As a cannabis business owner in California – staying in business means staying in compliance. But what most business owners don’t realize is that there are many compliance requirements besides those set out by the BCC. One of the biggest compliance challenges for new cannabis business is how to follow the patchwork of state local and federal labor laws that apply to almost all businesses in California with employees.
If you are cited for violating regulations by the Department of Industrial Relations, The Economic Development Department, The Department of Fair Employment and Housing, CalOSHA or a number of other California Departments – or if you find yourself on the losing end of a lawsuit with an employee — The BCC can revoke your license for labor standards violations. Unfortunately, these labor agencies don’t always do a good job of communicating the rules for business owners and, if you’re like most people, you didn’t start a business to get a master’s degree in human resources. Regardless, there are a few major principals your need to be aware of.
Perhaps the most important labor law principle that many cannabis business owners don’t realize is the burden of proof. This principle means that nearly every labor law places the burden of proof on the employer. If an employee makes an allegation, under most circumstances the employer is required to show evidence that the violation did not take place. California business owners have no presumption of innocence when it comes to labor law.
The Importance of Timekeeping
Another important principle is that employers are required to keep accurate time records. Most employees in California are entitled to a minimum 30 minute uninterrupted meal period if they work more than five hours, as well as a 10-minute break for every 4 hours worked. Most employees are also entitled to overtime if they work more than 8 hours in a workday.
Employers are required to keep accurate records, so if an employee alleges a violation and the employer cannot produce the time records to dispute the claim, they will face stiff fines and penalties which can be recovered from the employer’s personal assets, regardless of whether the business is incorporated or not.
Contractor or Employee?
Some employers in California also prefer to use independent contractors instead of W-4 employees. However, courts have ruled that if an employee is engaged in an activity that is a regular function of the business, he or she must be a W-4 employee, must be covered under the employer’s workers compensation policy and must have all the benefits of an employee.
There are literally hundreds of other important labor laws that most business owners we meet with just aren’t aware of, and the laws are changing all the time.
If you have questions about where your labor liabilities lie, download our free “Cannabis Business Owners Guide to Having Employees” attend one of our seminars or take the HR Fit Test. We can also meet with you and do an in-person HR assessment.