Login
Take a Trial | Subscribe
Polls
Past Polls
Suggest a Poll
Send your comments to the editor
About HRinfodesk
Why HRinfodesk?
Privacy Policy
Legal Notices
Editorial Policy
Contributors
Feedback
Help Desk
How to Subscribe|Renew
Change Email Address
Login and Password Centre
Contact Us
 
      

   
 
Text Size: M L XL XXL Printer Friendly Version
  Email this article

To pay or not to pay overtime

By Yosie Saint-Cyr, LL.B., Managing Editor at HRinfodesk.com---Canadian Payroll and Employment Law News, June 2007

According to findings from our recent HRinfodesk Poll, employers requiring non-unionized employees, especially salaried employees, to work extra hours (beyond the legislated daily standard hours, or maximum weekly hours of work for overtime purposes) without compensation is a common practice. Participants in the recent HRinfodesk Poll were asked if non-management, salaried employees in their organization were expected to work overtime without pay; although 51.38% of respondents said no, they do not expect their employees to work overtime without proper compensation, there was still an overwhelming 44.75% of participants that responded yes, while only 3.87% of respondents do now allow overtime work.

Buzz Hargrove, president of the Canadian Auto Workers, says forced overtime is one of the most common complaints of non-unionized employees who approach his union for help in organizing against their employers. In the absence of union protection, it's risky business for an employee to complain. However, the recent $600-million class-action lawsuit launched against Canadian Imperial Bank of Commerce (CIBC) in June 2007 by teller Dara Fresco for unpaid overtime has Canadian employers revisiting their overtime practices.

According to her statement of claim, Mrs. Fresco says she and her colleagues were consistently refused overtime pay at all 12 Toronto branches where she has worked in her 10-year career with CIBC. Employees are regularly asked to work in excess of their agreed-upon hours of work, “including before the scheduled beginning and after the scheduled ends of their shifts, and during lunch breaks - to perform work or services for the CIBC's benefit.”

The statement of claim further alleges that at the same time, they were actively discouraged from filing for extra pay. Instead, employees “were directed to prepare time records that described their hours of work as no more than their regular daily hours of work, notwithstanding that they worked in excess of their standard hours.”

Mrs. Fresco, a head teller at a Toronto branch of the bank, is paid $30,715 a year and was recently recognized for outstanding customer service. She describes herself as a good employee who, nonetheless, got tired of working between two and five extra hours without pay every week.

Regardless of whether the class action lawsuit proceeds - it still must be certified by the court - as a result of this much publicized class-action lawsuit, employees are becoming more aware of their rights under employment standards legislation or their collective agreements.

Below is a breakdown of the results of the recent HRinfodesk Poll and further information about overtime pay:

Overview on overtime requirements

In Canada, hours of work and overtime rules provisions vary significantly across jurisdiction under employment/labour standards legislation, as well as industry or sectors. Most employment/labour standards legislation by jurisdictions establishes the standard workday, workweek, and the maximum workweek in which an employee is not permitted to work. In general, legislation provides that where the standard workday or workweek is exceeded, overtime must be paid.

Overtime pay is compensation for work performed outside of a length of time (per day and/or per week), that has been determined by legislation.

Most employees are eligible for overtime pay, whether they are full-time, part-time, temporary or casual workers, students, or contract workers.

Many employers believe because they pay their employees a fixed salary, they are not obligated to pay overtime hours. Being an employee on an hourly or salary basis is not criteria for entitlement and rights under employment standards legislation. They are methods of paying wages that have an impact on how the right or entitlement is calculated. For example, as stated by the Ontario Ministry of Labour, generally, if an employee's hours of work change from day to day, but his or her weekly pay stays the same, the employee is paid a fixed salary. Suppose an employee works 44 hours one week and 42 hours the next, but receives the same pay each week. That employee is on a fixed salary. A fixed salary compensates an employee for all non-overtime hours up to and including 44 hours a week. After 44 hours, the employee is entitled to overtime pay.

