Uncle Ike's Pot Shop Admits It Violated Seattle's Minimum-Wage Law The Company Said Misinformation Was to Blame for the Error

Business owners who are unclear on the law can call the Office of Labor Standards to ask questions, with no risk of investigation. the stranger

Ian Eisenberg, owner of Uncle Ike's Pot Shop, the city's highest profile and most successful cannabis retailer, is used to navigating complex regulations. But when it comes to adhering to Seattle's minimum-wage ordinance, even he is not immune from messing up.

Recently, one of his budtenders, Nicole Stotts, noticed that she was being paid less than minimum wage. The current minimum wage for tipped employees at small businesses—budtending is a tipped industry these days—is $10.50 an hour. But Stotts was receiving only $10 an hour, which is the wage she started at eight months ago. (The minimum wage rose on January 1.)

After noticing the discrepancy, Stotts texted Lia Yagelowich, who handles payroll for Uncle Ike's, and asked if there was some sort of error. Stotts shared a screenshot of her conversation with The Stranger.

"Your tips is [sic] about 6 to 7 per hour," Yagelowich texted back, "so we meet the minimum requirements at $15 an hour per city law." Stotts then sent Yagelowich a link to the city's latest minimum-wage guidelines, which clearly indicate that the minimum wage for tipped workers is $10.50 an hour as of January 1, and reiterated her concerns.

"When are you working?" Yagelowich replied. "I will explain to you about minimum wages."

Let's take a moment to explain something about minimum wages: The system Yagelowich described is a tip-credit system, in which an employer can count a worker's total compensation—including tips, wages, and benefits—toward meeting the minimum wage. In Seattle, small employers must pay a minimum compensation of $12 an hour, and when considering tips and benefits, the minimum wage must be at least $10.50 an hour.

So how did Uncle Ike's, the city's most prominent pot shop, miss that crucial detail? According to Jen Lanzador, director of operations for Uncle Ike's, the error was due to misinformation given to them by their human-resources firm, which operates out of Spokane.

That's not entirely surprising, given that even companies right here in Seattle get confused about the minimum-wage law. The city's Office of Labor Standards (OLS) has an entire technical assistance program designed to help employers. Stotts said she filed a complaint with the OLS and has been in contact with an OLS investigator. And while the OLS can't comment on specific cases, Elliott Bronstein, the agency's spokesperson, said that any complaint involving minimum wage would likely warrant an investigation, especially if it involved multiple employees.

While there are not automatic penalties for employers found to have violated minimum-wage laws, Bronstein said, the OLS does make sure that employees receive all back pay they are owed. He also stressed that business owners who are unclear on the law can call the agency to ask questions, with no risk of investigation.

Lanzador said she was surprised and dismayed to learn that Uncle Ike's was in violation of Seattle's minimum-wage law. The business had no knowledge of the minimum-wage violation prior to Stotts's complaint, she said, and they would have fixed it if they had.

"I can't believe this happened," Lanzador said. "We love our budtenders. It was certainly never done intentionally. It was not done ignorantly, either. We thought that we were in compliance."

Eisenberg, Uncle Ike's owner, was similarly flabbergasted. "[The] embarrassing part is, I really followed the whole living-wage deal and thought to myself about people not understanding it, with all the outreach, 'How could they be so dumb?'" he said. "Just needed a mirror."

"I feel shitty about this one, because I was pretty psyched the city did the minimum-wage law," he added.

But Stotts wasn't buying it. "They sell over a million dollars in product a month, and they pay poverty wages," she said. "They tell you that you should feel lucky working there and that the tips are 'amazing!' But in reality, you make $15 an hour including tips, and that's still a low wage."

Stotts said she was also unhappy that her concerns about her wage were initially ignored. "I just don't see how they were so dismissive when I gave them all the info," she said. "It took me calling a newspaper and the civil rights office to get them to listen to me." (The Office of Labor Standards is a subdivision of the Office for Civil Rights.) Stotts said she was quitting her job as a result of the experience.

It may be too late for Stotts, but Eisenberg appears to be taking steps to rectify the situation. He estimated he owes 10 employees $2,834.63 in back pay for the time period between January 1 and May 26. In a post on Facebook that went up shortly after I interviewed him, Eisenberg also vowed to immediately raise all his lowest-paid employees to $11 an hour to make up for the error.

This snafu—apparently more of a screwup than a screwing over—also brings up the important and thorny issue of compensation for low-level cannabis employees. Although labor issues are not unique to the cannabis industry, they are especially fraught for cannabis companies. Washington's pot industry is watched closely nationwide, and if workers aren't making minimum wage while their bosses cash in on the so-called "green rush," it reflects poorly on legalization as a whole.