Cannabis Industry Employment Numbers on the Rise: Misclassification Claims to Follow?

Author: Katy M. Young

In a recent article in Marijuana Business Daily , author Eli McVey posited that the cannabis industry now employs 165,000 to 230,000 workers, which is more than the number of employees who are dental hygienists, bakers, or massage therapists.  At the NCIA’s Business Expo  in Oakland, I was a speaker on a panel discussing how cannabis business owners need to be mindful of employment classification issues.

Here at Ad Astra, we predict (along with many other experienced attorneys) that employment misclassification claims are going to be the next big wave of litigation in the cannabis industry.

As an example, I came upon a cannabis grower who operated as a sole proprietor.  When I asked if she had any employees, the owner responded: “No, just my boyfriend who works with me and we split profits 50/50, then a few people [her trimmers] who come and go.”   She must have seen the reaction on my face, because she then asked what it was that she said. I explained that in a business context, anyone working with you is either your business partner/co-owner, your employee, or your independent contractor. She said that her boyfriend is NOT her partner, though I was sure she called him her “partner” earlier in the conversation.

Additionally, this owner insisted that her trimmers were independent contractors.  She obviously was unaware that there is a multi-factor test for determining whether one is truly an independent contractor.  California’s default is that a person is an employee, and so it is far more likely that the trimmers are really misclassified employees. It came as a shock to her that there were no in-betweens, and that at any moment, one of those people she considers friends could go to the EDD and complain that they were misclassified as independent contractors when they are really employees.

If there are 165,000 employees we know of, how many “independent contractors” are there? How many potential claims does that translate to? Many!  Please do not fall into this trap.

If you are a business owner in the cannabis space, it is imperative that you understand the difference between employees and independent contractors; and, partners or co-owners.   Employees are further subdivided into “exempt” and “non-exempt” (non-exempt are entitled to meal and rest breaks, and paid overtime- this is a whole different topic).

 

In sum, please contact us for a review of your employment and ownership practices.  An ounce of prevention is really worth a pound of cure here!

 

By Scripta Ad Astra Staff

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