However, these employees, including hourly and salaried employees, may still be exempt from employment standards legislation depending on the occupation or industry sector. Certain employees have special rules or exemptions from all or certain rules under employment standards legislation. The lists of exclusions or exemptions from hours of work and overtime pay provisions are usually quite extensive. For a list of exemptions, please refer to your jurisdiction in the HRinfodesk Library, under Pay and Working Conditions, under Hours of Work and Overtime. You should also refer to the legislation and accompanying regulation.

Several jurisdictions give employees the right to refuse overtime work, or allow maximum hours of work to be exceeded where work is urgently required to maintain or repair the equipment or in the event of an accident, emergency or any occurrence beyond human control which imperils the life, health or safety of people or which interrupts the provision of an essential service.

The overtime rate is payable to the employees for each hour or part of an hour they work in excess of the standard hours. Most jurisdictions have established an overtime rate equivalent to one and a half times the employee's regular rate of pay. Each jurisdiction provides for a specific overtime threshold for entitlement. These include for example, in excess of 44 hours in a workweek in Ontario, or in excess of 40 hours in a workweek in British Columbia.

Employers are required to keep accurate records of hours worked (regular and overtime) and wages paid to employees. The law does not require any specific method for keeping records so employers can use any time keeping method they choose. For example, employers may have employees punch a time clock, use handwritten time sheets, or use an electronic badge reader. Any method is acceptable as long as it is complete and accurate. If a complaint for unpaid overtime is filed by an employee, the onus is on the employer to establish that the employee did not work the overtime alleged.

Furthermore, several jurisdictions, subject to certain conditions, allow employers and employees to agree to replace the payment of overtime by paid leave equivalent to one and a half times the overtime hours worked; or to average overtime hours. The averaging process is performed to vary from overtime compensation otherwise required by the provincial or territorial employment standards legislation.

Here is a comparative table on general overtime requirements by jurisdiction. However, for more specific information such as the definition of a workweek, requirements for averaging overtime or banking of overtime, exemptions, exclusions and different thresholds by industry, please refer to your jurisdiction in the HRinfodesk Library, under Pay and Working Conditions, under Hours of Work and Overtime. You should also refer to the legislation and accompanying regulation.

Jurisdiction

Maximum hours in a day or week

Standard Hours

(daily or weekly)

Overtime threshold hours

Overtime pay

Time off in lieu of overtime pay

Averaging overtime

Federally Regulated

48 hours per week

8 or 40

8 hours in a day or 40 hours in a week, whichever is greater

150% of regular rate

No provisions

Yes

Alberta

12 hours in a day

8 or 44

8 hours in a day or 44 hours in a week, whichever is greater

150% of regular rate

Yes

No specific provision

British Columbia

No provisions; however, an employee's work hours must not exceed a 12-hour period in a workday

8 or 40

8 hours in a day or 40 hours in a week

Note: employees could be eligible for daily, or weekly overtime or both during a week. However, employers must calculate daily overtime and weekly overtime separately.

The employer must choose which method of overtime pay calculation he or she will use; daily or weekly.

150% of regular rate, or double (200%) the employee's regular wage for any time over 12 hours.

Yes

Yes

Saskatchewan

44 hours per week

8 or 40

8 hours in a day or 40 hours in a week whichever is greater

150% of regular rate

No provisions

Yes

Manitoba

No provisions

8 or 40

8 hours in a day or 40 hours in a week whichever is greater

150% of regular rate

Yes

Yes

Ontario

8 hours a day and 48 hours a week

8 or 40

44 hours in a week

150% of regular rate

Yes

Yes

Quebec

No provisions

8 or 40

40 hours in a week

150% of regular rate

Yes

Yes

New Brunswick

There is no limit on the number of hours an employee may work

No standard workday or workweek. In general, a normal workweek is 44 hours a week

44 hours a week

150% of minimum wage

No provisions

No provisions

Nova Scotia

No provisions

No standard workday or workweek.

