Cannabis Companies and Wage and Hour Laws: Meek v. CNH Labs

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:
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.
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.

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