It is black letter FLSA canon that a promised bonus, such as a production bonus, or longevity bonus, must be included in the regular rate of employees who work overtime for the period of time covered by the bonus.  This maxim has just been reaffirmed in the case of a cannabis company that has been accused of not doing that.  The case is entitled Begay v. Copperstate Farms LLC and was filed in federal court in the District of Arizona.

The parties have settled their case and have filed a joint stipulation of dismissal.  The named plaintiff alleged that she and 100 other workers were underpaid because their attendance bonuses were not aggregated with the rest of their wages to arrive at a proper regular rate, for that particular week(s).  She also alleged that employees worked beyond the end of their shifts but these hours were also not counted and paid as overtime.

The Complaint alleged that the “defendant knew or should have known that plaintiff and other hourly employees worked hours over 40 in at least some weeks” and that the “defendant knew, or showed reckless disregard for whether the way it paid plaintiff and other hourly employees violated the FLSA.”

The named plaintiff alleged, as an example, that in one discrete pay period going back to August 2021, she worked some overtime, received an attendance bonus, which was not figured into her regular rate, “resulting in approximately $1.90 underpayment.”  That tiny amount of money, in and by itself, is nothing, but when applied across the board to 100 workers, week by week, going back two (or three years), those ostensibly small amounts quickly add up to a large liability for the employer.   

This named plaintiff was a quality assurance worker and packager for the Company for three years.  She inspected, weighed and packaged cannabis products for distribution.  The Company has 350 employees and four sites in the State so.  The Company needs to ensure that it corrects this issue at the other dispensaries as well.

The Takeaway

These are the types of lawsuits, good lawsuits (for the plaintiff, that is) that creep up on an unwary employer.  It is not a violation that jumps out at an employer but is a rather nuanced component of the FLSA.  On a week-to-week basis it may not be a great deal of money.  But, in the aggregate, it becomes a nightmare.  Employers must always remember that the regular rate is not just an hourly rate but includes all other manners of compensation (with few exceptions).

Don’ be caught unawares….