There are no shortage of employment laws related to cannabis businesses.

Cannabis businesses, as part of a highly regulated industry, have a lot of rules to follow. In addition to state regulatory rules, cannabis businesses have to follow a multitude of other state and federal laws specific to employment. Among these, the subset of wage and hour laws are particular, fact-specific, and can be some of the most difficult to comply with. Unsurprisingly, even the most sophisticated of cannabis business owners may be unaware of some of the more obscure wage and hour laws.

When it comes to cannabis employment matters, one of the questions I see most frequently relates to final paychecks. Like many states, Oregon has complicated laws surrounding final paychecks. Knowing the requirements and complying with them to a T can save money and expensive litigation. And we have definitely seen a recent uptick in cannabis litigation related to employment (see our posts on recent filings here and here).

To begin, timely payment of final paychecks in Oregon depends on how the employment relationship was separated. If an employer terminates an employee, or the employment relationship is terminated by mutual agreement, the final paycheck is owed at the end of the first business day after the termination. This means that if you plan on terminating someone, have payroll prepared to issue a check immediately.

If, on the other hand, an employee quits with at least 48 hours notice, the final paycheck is owed on the employee’s last day of employment. This may seem harsh, and it can definitely create some logistical headaches, but there is little wiggle room on this statutory requirement.

If an employee quits without 48 hours notice, things are a bit easier on the employer’s side. The final paycheck is due within five business days, or at the next regularly scheduled payday, whichever is sooner. If the employee’s time records are required to calculate the amount owed, and they are unavailable, the employer must pay the employee what it reasonably believes is owed. If the employee later provides the time records, the employer must issue payment for any remaining amount owed within five days of receipt of the time records.

Failure to timely pay a final paycheck comes with strict and hefty penalties. Penalty wages begin from the due date of the final paycheck. Penalty wages are calculated as the employee’s regular hourly rate for eight hours per day until paid or until legal action is commenced.  Penalty wages are tricky and continue even if you have paid the employee their regular wages.  For example, let’s say an employee quits with at least 48 hours notice. She is given her final paycheck three business days after she quits. Penalty wages began to accrue on her final day, but the final paycheck did not include penalty wages. Despite the fact that she was paid her final wages, penalty wages continue to accrue until the penalty wages are paid. Penalty wages continue for 30 days or until legal action is commenced.

Penalty wages only kick in if an employer willfully fails to timely provide a final paycheck. “Willfully” sounds like it requires intent by the employer to avoid paying the wages, but court cases make it clear that much less is required. In fact, Oregon courts only require that some sort of effort by the employer be shown to make the final wage payment. Without this showing, a court will find that the employer has “willfully” fail to pay final wages.

There is only one real way to avoid wage and hour lawsuits for your marijuana business: Ensure that your practices comply with the law. The ending of employment relationship can come with a lot of stress and potential litigation. Learn and comply with wage and hour laws to reduce exposure. If you are unsure if your practices comply, it’s best to have an outside expert like an employment attorney review your practices.

marijuana employment litigation
Wage violations are often litigated, even with executive employees.

Are wage and hour claims against cannabis businesses on the rise in Oregon? It appears so. Last week we highlighted a wage claim filed against CNH Labs by a former employee. That post highlighted some of the consequences cannabis employers can face when they fail to pay employees. But what about liability for failure to pay executive employees, including employees who are still employed by the cannabis company? A wage claim filed by Sara Batterby against HFV Enterprises is a great example of the liability a marijuana company can face against its own president and executive employee.

Ms. Batterby is the president and an executive employee of HFV Enterprises, Inc. (“HFV”) an Oregon corporation formerly known as HiFi Farms, a prominent cannabis producer. Ms. Batterby’s position did not stop her from filing a wage claim against HFV  in Multnomah County. She alleges an employment contract required HFV to pay her $2,000 every two weeks beginning in October 2017. According to the complaint, HFV made one $2,000 payment but has since failed to pay her any wages. Ms. Batterby’s claim requests $46,000 in unpaid wages, 9% interest until the wages are paid, and attorney fees and costs. If this lawsuit goes for any length of time, the attorney fees will likely be much higher than the claim itself.

Ms. Batterby’s wage claim is brought under ORS 652.120, which requires employers to establish regular pay days not less than 35 days apart. Violation of ORS 652.120 is a Class A violation punishable by a fine of up to $2,000 for each violation. This means that each payday HFV missed could be punishable by a $2,000 fine.

Ms. Batterby’s claim is unusual not because she is an executive employee, but because of what it does not allege. For whatever reason, the lawsuit fails to request penalty wages under Oregon’s minimum wage statute, and it fails to bring a breach of contract claim. If this case is not settled quickly, it would not surprise us to see an amended complaint by Ms. Batterby, covering these standard claims.

