Overtime pay can be challenging and confusing, especially when an employee is not paid based on an hourly wage.
Ontarios Employment Standards Act, 2000, Part VIII (the Act), sets out when an employee is entitled to overtime pay and the rate that is payable to the employee.
Employers who do not follow the overtime rules can be exposed to significant liability claims by employees, particularly if the problem is wide-spread throughout the employers business.
Employers often (unknowingly) do not comply with Ontarios overtime pay law.
Three of the most common mistakes that employers in Ontario make are:
1. If the employee is paid a fixed salary amount, this also covers overtime Incorrect. Generally, salaried employees are not required to punch the clock, but a fixed salary or flexible work arrangement do not eliminate overtime pay. Employers must still calculate and pay overtime for non-managerial employees who work enough hours to qualify for overtime pay under the Act. Employers must have a system to keep track of and monitor overtime hours for all employees eligible for overtime pay, including salaried and flexible arrangement employees;
2. If a fixed-salary employee chooses or elects to work more than 44 hours weekly, that is the choice of the employee and the employer is not responsible for overtime Incorrect: Generally, when overtime is reviewed, the employees average work week will be considered (over a reasonable period of time). If the employee ultimately works, on average, more than 44 hours weekly, overtime is likely payable at time and a half. If the employee is consistently working more than 44 hours weekly, overtime liability is likely accumulating for the employer in the background (in addition to the base salary that is payable to the employee); and
3. Very few employees realize this and, as a result, very few raise the issue or make a claim Incorrect: Employees are more knowledgeable and aware of their rights generally, including under the Act. Employers are required now to post information about rights for overtime in the workplace, pursuant to the Act. If the employee is terminated, qualified employment lawyers now ask more questions about potential overtime that was not paid to the employee prior to termination.
Recent cases in Ontario clearly indicate that employers run the risk of paying significant damages to employees if overtime is not paid properly to employees.
A good example is Baroch v. Canada Cartage, an Ontario class action that has been certified by the Ontario Court. In this case, 7,800 employees (of this trucking/transportation business) claim that their employer systematically failed to properly pay overtime to employees over several years (when the employees worked more than the threshold set out by the Act.
The Baroch case also makes it very clear, based on the Courts initial treatment of the case, that employers must:
1. have a written overtime policy;
2. give clear directions in the workplace for employees to know how to apply the overtime rules and the thresholds; and
3. implement a good system internally to track working hours for employees in order to identify and properly calculate overtime pay and entitlement.
The employer in Baroch did not have these in place this had a significant impact on the Courts decision to allow the case against it to proceed. Had the employer done these things properly, it likely would not have needed to face what will be a very substantial damages payment to its employees, plus very significant legal expenses.
This WARDSPC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.
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