Apr 10 2019

Overtime Exemption for Agricultural Workers in the Cannabis Industry

Underlying the successful operation of a cannabis business involves a considerable amount of labor both literally and figuratively under the law.  Employees at a cultivation site may be tasked with germinating, harvesting, and curing buds, while other employees may be tasked with cleaning, inspecting, weighing, and packaging the final cultivation batch.  Despite the efficacious relationship between these duties, questions may arise as to the right of overtime pay when these employees work more than forty hours per week.  Indeed, a recent decision by the Supreme Judicial Court addressed a similar question concerning employees at a bean sprout farm.  See Ana Arias-Villano et al. v. Chang & Sons Enterprises, Inc., et al., Docket No. SJC-12548 (Budd. J.) (March 15, 2019).  With the SJC’s ruling, employers in the cannabis industry can reduce the risk of improper treatment, classification, and compensation of its cultivation employees.

The Massachusetts overtime statute, M.G.L. chapter 151, § 1A, provides that “no employer in the commonwealth shall employ any of his employees in an occupation . . . for a work week longer than forty hours, unless such employee receives compensation for his employment in excess of forty hours at a rate not less than one and one half times the regular rate at which he is employed.”  The overtime statute also includes twenty categories of exceptions from the overtime pay requirement that exempt work performed in certain activities.  The agricultural exemption applies to laborers “engaged in agriculture and farming on a farm.”   As highlighted by the SJC in Arias-Villano, “the scope of the agricultural exemption turns on the meaning of the phrase ‘agriculture and farming.’ ”  Id.  at *6.

In seeking the definition of “agriculture and farming,” the SJC turned to M.G.L. c. 151, § 2, which defines “agricultural and farm work” as “labor on a farm and the growing and harvesting of agricultural, floricultural and horticultural commodities.”  Here, the SJC stated that “the definition refers to ‘growing and harvesting’ commodities but does not include postharvesting activities.”  Arias-Villano, supra, at *7. In short, the SJC held that the type of work the plaintiffs in the case performed—cleaning, sorting, and packaging the sprouts—did not fall within the scope of the overtime exemption statute.  Thus, the plaintiffs were entitled to both future overtime for all hours worked in excess of 40 hours in one week and back wages for past overtime not paid—the latter potentially totaling greater than $375,000.

While the SJC’s focus on the “postharvest” activities raises potential questions as to whether drying and curing buds are to be construed as postharvest tasks, the decision is otherwise clear that employees engaged in cleaning, inspecting, weighing, and packaging a cultivation batch are not exempt under the agricultural exemption.

It should be noted as well that federal law also has an agricultural overtime exemption, see 29 U.S.C. § 213(a)(6) and 29 U.S.C. § 213(b)(12)-(13), and that case law is clear that employers are not excused from complying with federal laws, such as the Fair Labor Standards Act, just because their business practices may violate federal law.  See United States v. Sullivan, 274 U.S. 259, 263 (1927) (where defendant's business violated federal prohibition laws, Supreme Court of the United States held that there was no reason “why the fact that a business is unlawful should exempt it from paying the taxes that if lawful it would have to pay”); see also Donovan v. Burgett Greenhouses, Inc., 759 F.2d 1483, 1485 (10th Cir. 1985) (finding FLSA violations where defendant employed undocumented immigrants in violation of federal law).  Notwithstanding, the SJC in Arias-Villano emphasized that Massachusetts and federal overtime laws are not identical.  “In fact, the Massachusetts overtime statute was enacted, in part, to provide overtime compensation for many of those workers not covered by the FLSA.” Arias-Villano, supra, at *10.

As pointed out in Arias-Villano, unlike the Massachusetts overtime statute, the FLSA defines “agriculture” broadly to include “farming in all of its branches and among other things comprises the cultivation and tillage of the soil, . . . the production, cultivation, growing, and harvesting of any agricultural . . . commodities . . . and any practices . . . performed by a farmer or on a farm as incident to or in conjunction with such farming operation, including preparation for market, delivery to storage or to market or to carriers for transportation to market.” 29 U.S.C. § 203(f) (emphasis added); see also 29 C.F.R. § 780.105.  Akin perhaps to the parties’ theories of federal liability in Arias-Villano, Massachusetts employers engaged in the cultivation sector of the cannabis industry may have a broad argument for overtime exemption under the FLSA.  However, under Massachusetts law, employers should be particularly cognizant of their employee hours, especially those engaged in tasks falling clearly outside the scope of “growing and harvesting.”

It’s an employer’s responsibility to ensure employees are classified and compensated properly for all time worked.  In the event of questions concerning whether an employee’s duties fall within the agricultural exemption as discussed above, consulting with legal counsel is recommended. 

 

Tagged under

featured

Practice Areas

Employment and Labor

Back to the Blog