7) experience. Let’s unpack these a little bit.oregon marijuana equal pay

A seniority system is defined as a system that recognizes and compensates employees based on length of service with the employer. A seniority system should be applied consistently. Meaning, If Budtender A is hired at $14 per hour and is raised to $16 per hour after two years of employment, Budtender B should receive the same raise after two years of employment.

A merit system provides for variations in pay based upon employee performance as measured through job-related criteria. BOLI has provided an example of “a written performance evaluation plan or policy that measures employee performance using a set numerical or other established rating scale.” An employer should use such performance evaluation to determine employee pay rates.

A system that measures earnings by quantity or quality of production include piece rate work. So for example, you could pay joint-rollers a certain amount for each joint rolled. An employee who rolls more joint would be paid more.

Work place location can be a consideration for differential wages. When determining if workplace location should factor into employee’s wages, the employer should consider: cost of living; desirability of worksite location; access to worksite location; minimum wage zone; or wage and hour zones.

Employers can also consider necessary and regular travel. This does not include consideration of normal travel between home and work.

When considering education, training, and experience, employers should consider substantive knowledge acquired through coursework, experience in the job field or trainings attended.

The rules require employers show a “devised coherent, consistent, verifiable and reasonable method.” This means more than an ad hoc decision to pay one budtender more than another. Instead, employers should have written policies describing how it pays its employees. This will require work—but in the long run could save you from BOLI penalties or a civil lawsuit from an employee (which is happening more and more in the industry as of late).

If you need assistance drafting compensation plans consult an attorney or a certified human resources specialist.

equal pay oregon marijuana employmentIn 2017 Oregon passed sweeping Equal Pay Legislation. Towards the end of August, Oregon Bureau of Labor and Industries (BOLI) issued draft rules implementing the Oregon Equal Pay Act. This series of post is exploring those new rules and how they will affect cannabis businesses. In my last post, I unpacked the definition of “compensation” under the Equal Pay Act and the proposed rules. This week I’ll discuss “work of a comparable character.”

The Oregon Equal Pay Act prohibits employers from paying wages or other compensation to “any employee at a rate greater than that at which the employer pays wages or other compensation to employees of a protected class for work of a comparable character.” To put it simply, cannabis businesses need to pay employees doing the same work the same pay. But what is “work of a comparable character?”

Work of a comparable character is not determined simply by job title alone. Two cannabis workers who have the same job title but perform different tasks are not necessarily performing “work of a comparable character.” Similarly, two cannabis workers that perform essentially the same tasks but have different job titles may be performing work of a comparable character.

According to the BOLI draft rules, to determine if different jobs constitute “work of a comparable character” the employer must consider whether the jobs require “substantially similar knowledge, skill, effort, responsibility, and working conditions.” No one factor is determinative. Meaning, an employer should balance the factors against each other to determine if employees are performing the same work and therefore should be receive equal pay. The proposed BOLI rules further define each factor.

  • Knowledge. When considering whether two jobs require similar “knowledge,” the employer should consider whether the jobs require similar education, experience, or training.
  • Skill. Things to consider to determine if two jobs require the same “skill” include the ability, agility, coordination, efficiency or experience required to perform the job.
  • Effort. Considerations to determine the “effort” of a job include the “amount of physical or mental exertion needed; amount of sustained activity; or complexity of job tasks performed.”
  • Responsibility. To determine if responsibility of two positions are “similar,” an employer should consider the “accountability, decision-making discretion, or impact of an employee’s exercise of their job functions on the employer’s business; amount, level, or degree of significance of job tasks; autonomy or extent to which the employee works without supervision; extent to which the employee exercises supervisory functions; or extent to which an employee’s work or actions expose an employer to risk or liability.
  • Working conditions. Finally, to determine if employees are working in similar “working conditions” an employer should consider the “work environment; hours; time of day worked; physical surroundings; and potential hazards.”

Determining how to pay your employees is not an easy task. The Equal Pay Act, while it has good intentions, may make that task even more difficult. Regardless, now is the time to analyze how you are paying your cannabis employees. Now is the time to look at the jobs that are being performed, identify work of a comparable character, and adjust wages accordingly. If you’re unsure whether two workers should be receiving equal pay, you should contact an employment attorney.

