Tenth Circuit Rejects FLSA Overtime Appeal for Marijuana Industry

Last year, Tina Harkness reported that marijuana’s dual developing legal status was fertile ground for employers to take liberties with the Fair Labor Standards Act (FLSA). In particular, a company providing security services to the marijuana industry came to the somewhat self-serving conclusion that because marijuana remains illegal under the federal Controlled Substances Act of 1970, then the equally federal FLSA must therefore not apply. Kenney v. Helix TCS Inc. (10th Cir. 2019). Taken to its logical conclusion, this also meant that overtime need not be paid, and the company classified its clearly nonexempt security guards as “exempt.”

The Tenth Circuit Court of Appeals rejected this argument last year, holding that the business was not excused from complying with federal overtime laws due to marijuana’s federally unlawful status. Last week, the company failed to convince the Tenth Circuit to reconsider its opinion, meaning a lawsuit against the company can move forward.

The Tenth Circuit covers Colorado, Kansas, New Mexico, Utah, Wyoming, and much of Oklahoma. Regardless of your industry or region, it is seldom a good practice to determine what laws do and do not apply to your business without competent legal counsel. Remember to call Employers Council first.