Plaintiff-Appellee Robert Kenny sued Helix TCS, Inc., an operations and security platform for cannabis companies, arguing that Helix misclassified Kenny as being exempt from the FLSA’s overtime requirements. Helix moved to dismiss Kenny’s complaint, arguing that the statute’s requirements did not apply to Kenny’s work. Because cannabis remains illegal under the CSA, Helix argued, the FLSA does not afford protections to employees like Kenny who are engaged in cannabis-related work activities. The trial court denied Helix’s motion, Helix appealed to the Tenth Circuit.
The appellate court rejected Helix’s arguments as well. First, the court observed that “employers are not excused from complying with federal laws because of their other federal violations.” (Opinion at 7 (citation omitted)). Moreover, the court reasoned, the FLSA is not focused on regulating the legality of workers’ activities.
Next, court pointed out that the “striking breadth” of the definition of an employee under the FLSA strongly weighed against Helix’s argument that Mr. Kinney and similarly-situated employees fall outside that definition. (Id. at 8.)
Finally, the court rejected Helix’s argument that the FLSA’s purposes would be undermined by applying the labor law’s protections to cannabis industry workers. The court thought Helix’s arguments had “cherry-pick[ed]” the statute’s purposes, and the court observed that those purposes included promotion of “well-being of workers.” (Id. at 9.) Application of the FLSA’s protections to cannabis workers, the court found, was consistent with that statutory objective.
If federal rescheduling of cannabis becomes a reality, cases like this one will fade into memory. In the meantime, the Tenth Circuit’s ruling that federal labor laws protect cannabis industry workers may deter other companies in the industry from seeking to benefit from the current status of cannabis under the CSA.
Andrew Orr is a litigator who follows the cannabis industry, and has represented agricultural companies in a variety of commercial and other complex cases.