The Equal Pay Act pay provisions are effective on January 1, 2019. Again, now is the time to ensure compliance before BOLI starts handing out penalties next year.

oregon marijuana equal pay

Back in 2017, the Oregon legislature passed equal pay legislation prohibiting employers from asking applicants about compensation history. The law is known as the Equal Pay Act. This law, like other employment laws, applies to cannabis businesses. The equal pay provision of the law goes into effect on January 1, 2019. Oregon Bureau of Labor and Industries (BOLI) was tasked with drafting rules implementing the Equal Pay Act and recently released draft rules. This series of posts will unpack the new rules and explain the impacts on your cannabis business.

The Equal Pay Act prohibits employers from paying disparate compensation for work of a comparable character. The Equal Pay Act defines compensation as “wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.” What this means is each of these taken in total is an employee’s compensation. The proposed BOLI rules provide clarification to each of the words that make up “compensation.”

BOLI defines benefits as:

“the rate of contribution that an employee makes irrevocably to a trustee or to a third person under a plan, fund or program; or the rate of costs to the employer in providing benefits to an employee beyond what is required by federal, state or local law pursuant to an enforceable commitment to carry out a financially responsible plan or program which is committed to the employee affected including but not limited to the following: medical or hospital care; pensions on retirement or death; compensation for injuries or illness resulting from occupational activity; insurance to provide any of [the above]; unemployment benefits; life insurance; disability insurance; sick leave pay; accident insurance; vacation or holiday pay; or defraying costs of other bona fide fringe benefits.”

But what does this long-winded definition actually mean? As an example, if you have two extraction technicians that perform substantially the same work, you need to provide them the same benefits, otherwise you will be in violation of the equal pay laws. If you provide one health insurance, you need to provide the other the same level of health insurance. Etc.

Bonus, similarly has been given a long definition. Bonus is defined as:

“an amount that is paid or something of monetary or quantifiable value that is given to an employee by an employer in addition to the employee’s regular rate of pay, typically as a means of encouragement or in recognition of superior performance. Bonuses include but are not limited to the following: signing or job acceptance bonuses; attendance bonuses; loyalty bonuses; performance bonuses; and productivity bonuses.”

Again, if you provide a performance bonus to one extraction technician, you must provide a bonus on the same terms to any other extraction technician. A future post will discuss in detail exactly what the “same terms” means.

Finally, “salary” is defined as a predetermined amount constituting all or part of the employee’s compensation paid for each pay period of one week or longer. And “wages” means all compensation for performance of service by an employee for an employer. Your extraction technicians need to be receiving the same salary or wages otherwise, you’ll be in violation of the rules.

All of the above definitions need to be considered in total when setting compensation for your employees. Remember–work of a comparable character must be paid the same. And yes, a future post will explore what “comparable character” means.

The Equal Pay portion of the Equal Pay Act officially goes into effect on January 1, 2019. Now is the time to get familiar with the law and its implementing rules, and to ensure you are paying your cannabis employees in accordance with the requirements. If you are unsure, consult an attorney to review your pay practices. Non-compliance will come with hefty fines.

marijuana canada vancouver police
New rules at the Vancouver P.D.

Despite a few employee victories across the country, states continue to allow employers to punish employees for off-work use of marijuana—even if they are medical marijuana users. Oregon and California tried and failed to pass legislation to protect off-work use of marijuana. The federal government even tried to protect off-work use for medical marijuana. Despite the efforts, a majority of states with legal marijuana allow employers to terminate employee for off-work marijuana use. Our neighbors to the north, however, seem to be moving in the opposite direction.

Canada legalized the sale and use of marijuana earlier this year and is set to begin legal sales on October 17. It’s only the second country to fully legalize at the national level. Along with Canada’s progressive views on marijuana, comes progressive views on public employees’ use of marijuana. To wit, the Vancouver Police Department (“VPD”) has officially approved off-work marijuana use.

Initially, back in early August, the VPD proposed a 24-hour pre-shift period of abstinence. Instead of immediately accepting or rejecting the proposal, the VPD did its research. The VPD issued a report noting that cannabis can affect individuals to different degrees and THC remains in an individuals system despite the individual no longer feeling the effects. Specifically the VPD rejected any pre-shift abstinence period, finding that:

specifying a time frame can create an implicit approval that that this period of abstinence is all that’s required to ensure fitness for duty…This can lead to unnecessary labour conflicts where employees are fit for duty but have consumed cannabis within this time frame, or where employees are not fit for duty but mistakenly believe they are as they consumed outside this time frame.”