In general, a standard workweek is 48 hours a week

48 hours a week

150% of minimum/regular wage*

No provisions

Yes

Prince Edward Island

No provisions

No standard workday or workweek. In general, a normal workweek is 48 hours a week

48 hours a week

150% of regular rate

No provisions

No provisions

Newfoundland and Labrador

14 hours per day

The current Regulation sets a 40 hour workweek

40 hours a week

150% of minimum wage

Yes

No provisions

Northwest Territories

10 hours per day, 60 hours per week

8 or 40

8 hours in a day or 40 hours in a week, whichever is greater

150% of regular rate

No provisions, However, the NWT Ministry of Labour states that banking of overtime hours is allowed as long as both the employer and the employee agree to it and the time off is provided at time and a half.

Yes

Yukon

No provisions

8 or 40

8 hours in a day or 40 hours in a week, whichever is greater

150% of regular rate

Yes

Yes

Nunavut

10 hours per day, 60 hours per week

8 or 40

8 hours in a day or 40 hours in a week, whichever is greater

150% of regular rate

No provisions

Yes

Overtime policy

The following is a list of considerations when setting up an overtime policy.

  • Consider averaging (staggering) work periods if the legislation allows. This process is performed to vary from overtime compensation otherwise required by the provincial or territorial employment standards legislation. In most jurisdictions, employment/labour standards legislation allows the employer to average (stagger) work periods. For example, weekly shifts can begin in one workweek and end in the following one so that the hours worked in excess of the statutory straight-time workweek fall in the following week, thereby taking them out of the overtime category for the first week. A workweek can also be averaged over a period of two, three, and up to four workweeks (consult the requirements of your jurisdiction in Quick References to Employment Standards by Jurisdictions).
     
  • Communicate your average (staggered) workweek. If you are going to adjust overtime pay to take advantage of the offsets the law provides, make that very clear in your policy and routinely communicate that information to your employees. Several jurisdictions require employees to agree to the averaging of their work hours in a written agreement. Employees will expect time and one-half pay for all hours over 40 (depending on the jurisdiction). Unless the perception is addressed, employees may challenge the practice unnecessarily and/or feel disapprovingly towards their employer.
     
  • Don't treat overtime as a privilege. Your policy should stress that overtime is not a benefit-it is only to be authorized when business demands it. In no instance should overtime be authorized solely at the request of the employee or awarded as a privilege.
     
  • Don't be casual about unreported time. Prohibit in writing and actively enforce a prohibition against “casual work time“, and unreported time. Pay for all time and discipline abusers immediately after the fact.
     
  • Don't unintentionally support unreported time. Through management development and supervisory training, aim to dispel the belief that the “good” employee is the one who comes in a little early or stays a little late just to help out, but does not report the time.
     
  • Have a clear policy on mandatory overtime. If overtime is to be mandatory when requested, state that fact throughout the hiring process and include a statement to be signed by the employee acknowledging an understanding of the company policy regarding mandatory overtime. Even with such a policy, there may be occasions where certain mitigating circumstances, such as illness or death in the employee's immediate family, can and should be exceptions. Document all exceptions to the policy.
     
  • Don't fail to include on-call pay in overtime calculations. Pay for time when employees hold themselves ready for a call into work must be included in the regular-rate computation (consult legislation in your jurisdiction).
     
  • Do not negotiate side agreements with employees to avoid paying overtime. Employees cannot waive their rights to overtime compensation granted them by law, except where there is an averaging agreement between the employer and employee when the law allows it.
     
  • Employees cannot agree to receive payment of their overtime hours at a lower rate. Agreements to “kick back” overtime pay and agreements to conceal overtime hours are invalid. Even though employees have agreed to such arrangements, they can still recover the overtime pay specified in law, possibly by suing the employer at some point in the future.
     
  • Treating employees equally and consistently. Salaried employees (employees receiving the same amount of pay regardless of the number of hours worked in a month) must still be paid overtime after the legislated maximum work hours in a week, unless they are exempted because of their profession or industry sector. Any overtime policy that automatically excludes all salaried employees from its application must be reconsidered.

Our next HRinfodesk poll is dealing with definition of manager for overtime purposes. Stay tuned.



© 1999-2017 First Reference Inc.  All Rights Reserved. ISSN 1713-6105
Legal and Copyright notices      Privacy Policy