As we discussed in our coverage of the CNH Labs case, employers are required to pay employees minimum wage. Because Ms. Batterby was not paid anything in violation of the minimum wage statute, she likely has a minimum wage claim. Had she requested penalty wages for the company’s failure to pay her minimum wage, she may have been entitled to an additional 30 days wages as a penalty wage. A month’s wages at $10.25 and hour amounts to something like $2,460.

Ms. Batterby also claims she had an employment contract with HFV Enterprises. She likely could have supplemented her wage claim with a breach of contract claim against HFV Enterprises. A breach of contract claim would provide similar relief to Ms. Batterby, including at least 9% interest on the unpaid amount and possibly more if the employment contract included a provision for interest on unpaid wages, as many employment contracts do.

Employees are an essential part of any successful marijuana business. With employees comes exposure to liability. Wage and hour claims can come from any employee at any level and the penalties will depend on the type of violation, as the HFV and CNH cases have shown. The best way to avoid wage and hour claims is to ensure employees are being paid according to state laws. If you aren’t sure, have an outside expert come in and review your practices, from your cannabis-specific employee handbook on down. And if your company does face a wage and hour claim, it’s best to hire an experienced employment attorney to defend the claims and reduce the exposure.

oregon employment marijuana
Failure to pay wages can cost you — a lot.

We get a lot of questions regarding how to pay employees and the consequences of failing to do so properly. With a few exceptions, if you hire someone to work for your cannabis business, you need to pay them at least minimum wage. Failure to pay employees or to provide required meal and rest breaks can come with hefty fines and civil penalties in Oregon. A recent case filed against an Oregon marijuana company is a great example of the potential liability your business could face for failing to pay employees.

In a complaint filed in Lane County, Kenneth Meek contends his employer, cannabis company CNH Labs, LLC, failed to pay him any wages. According to the lawsuit, Mr. Meek started working for CNH Labs in October 2016 prior to CNH Labs being licensed by the OLCC. The parties had an agreement that Mr. Meek would be paid $1,000 per week once CNH Labs was licensed. According to Mr. Meek, CNH Labs did not start paying him upon licensure and did not intend to pay him until CNH Labs was profitable. Mr. Meek’s employment with CNH Labs ended in December 2017 and he subsequently sent CNH Labs a letter demanding payment of the wages. Ultimately, Mr. Meek filed suit against CNH Labs for $65,000 plus interest and attorney fees.

Unfortunately, this type of fact pattern is not terribly uncommon in the cannabis industry, but it brings up two very important points:

  1. In Oregon, employees cannot waive their right to minimum wage. Meaning, even if your employee agrees to receive an amount less than minimum wage (or as in Mr. Meek’s case, no wage at all), the employee can still bring a wage claim later. Thus, the agreement Mr. Meek admits he struck with his employer should not hurt his case, assuming the allegations are true.
  2. Mr. Meek’s complaint requests the unpaid wages and penalties under Oregon Wage and Hour Statutes. In Oregon, the penalty for failing to pay an employee is the employee’s regular rate of pay for eight hours a day for up to 30 days. In Mr. Meek’s case this is equal to approximately $4,000. If he prevails, the employer may also be required to pay Mr. Meek’s attorney fees. That fact alone may be a strong incentive for CH Labs to settle right away:  in a case like this, attorney fees will exceed the $65,000 claimed by Mr. Meeks, if the case goes to trial.

Whatever happens with this lawsuit, it’s worth noting that Mr. Meek’s complaint may also result in a Bureau of Labor and Industries (“BOLI”) investigation into CNH Lab’s employment practices. BOLI has the power to investigate employers to determine if they are in compliant with Oregon wage and hour laws. Even if Mr. Meek’s claims do not have merit, BOLI may choose to start an investigation into CNH Lab’s employment practices, an uncomfortable prospect for any business. If BOLI determines there is a violation, it can issue civil penalties up to $1,000 for each violation.

Mr. Meek’s case is a good example of the penalties for failing to correctly pay employees. The bottom line is, make sure you are properly paying your employees and complying with wage and hour laws. If in doubt, it’s never a bad idea to have an outside expert review your employment practices.

marijuana washington employment
Washington’s new employment legislation hopes to close the pay gap.

More and more states are recognizing there is a pay gap between the genders. Washington is the latest state to address the gap through legislation. The near-final law, HB 1506, is commonly referred to as the Equal Pay Act. It is currently awaiting the Governor’s signature, which we can expect any day now.

Equal pay laws are complicated and understanding your obligation as an employer is critical to avoiding hefty civil penalties and  liability. Washington’s Equal Pay Act specifically notes the difficulties women can face in obtaining equal pay and moving up in companies. The Washington law attempts to address these issues by prohibiting employers from discriminating against similarly situated employees based on gender.

