When it comes to cannabis industry compliance, employers must grapple with many complex federal and state laws – but it doesn’t stop there. Many cities have their ordinances related to compensation, paid time off, background investigations, and scheduling.

The influx of new local laws creates a lot of compliance challenges for cannabis industry employers. One problem is that it adds another layer of laws employers must track and incorporate into their policies and procedures.

Furthermore, municipal laws are being enacted so quickly that it is sometimes hard for employers to keep up. Although it may be difficult and time-consuming, HR professionals need to stay on top of these changes to make sure they comply with federal, state, and municipal requirements.

This can be especially difficult for multijurisdictional cannabis employers because they have to make sure they are managing the interplay of the myriad laws.


1. Minimum-Wage Laws

The federal minimum wage has been $7.25 for nearly a decade, but 29 states have higher minimum wages, according to the National Conference of State Legislatures. Some of those states are gradually raising the rate each year until it reaches $15 an hour.

But employers need to look beyond federal and state wage requirements. Responding to pressure from labor activists and with the support of Democratic leaders, larger cities with a higher cost of living are steadily increasing their minimum-wage rates.

These are higher than the federal minimum wage and often higher than the state-level minimum wage. Some cities have also adopted tiered minimum-wage rates based on the size of the employer and the particular industry.


2. Paid-Sick-Leave Laws

Paid-sick-leave laws have been popping up around the country and passing at a steady rate at the local level. Cannabis industry employers in states such as California must comply with a statewide law and may be subject to local ordinances as well.

Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica each have their sick-leave laws – which may have different eligibility requirements, caps, accrual rates, and coverage. Additionally, some employers in some cities, such as large hotel operators in Los Angeles, might be covered by state, city, and industry rules.

Some cities, such as Philadelphia, have paid-sick-leave mandates even though there’s no statewide law. Other jurisdictions with mandates include Chicago; Cook County, Ill.; Montgomery County, Md.; Minneapolis; and St. Paul, Minn., according to XpertHR‘s report on municipal trends.

A paid-sick-leave ordinance in Austin, Texas, is facing a legal challenge led by the Texas Association of Business and supported by the Society for Human Resource Management (SHRM). The ordinance was slated to take effect on Oct. 1, but it has been put on hold while the lawsuit is pending.

SHRM opposes inconsistent paid-sick-leave rules at the state and local levels that make compliance difficult for employers. Instead, SHRM backs the Workflex in the 21st Century Act (H.R. 4219), which would simplify paid-leave options nationwide and offer employees generous paid leave and increased flexible work arrangements.


3. ‘Ban-the-Box’ Laws

Thirty-two states and more than 150 cities and counties have adopted “ban-the-box” laws or policies that prohibit employers from asking job candidates about their criminal histories until a certain stage of the hiring process, according to the National Employment Law Project (NELP), a worker-advocacy group. Some of those laws apply only to public-sector employers, but others extend to private-sector businesses.

Austin, Texas; Baltimore; Buffalo, N.Y.; Chicago; Columbia, Mo.; Kansas City, Mo.; Los Angeles; Montgomery County, Md.; New York City; Philadelphia; Portland, Ore.; Prince George’s County, Md.; Rochester, N.Y.; San Francisco; Seattle; Spokane, Wash.; and Washington, D.C., all have ban-the-box laws that apply to the private sector, according to NELP.


4. Predictable Scheduling Laws

San Francisco was the first city to enact a predictable scheduling law in 2015, and New York City and Seattle followed suit. Among other things, these laws protect workers in certain industries – typically retail stores and restaurants – from last-minute schedule changes.

These laws generally require employers to give workers two weeks of notice about their schedules (or pay penalties for last-minute changes) and prohibit them from retaliating against employees who don’t accept shift changes on short notice.

Predictable scheduling laws also may require employers to offer shifts to existing staff before hiring additional workers.


Some States Block Local Laws

Although the recent trend is to pass workplace laws at the local level, some states are preventing cities from doing so. Many states with Republican legislatures and governors also have one or more large cities with Democratic leadership. The state government wants to limit cities’ abilities to tinker with the minimum-wage rates to reduce complexity for businesses that operate across the state or in multiple states.

For example, after St. Louis raised its minimum wage to $10 an hour in May 2017, Missouri state legislators passed a law that blocked cities from enforcing higher minimum wages than the statewide rate, which is currently $7.85. Missouri residents, however, will have the opportunity in November to vote on an incremental wage hike to $12 an hour by 2023.

For employers with multisite operations, keeping up-to-date on local wage ordinances is a constant challenge. Employers also have to consider the negative impact on employee morale if wage increases are rescinded. Even if the wage cut is lawful, it might be too harmful to employee recruiting and retention efforts to make business sense.


Compliance Tips

Employers must not only decide whether a municipal law affects their workplace, but they must also determine how the law relates to federal and state laws. They should review their workplace policies, rules, and employee handbooks to determine how a particular municipal law affects long-standing policies and practices.

To effectively manage the interplay of federal, state, and municipal laws, it is recommended that cannabis industry employers:

  • Know the applicable legal requirements.
  • Ensure policies, practices, and procedures are compliant.
  • Keep adequate records and documentation.
  • Train supervisors on unique requirements.

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