The VPD, much like it does with alcohol, will require officers to refrain from partaking prior to the start of their shift and present “fit-for-duty.” The VPD will also allow officers to possess cannabis during working hours so long as the substance is stored in its original, sealed, and unopened package.

What does this mean for the rest of North America? Not a lot exactly. Canada’s laws, rules, and policies have zero effect in the U.S. or elsewhere. But perhaps Canada’s policies will trickle down. U.S. lawmakers seem to be unable to draft a bill that garners enough support to protect employees’ off-work use of marijuana. Many states, like Oregon, fail because the marijuana remains a controlled substance federally. Unless marijuana is de- or rescheduled, states will continue to struggle to protect employees off work use.

At most, Canada’s legalization may show the United States a way forward. If Canada’s legalization goes smoothly, perhaps federal U.S. lawmakers will realize it can be done and will not continue to cleave to the failed policies of prohibition. At the state level, maybe jurisdictions like Oregon and California can look to Vancouver for guidance on protecting employees’ rights to use marijuana off-work.

VPD has taken a reasonable approach to off-work marijuana use: don’t show up to work impaired. This is the same standard we use with other substances, so why not marijuana? As Canada moves forward with its legalization, let’s hope the U.S. and its states look north for guidance in areas such as employee rights.

noncompete marijuana cannabis
Noncompetes aren’t always enforceable.

Marijuana has been legal in Oregon for about three years now. Employees with specialized skills are starting to jump ship and head to competitors. What do you do, as an employer, if a candidate for employment shows you a non-competition agreement they signed with their former employer? Typically, the former employer will go after the employee to enforce the non-competition agreement, but the former employer may seek an injunction against your business to prohibit you from hiring the candidate.  Is there a way around this? Perhaps.

First, you should consider whether the non-competition agreement is enforceable. As we’ve previously discussed, non-competition agreements in Oregon are highly disfavored. Non-competition agreements in Oregon are only enforceable if the employee was making at least the median income of a family of four at the time of termination and the employee was given the non-competition agreement at least two weeks prior to the commencement of employment, or if the non-competition agreement was entered into as a part of a bona-fide advancement with the employer. If these factors are not met, the agreements are not enforceable.

However, this does not automatically invalidate the agreement. The Oregon Court of Appeals ruled in Bernard v. S.B., Inc. that the employee must take affirmative steps to invalidate or void the obligation of the non-competition agreement. Meaning, they need to send a written notice to the former employer that they intend to void the agreement. Have an attorney review the agreement to determine if its enforceable in the first place, if it’s not, it may be easy for the potential employee to void the agreement and make it safe for you to hire the individual.

Second, some employees may have entered into non-competition agreements in other states. Those agreements may be entirely enforceable under choice of law provisions in the agreements. What then? It’s time for negotiation skills. Some companies may not want to deal with the hassle of attempting to enforce a non-competition agreement and may agree to sign a waiver releasing the former employee from their obligations under the agreement. Others may truly want to enforce the non-competition agreement and refuse to release the employee from the agreement. At that point, you may want an attorney on your side to review the non-competition agreement and see if there is a way to avoid violating it. Perhaps the agreement only prohibits the employee from working with edibles, but you plan on utilizing the employee’s skills to clone plants, for example. Further, an attorney may be able to work with the former employer to convince them to waive the non-competition agreement.

Non-competition agreements can be a good tool to protect your investment in your employees and to protect trade secrets. Alternatively, they can be a pain when you are attempting to hire. Whatever side you’re on, it’s always best to have an attorney on your side to review the agreement and ensure your company is protected to the fullest extent.

marijuana cannabis employment discrimination
Nice job by the court.

As a general rule of thumb, employers are not allowed to discriminate against employees with disabilities. Both federal and state laws provide this protection. This means that an employer cannot take an adverse employment action against an employee because of the employee’s disability. Again, this is a “general” rule of thumb: In the cannabis context, things are always a bit different.