So what constitutes discrimination in this context? Discrimination occurs when an employer pays similarly situated employees different wages because of the employee’s gender, or when the employer fails to promote or advance an employee because of their gender. Employees are “similarly employed” if the performance of their job requires similar skills, efforts, responsibility, and if the jobs are performed under similar working conditions. Job title alone is not determinative.

Employers can pay similarly situated employees different if: 1) the difference is based on a bona-fide job factor that is consistent with business necessity; 2) is not based on a gender based differential, and 3) accounts for the difference. Bona-fide factors include: education, training, or experience; a seniority system; a merit system; a system that measures earning by quantity or quality of production; or a bona-fide regional difference in compensation levels. Employers bear the burden to prove there was a bona-fide factor for the difference in pay, which means that businesses had better get it right. Note that employers may use the same bona fide factors in determining whether to promote or advance employees.

Cannabis companies are not sheltered from the new law. Although cannabis companies boast a higher percentage of female founders and executives than other industries, women still face unique challenges in the industry. Studies suggest that while women have success starting cannabis businesses, they do not retain that success. As the cannabis industry has grown, female ownership and executive percentages has also dropped. Finally, as individual companies grow, they tend to adopt more traditional business structures that results in a high percentage of males in senior roles.

Every Washington cannabis company should have a plan in place to ensure its business practices meet the requirements of the new Equal Pay Act. A good place to start is to have an expert audit your payment practices and assist in drafting a policy identifying the factors that are considered in setting wages and offering promotions. Cannabis companies in other states should also follow suit: Equal pay promotes employee retention, creates positive brand capital, and–most importantly of all–it’s the right thing to do.

washington employment marijuana
Careful!

The Washington Legislature concluded its 2018 Session last week, and joined Oregon and California in “banning the box” when it comes to employment applications. Specifically, Washington’s new law, dubbed the “Fair Chance Act” (the “Act”),  prohibits employers from looking into any criminal history of potential employees at the point an applicant first applies for a job. The Act is less stringent than California’s legislation and tends to mirror Oregon’s legislation.

The Act passed through both houses of the Washington legislature on March 3, and Governor Jay Inslee wasted no time signing it into law. At this point, the only thing that would prevent the Act from taking effect is a provision which states that funding must be appropriated “by June 30, 2018, through the omnibus appropriations act.” The likelihood of that not happening is very slim. For this reason, we are advising all of our cannabis businesses clients to treat HB 2198 as the law of the land in Washington, starting now.

It is important to note that the Act does not bar employers from inquiring as to criminal history at all points in the application process. Once an employer has determined the applicant is “otherwise qualified” for the position, the inquiry may begin. “Otherwise qualified” means that the applicant meets the basic criteria for the position as set out in the job advertisement or job description. In most cases, whether the applicant is otherwise qualified can be determined from the application materials. Thus, employers in Washington may be able to ask about criminal history during interviews, but not before.

In addition to the initial screening rules, it is important to note that the Act also prohibits employers from advertising open positions in any way that excludes people with a criminal record from applying. Job advertisements that state “felons need not apply” or “no criminal background”, or that convey similar messages are prohibited. Finally, employers that are required by either federal or state law to perform criminal background checks are exempt from the law. This exemption does not apply to Washington cannabis businesses.

Ban the box legislation is trending nationwide: today, 31 states and more than 150 cities and counties have adopted a ban-the-box law regulating either public or private employers. These laws are especially important for cannabis businesses, which may, anecdotally, have a higher incidence of applicants with colorful backgrounds. Some states seem to care more about this than others: Oregon, for example, runs a background check while individually permitting cannabis employees; Washington does not.

The big take-aways here are: 1) do not ask about past criminal history on applications; and 2) consider seriously whether asking this question is necessary at all during interviews. By turning over too many rocks, you may find that an applicant has a past conviction for something like marijuana possession or distribution, and you may unintentionally violate one of Washington’s newest laws. Above all, and when in doubt, have an experienced employment attorney review your hiring techniques.

marijuana lgbtq employmentThe Trump administration is known for its hostility to marijuana. It’s also known for its hostility to the LGBT community. In a huge blow to the Trump administration, the Second Circuit Court of Appeals ruled last Monday that employers cannot discriminate against employees based on sexual orientation.  Many states, including Oregon, Washington, and California have statutes explicitly prohibiting employers from discriminating against employees based on sexual orientation. The Federal Civil Rights Act (“the Act”) does not explicitly protect employees based on sexual orientation: instead, it only protects employees based on sex. Circuit courts across the country are taking up the issue of whether employees should be protected based on sexual orientation, and reaching different conclusions.

In 2010, Donald Zarda sued his employer, Altitude Express, Inc. alleging they had terminated him because he was gay. The federal district court ruled in favor of the employer, holding the Act did not protect employees based on sexual orientation. The case pitted the federal Equal Employment Opportunity Commission (EEOC) against the federal department of justice. The EEOC submitted a brief in support of Mr. Zarda, arguing the Act protects employees based on sexual orientation. The Federal Department of Justice (headed by our good friend, Mr. Sessions) submitted a brief supporting the employer, and arguing the Act did not extend to sexual orientation.

