A number of new laws have recently gone into effect that could have a dramatic impact on businesses and their relationships with employees, including those in the cannabis industry, so having a clear understanding of these changes is essential to avoid and limit potential liability.
Cannabis employers are strongly encouraged to consult with counsel to ensure compliance with these new laws.
California Consumer Privacy Act: The California Consumer Privacy Act (CCPA) went into effect January 1, 2020. This law gives consumers and employees new rights to regulate and control their personal data and applies to any for-profit company operating in California that has more than $25 million in annual gross revenues, derives more than 50% of its annual revenue from selling consumer or personal information, or buys or receives information from 50,000 or more consumers, households or devices annually for a commercial purpose. Among other requirements, businesses must generally disclose to consumers the categories and source of collected personal information, and generally not sell and/or must delete a consumer’s personal information on request. The CCPA also requires employers to provide a notice to employees, applicants and other workforce members when collecting their personal information and to implement and maintain reasonable safeguards to protect that information.
New restrictions on contractual arbitration: The California Legislature also passed new restrictions on arbitration agreements in which employees or consumers agree to resolve disputes before a private arbitrator rather than a judge or jury. Many new cannabis businesses have drafted and implemented arbitration agreements with employees. Under California’s new arbitration laws, employers: (a) may no longer require employees to execute arbitration agreements as a condition of employment that address disputes under California’s Labor Code and its anti-discrimination law; and (b) must now promptly pay an arbitrator’s fees or face serious consequences.
Please note that a federal court has recently issued an order preventing the state from enforcing some of these laws, so industry employers with arbitration agreements are strongly encouraged to carefully review their agreements and, if needed, consult with counsel.
A ban on “use it or lose it” vacation pay policies: In December 2019, the Colorado Department of Labor and Employment adopted regulations that prohibit employers from having “use it or lose it” vacation policies. Under this regulation, employees’ earned vacation hours are a form of wages that must be paid to the employee at the end of employment, and that employers may not adopt policies or practices that forfeit earned vacation hours. Employers may nonetheless adopt policies that cap the total number of vacation hours that employees may earn.
Equal Pay for Work Act: Colorado recently enacted a pay equity law that goes into effect January 1, 2021. Under the law, an employer may not pay an employee of one sex less than an employee of a different sex for substantially similar work. Employers can avoid legal liability by demonstrating that the difference in compensation rates between two employees is due to non-discriminatory reasons including seniority, a merit-based compensation system, a performance-based pay system, or the education, training and experience of the two employees. Employers must also disclose in a job opening the planned hourly wage or salary range for the vacant position along with a general description of the employment benefits or other compensation associated with the position. Employers must make a reasonable effort to make known opportunities for promotion to all current employees on the same day. Employers should be prepared to explain the basis for compensation decisions from potential audits by the state and/or future lawsuits from employees.
Employer Accommodations for Pregnancy Act: Beginning January 1, Oregon employers with six or more employees must provide job applicants and employees with reasonable accommodations for medical conditions related to pregnancy and childbirth, including but not limited to modifications to employees’ job assignments, giving more frequent rest breaks and providing additional assistance with manual labor. Employers in the cannabis industry should be aware of their obligations to provide accommodations to employees with pregnancy-related medical conditions as employees may respond to violations of this law through a civil lawsuit or filing complaints with Oregon’s Bureau of Labor and Industries. All employers, regardless of whether their employees have a medical condition associated with pregnancy or childbirth, must post a sign informing employees of the law’s requirements.
Workplace Protection Act: Oregon introduced several new requirements relating to employment discrimination, sexual harassment and sexual assault in the workplace. For example, the law mandates that all employers adopt clear anti-discrimination policies that include a process for employees to report potential instances of discrimination and harassment. The law also prohibits an employer from requiring the execution of a nondisparagement or nondisclosure agreement with applicants or employees addressing conduct relating to employment discrimination or sexual assault. Failing to comply with mandatory discrimination or harassment laws could subject businesses to lawsuits and unwanted public or media attention.
Conor Dale is a principal with the law firm of Jackson Lewis, P.C. He provides strategic advice and counseling to employers regarding independent contractor and employee classification issues and represents businesses in the cannabis industry.