Some states have passed legislation protecting medical marijuana users off work marijuana use. Employers in those states cannot terminate an employee or refuse to hire an applicant because of their off-work medical marijuana use. Historically, however, the big problem with these laws is that state and federal courts have readily determined the Controlled Substance Act (CSA) preempts state law, and that employers may terminate medical marijuana patients for off-work use. Recently, for the first time, a federal court sided with an employee who brought a claim against her employer for termination for off-work use of marijuana.

According to the lawsuit filed in Connecticut, Katelin Noffsinger is a registered medical marijuana user. In 2016, Noffsinger applied for a job with Bride Brook Nursing & Rehabilitation (“Bride Brook”). Bride Brook offered her the job contingent on passing a pre-employment drug test. Noffsinger informed her potential employer that she was a medical marijuana patient and likely would not pass the drug test. Noffsinger took the drug test which confirmed the presence of THC. Bride Brook rescinded its job-offer. Noffsinger brought a claim against Bride Brook alleging Bridge Brook had violated the anti-discrimination provision of the Connecticut Palliative use of Marijuana Act (PUMA). Bride Brook attempted to dismiss the case, asserting the claim was preempted by the CSA, the Americans with Disabilities Act (ADA) and the Food, Drug and Cosmetic Act (FDCA).

The federal court first addressed the CSA preemption claim. The Court held that the CSA did not prohibit employers from employing marijuana users. Meaning, if state law prohibited employers from discriminating against medical marijuana users, it would control.

The Court next determined that the ADA did not preempt PUMA because the ADA explicitly allows employers to prohibit illegal drug use at the workplace but does not authorize employers to take adverse employment action based on drug use outside of the workplace. Finally, the Court determined the FDCA does not regulate employment and therefore was inapplicable in the current case.

The Court did not rule on the substance of Noffsinger’s claim–meaning it has not determined if Noffsinger was discriminated under PUMA. That decision is still pending a jury trial.

The Noffsinger case is important. It’s the first case of its kind to determine that marijuana’s illegality under federal law does not bar an employment claim based on state law. State courts, such as the Oregon Supreme Court, have expressly held that the CSA preempts state medical marijuana laws—meaning employers in the State of Oregon, for example, may still terminate an employee for off-work marijuana use.

The decision in the Noffsinger case is not binding in other jurisdictions, but it could indicate a significant shift in federal courts’ view on medical marijuana. Perhaps this court’s sound reasoning will influence other federal judges to provide equal protections to medical marijuana patients until marijuana is de- or rescheduled under the CSA.

What’s in YOUR employee handbook?

Even if your company is fully compliant with all OLCC-mandated marijuana laws and regulations, you can still expose yourself to legal pitfalls if you aren’t just as strict keeping up with state and federal employment laws. While the rapid evolution of corporate cannabis is evident in the news alone, you may not realize that state employment laws are just as volatile — and there are a lot of them.

As a business owner, you should know how to navigate this multitude of regulations. We saw one company face the consequences of violating Oregon’s sick leave law earlier this year. OSHA could be just as serious if they find marijuana producers are not adhering to state agricultural safety standards. What can you expect with an employment audit? How does Oregon and Portland’s “ban-the-box” ordinance effect who and how you hire?

Harris Bricken employment lawyer Megan Vaniman will be leading a free presentation on employment law for cannabis businesses on October 11, 2018 from 4 to 5 PM PST, followed by a reception. OSHA and BOLI are the tip of the iceberg; Megan will dive deep into state and federal legislation that can prevent your business from succeeding if you don’t proceed with caution.

Both the event and reception will take place at Harris Bricken’s Portland office. Can’t be there in person? The content in this presentation will be recorded and distributed as a webinar at a later date. Further questions about the event can be sent to firm@harrisbricken.com.

RSVP for this event at our EventBrite today!

Want to study up before the event? In addition to the articles linked above, check out these past articles by Megan:

washington family medical leave cannabis

The Washington Family and Medical Leave Act (“WFMLA”) is getting some major changes beginning in 2019. Why does this matter to Washington cannabis businesses? Because all of those businesses, regardless of type or size, will be required to collect and pay premiums under the revised law beginning January 1. These companies will also be required to provide wage replacement for eligible employees beginning in 2020.