The Second Circuit overruled the lower court. Siding with Mr. Zarda in a lengthy, 69-page opinion, with multiple concurrences and 80 pages of dissents, it ultimately held that “sexual orientation is doubly delineated by sex because it is a function of both a person’s sex and the sex of those to whom he or she is attracted. Logically because sexual orientation is a function of sex and sex is a protected characteristic under [the Act] it follows that sexual orientation is also protected.” Makes sense to us.

Two other federal appeals courts recently have heard similar cases. The Seventh circuit determined discrimination based on sexual orientation was discrimination based on sex under the Act, while the Eleventh Circuit held the Act’s reference to sex did not encompass discrimination based on sexual orientation. The Supreme Court declined to hear the Seventh Circuit’s case, but now, with multiple circuits offering opinions on the issue, the Supreme Court may be persuaded to hear the Second Circuit’s case. If they do, let’s hope they get it right.

So why does this matter to cannabis businesses? Cannabis businesses are subject to both state and federal employment laws. If a cannabis business discriminates against an employee because of sexual orientation, the business could be in violation of both state and federal law. As we all know, Attorney General Sessions ripped up the Cole memorandum earlier this year. Without the memorandum, there is little guidance about when and where federal district attorneys will choose to enforce the Controlled Substance Act (CSA) against cannabis companies. Thus, compliance with state and federal regulations is more important than ever during this time. It is best to stay under the radar rather than drawing federal attention to your business by arguably violating federal laws—other than the CSA that is.

If you ever have questions about terminating an employee it is always best to consult an employment law expert first to ensure all basis are covered and no violations arise from the termination. If your company is not terminating an employee on the basis of sexual orientation, but you believe that the employee could make such a claim, it is crucial to consider and attempt to mitigate possible claims. Both state and federal laws tend to be very detailed when it comes to protection of employees. In unsettled areas of law, such as the employees and sexual orientation, prudence is advised.

marijuana farm employment Oregon
Getting the pay right is important– and required.

Cannabis producers make up the largest number of Oregon industry licensees. As of the Oregon Liquor Control Commission’s (OLCC) February 15, 2018 report, there are 922 licensed producers and approximately 1100 producer licenses awaiting approval. In comparison, the next largest license category is retail establishments, with a total of 527 approved licenses and approximately 200 awaiting approval. Clearly, licensed marijuana farms are leading the pack.

Cannabis farm workers are sometimes subject to additional statutes, rules, and regulations that do not apply to non-farm workers. For this reason, if you are an Oregon marijuana producer, it is important to be familiar with agricultural rules as well as the OLCC marijuana rules. One especially important area to be aware of is hourly payments for cannabis farm workers. Underpaying farm workers can have disastrous consequences, and overpaying workers simply because you do not understand the rules is a poor business model.

Certain cannabis farm workers are exempt from overtime payment requirements. For example, employees engaged in agricultural work 100 percent of the workweek are exempt from overtime pay requirements. Agricultural work is broadly defined to include farming in all its branches, including, but not limited to the cultivation and tillage of soil, the production cultivation, growing and harvesting of any agricultural or horticultural commodities and any practices performed by a farm or on a farm as an incident to or in conjunction with farming operations. If an employee handles or otherwise works on tasks that are not associated with farming, that employee must be paid over time for any hours worked in excess of 40.

Oregon employers can sometimes also be exempt from paying minimum wage to agriculture employees. Both federal and state laws provide minimum wage exemptions for small farms. A cannabis producer employer must ensure the cannabis farm employee is exempt under both federal and state minimum wage requirements to avoid liability.

Under the federal Fair Labor Standards Act, agricultural employers do not have to pay minimum wage to employees if the employer did not employ more than 500 man-days of agricultural labor in any calendar quarter of the preceding year. A “man-day” is defined as any day during which and employee performs agricultural labor for at least one hour. So for example, if you employed two cannabis farm workers on October 20, 2017 to cultivate plants and each worked a total of 4 hours, that is equivalent to two man-days.

In Oregon, employers do not have to pay minimum wage to agriculture employees if the employer did not employ more than 500 piece-rate work days in any calendar quarter in the preceding year. Piece-rate work is defined as pay calculated on the basis of the quantity of crop harvested. Again, the employee must be exempt under both federal and Oregon minimum wage requirements here.

It is important to accurately classify your cannabis farm workers. Violation of wage and hour laws can come with hefty fines. If you are unsure if your workers are exempt from minimum wage or overtime requirements, have an attorney or other qualified individual review your pay practices, and make sure your employee handbook is in line with current federal, state and local law.

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:

 

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.