One key area where compliance and operational efficiency intersect is deciding how to fill hiring needs, especially when dealing with the cultivation cycles and the fluctuating needs for extra hands around the garden. While most operators understand the value of training and retaining full-time staff, keeping staff off-cycle can be costly. Bridging the labor gap with on-demand temporary workers is common in agriculture, including cannabis. Trimmers and harvesters, also known as farm workers, are a vital part of any cultivation operation, but due diligence of temporary staffing agencies is critical. 

What Is An FLC? 

A Farm Labor Contractor (FLC) license isn’t something new; it has existed for decades, but may still be relatively unfamiliar within the emerging cannabis industry. 

This specialized federal license is required for: 

Any individual or business entity that, for a fee, engages in recruiting, soliciting, hiring, employing, or furnishing agricultural workers as part of farm labor contracting activities (U.S. Department of Labor, n.d.). 

Basically, if you bring a team of workers to help harvest or trim, but they are not full time employees, a federal FLC license, and possibly a state license, is required. The FLC licensing process, similar to cannabis licensing, is pretty rigorous, and only individuals who meet all of the requirements can obtain the license. 

Eligibility Requirements for an FLC License 

To become a licensed Farm Labor Contractor (FLC) under the U.S. Department of Labor (DOL) and comply with the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), applicants must meet the following criteria: 

1. Age: Must be at least 18 years old. 
2. Background Check: Fingerprints and Pass a federal background check to ensure no convictions for crimes of moral turpitude (e.g., fraud, dishonesty) or violations of labor laws, including MSPA provisions. 
3. Exam: Pass an MSPA exam that tests knowledge of federal labor laws, worker protections, and contractor responsibilities. 
4. Insurance Requirements:Provide proof of workers’ compensation insurance and unemployment insurance. 
5. Documentation: Valid photo ID and driver’s license, submit work agreements, recruitment materials, and housing disclosures (if applicable). 
6. Fees: Pay the required licensing fees and annual renewal. FLC licenses must be renewed every year, and any updates (e.g., operational changes) must be reported to the DOL. 

In addition to federal registration, some states have their own process for licensing or registration before any contractor can begin staffing. For example, California requires FLCs to pass an exam by proxy, complete 9 hours of Labor Law education, attest to never having sexual harassment claims, and pay additional fees to obtain a separate license through the California Department of Industrial Relations. States like Florida and Oregon also have their own registration, fee, and compliance requirements. 

Why This Vetting Process Matters 

The licensing process for FLCs is rigorous to protect the rights of agricultural workers. It ensures: 

• Only individuals with a clean legal and ethical history are licensed. 
• Contractors are knowledgeable about federal and state labor laws. 
• Businesses working with FLCs can trust that they are compliant with regulations, reducing risks of penalties, lawsuits, or worker exploitation. 

By requiring extensive documentation, passing an exam, and undergoing a thorough background check, the DOL ensures that FLCs are highly vetted professionals capable of operating responsibly and legally. Compliance is such an important part of any cannabis operation and this vetting process offers peace of mind when choosing to staff through an FLC instead of hiring full time employees. 

Common Operator Missteps 

Operators must exercise caution when choosing any one of the hiring options, especially when classifying and paying wages to workers or contractors. Not complying can lead to significant penalties. 

Wage Claims 

In today’s landscape, previous practices such as paying trimmers “by the pound” could result in wage and hour claims. Even if cultivators pay piece rate, they are still required to meet minimum wage. Operators must comply with the laws regarding hourly pay, overtime, rest, and recovery periods. 

Misclassifications 

Classifying an employee as a 1099 independent contractor is a common mistake. According to the Department of Labor (DOL), penalties can be up to $25,000 per violation, as well as payment of back wages, unpaid overtime, rest breaks, and meal periods that the employee would have received (U.S. Department of Labor, n.d.). 

As of the latest available data, New York and California are among the states with the highest numbers of misclassified workers in the U.S. In New York, approximately 873,000 workers in major low-paying industries are misclassified as independent contractors, representing about 10% of the state’s total workforce (Center for New York City Affairs, 2023). 

In California, the Employment Development Department (EDD) identified approximately 158,000 misclassified workers through audits and inspections in 2022 (California Employment Development Department, 2022). 

Sham Labor Unions 

Another poor practice identified in the cannabis industry is that some operators have been accused of creating their own, or engaging with non-legitimate labor organizations to fulfill Labor Peace Agreement (LPA) requirements, potentially to avoid genuine union negotiations (MJBIZDaily, 2024). Several states – California, New York, New Jersey, Virginia, Connecticut, and Oregon require cannabis businesses that

exceed a specific headcount threshold to enter into LPAs as a condition for obtaining or renewing their licenses. Attempting to circumvent the LPA requirements can jeopardize the risk of losing licensing. 

Utilizing a temporary labor contractor can effectively mitigate the risks of overspending on payroll, employee misclassification, and costly LPAs. By relying on the trained staff provided by an FLC, operators can achieve substantial cost savings, as the FLC typically assumes responsibility for overhead costs related to hiring, training, payroll, taxes, and insurance. 

Benefits & Risks of Using Labor Contractors 

1. Cost-Saving Benefit: Outsourcing labor management to a contractor frees up time and resources that can be reinvested into growing your business. Using a licensed farm labor contractor comes with predictable labor costs, potential for process experts, and reduced risk related to non-compliance. 
2. Streamlined Operations: Managing labor in-house can be time-consuming. FLCs handle the hiring process, manage payroll, and ensure all workers have the proper training and documentation so you can focus on core business operations—cultivating and selling high-quality products. 
3. Risks of Using Unregistered Seasonal Labor. The long-term financial consequences of using unlicensed labor far outweigh any short-term savings. The MSPA explicitly recognizes joint employment, especially when operators use FLCs. 

The farm and the FLC can be jointly responsible for unpaid wages, labor law violations, and noncompliance with worker protections. Even if the FLC is registered, the farm must ensure compliance with face liability and potential costly litigation. 

4. Risk of Penalties: State labor boards and cannabis regulatory bodies actively audit and investigate businesses for compliance violations. Penalties for providing unlicensed labor can quickly drain resources. Cannabis operators are particularly vulnerable to the penalty of having their licenses revoked or suspended for non-compliance. 

Finding an FLC or Checking A License Status 

It’s important to complete your due diligence when choosing a labor contractor. Things you should do: 

1. Ask for Proof of Registration: A reputable FLC will not hesitate to provide proof and furnish their Orange & Blue Federal registration cards. If they refuse, that’s a red flag! 
2. Database Check. The federal database (and your states) have easy tools to check active or revoked status. U.S. Department of Labor FLC Registration Search:
3. Check your state licensing requirements. Most states’ Labor Departments maintain a publicly available database of licensed FLCs. 
4. Contact local Farm Labor Contractor associations in your state for reputable referrals. 

In the fast-growing cannabis industry, using a licensed farm labor contractor can save you money, protect your business from legal risks, and streamline operations. By verifying a staffing agency’s licensing status and working with professionals who prioritize compliance, you can set your cannabis operation up for sustainable, long-term success.

Want to learn more? Then don’t miss the upcoming webinar “Committee Insights: The Grower’s Guide to Contract Labor, Compliance, and Cultivation Workforce Safety”. Arabella will be joined by other members of NCIA’s Cultivation Committee to unpack the legal, financial, and operational considerations around FLCs and share strategies to protect your team and bottom line. Register online here.