Last year, the Washington legislature became just the fifth state to approve paid family and medical leave. Paid family and medical leave is a statewide insurance program that will provide eligible employees with partial wage replacement while on qualifying leave. Paid family and medical leave will be paid from a state fund, funded by premiums collected by employers. Premium collection begins January 1, 2019. The premium is equal to 4% of an employee’s wages, and the burden is shared between the employer and the employee.

Like with FICA and federal income tax, the employer is responsible for collecting the employee’s portion of WFMLA tax through payroll. If you want to be a model cannabis business, the law allows employers to cover the employee portion of the premium. Note that employers with less than 50 employees are not required to pay their portion of premium, but must still collect the employee’s portion and remit it to the state.

Employees become eligible for paid family leave once they have worked 820 hours for a Washington-based employer during the previous year. Employees can take paid leave for their own medical condition, bonding with a child, caring for family members, and certain military-related events. Eligible employees can receive up to 12 weeks of wage replacement with a weekly minimum of $100 and a weekly maximum of $1,000. The amount of wage replacement the employee receives is based on the employee’s earned wages, the state median income, and other factors. Employees can begin applying for benefits on January 1, 2020.

But what about the paid sick leave marijuana employers are required to provide in Washington? The WFMLA does not affect the requirement for employers to provide paid sick leave to employees in Washington.  Paid sick leave, unlike paid medical and family leave, does not require the payment of premiums. Further, employees accrue at least one hour of paid sick leave for every 40 hours worked under the Washington sick leave law.

Cannabis businesses should get ready for the new premium assessments beginning January 1, 2019, and budget for those new costs now. If you’re worried about compliance, our cannabis business and employment attorneys here at Harris Bricken can help you formulate a plan to ensure you comply with WFMLA and related laws.

marijuana federal employment cannabis
Will the laws change for federal worker marijuana use?

Could the federal government protect the rights of federal employees to use marijuana in states where its legal?

Possibly. A bipartisan bill was introduced in Congress on July 28 proposing to protect federal employees’ personal and private use of marijuana in states where it is legal. Congressmen Charlie Crist (D-Fl) and Drew Ferguson (R-Ga) jointly introduced the “Fairness in Federal Drug Testing Under State Laws Act”, which would prohibit federal employers from denying employment or subjecting federal employees to adverse personnel action if they test positive for marijuana and live in a state where it is legal.

Today, because marijuana remains an illegal substance under the Controlled Substance Act, federal employees can be terminated or denied employment if they test positive for marijuana on a drug test (and many federal agencies require regular or periodic testing). The bill would not apply to individuals occupying or seeking positions requiring top-secret clearance (meaning, they could still be tested), and the bill would allow federal employers to terminate employees for being impaired at work.

The bill, while incredibly important for federal employees, could also significantly impact private employers in states with legal cannabis. A majority of states have some form of legal marijuana, either medical or recreational. However, many of those states still allow employers to terminate employees for off-work use of marijuana, even medical marijuana patients. Several states, including Oregon and California, have attempted to pass legislation protecting employees’ off-work marijuana use, but the bills have failed in committees or did not garner enough votes to pass. Thus, both Oregon and California currently have statutes and/or case law allowing employers to terminate employees for off-work use.

So why are the state proposals failing? One big reason is that they have not made exceptions for private employers who contract with the federal government. Private employers who contract with the federal government are required to have drug-free workplace policies in place—meaning they have to terminate employees for positive drug tests to maintain their federal contracts. If the Fairness in Federal Drug Testing law passes, it likely would extend to private employers contracting with the government. And if the federal law passes, states may have a clearer path to protecting off-work use.

It is also important to note that the state laws and cases permitting employers to terminate employees for off-work marijuana use rests on marijuana’s continued classification as a Schedule I controlled substance under the federal Controlled Substance Act. While the Fairness in Federal Drug Testing act would not change marijuana’s status as controlled substance, states would at least be able to rely on the federal government’s position that it will not fire employees for off-work use. It seems more likely that the states where marijuana is legal in some form would be successful in passing legislation protecting employees’ off-work use of marijuana.

It will certainly be interesting to see if the Fairness in Federal Drug Testing bill gains momentum in committee and in front of Congress. We will be sure to keep you posted for any movement on the bill after Congress returns from their August recess.