Keeping pace with the ever changing state and federal regulations of being a cannabis employer is complicated. A misstep can be financially devastating.

Get on the right side of Employment Law : PEO Partners Help Cannabis Businesses Avoid Danger Zones.

By Shelby Kier |  Sept 30, 2020

Get on the right side of Employment Law : PEO Partners Help Cannabis Businesses Avoid Danger Zones. 

Because employment law continually evolves, it can be difficult for businesses to stay compliant. That’s why having HR professionals dedicated to maintaining best practices for your company is important—especially for the cannabis industry.

A Professional Employer Organization (PEO) with expert HR resources and that knows the cannabis industry can be an indispensable partner for your business. Whether you need help in compliant job postings and workers' classifications or in getting state and local wage laws right, a PEO like Adaptive HR can help.

Here are a few examples of danger zones that a PEO can steer your cannabis business clear of: 

Job Postings

Attracting and maintaining qualified employees can be a challenge in any business but for the cannabis industry, this can be particularly difficult. You may not realize that something as simple as a job posting could land you in legal trouble.

For example, anti-discrimination laws prevent employers from selecting or rejecting workers based on protected classes such as race, in part, gender, religion, age, disability, and national origin (some states have additional categories). At the federal level, the Equal Employment Opportunity Commission (EEOC) enforces such laws, which cover applicants and employees. Most states also have an agency that oversees anti-discrimination as well.

Your business could inadvertently slip into EEOC hot water by posting for workers who are “young and energetic.” Doing so might seem logical as possible applicants interested in the cannabis industry may be of a younger demographic. But your posting could violate discrimination laws because it infers only “young” need apply or older applicants may not be selected if they do apply.

Often businesses wrongly classify workers as independent contractors (1099s) or they misclassify employees as salaried rather than hourly. Such mistakes can be costly. Your business can face fines, damages, and legal fees by failing to understand the importance of correct classifications.

A 1099 classification is unusual for a retail setting. That’s because true independent contractors supply their work materials, set their hours, and manage their work, rather than company supervisors. Their work is “managed” by their contract with the business, which is typically for a set period (such as 3-6 months). Employees, on the other hand, are usually “at-will” and all the details of their work are managed by the company.

Employees are either exempt or non-exempt. What this means is that under the Fair Labor Standards Act (FLSA), an employee is subject to overtime regulations, unless found to be exempt from them. Those who are exempt must meet a duties test (such as administrative, professional) and a salary test (currently set at $684 a week, under federal law, some states are higher).

Failing to follow the Department of Labor (DOL) and FLSA regulations can doom a business. A professional HR representative in your corner to prevent potential violations is a must-have.  

Payroll and Taxes

Sometimes things can feel simple. Employees work a full shift for the day, you pay them. Easy, right? Not so fast. Payroll done wrong is a huge risk for companies.

Let’s start with minimum wage. It can differ depending on location. You could have a shop in a jurisdiction that follows the federal minimum wage, another in where the state rate controls, and a third in a city/county that has a minimum wage requirement!  

There are also different laws depending on jurisdiction on when employees are paid, how they receive wages, what constitutes wages, and when they get a final check if terminated. And we haven’t even discussed issues surrounding proper payment of overtime and government-mandated paid sick leaves.

When you’re on the cutting edge of a new industry like cannabis, you have a lot to handle. Getting payroll right doesn’t have to be on your list when you can trust a PEO payroll expert to administer it instead.

AdaptiveHR Partners with You

Compliance failures can seriously damage a business, especially a new one. Consequences range from monetary losses to damage to your reputation. To give your cannabis business the chance for success, you need dedicated HR professionals with industry knowledge.

Get on the right side of employment law and best practices within your cannabis business by visiting: or fill out the form below.

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