The U.S. 10th Circuit Court of Appeals in Colorado has ruled that workers in the marijuana industry, which is legal in that state, are covered by the Fair Labor Standards Act (FLSA), even though marijuana is still illegal under the federal Controlled Substances Act (CSA).
The case the justices heard involved an argument by a Colorado securities services firm — Helix TCS Inc. — that it needn’t pay overtime to its workers since they were involved in an operation that is illegal by federal statute, thus voiding protections of the FLSA.
A district court had previously ruled against Helix, and it was appealed to the 10th circuit.
“The district court correctly reasoned and case law has repeatedly confirmed that employers are not excused from complying with federal laws just because their business practices are federally prohibited,” Senior Judge Stephanie Kulp Seymour wrote in a 12-page opinion.
The decision of the three-member panel was unanimous.
Workers at Helix had filed a class action lawsuit to demand overtime pay owed them under the FLSA.
Other courts previously held that businesses involved in illegal activities, such as gambling or illegal immigration, are still subject to the federal wage-and-hour act. Eleven U.S. states currently allow the sale and use of recreation marijuana, while dozens allow the drug’s medicinal use.