'The whole concept of clarity of policy and understanding the proper process for tracking… can't be overstated enough'
Staying on top of overtime pay has always been a challenging issue for many employers — whether it’s tracking employees’ hours or following the rules.
That was highlighted once again recently after CIBC agreed to pay $153 million to roughly 30,000 current and former employees.
The money will compensate staff for unpaid overtime, along with legal fees and the cost of distributing the settlement funds, though the agreement must be approved by the Ontario Superior Court before it becomes binding.
The settlement was reached long after bank teller Dana Fresco first brought the issue forward back in 2007.
Know the rules
So, what is about overtime exactly that make it such a challenge?
For one, making sure an employer’s overtime policies are up to date with legislation can be an issue. For the vast majority, that means following provincial rules, while a federally regulated employer, such as CIBC, would follow the Canada Labour Code.
And though overtime provisions have been fairly consistent over the years, things like sick leaves have changed, so you want to understand how these interact with overtime entitlements, “and make sure that your T's are always crossed and your I’s are dotted,” says Chris Sinal, partner at the law firm Siskinds in London, Ont.
The size of the employer also makes a difference, he says.
“Bigger employers [means] more moving parts. It can be challenging to make sure that all of the policies are known, and people are aware of them. And that includes not just employees, but also management.”
As employers get larger and potentially become multiprovincial, they must start paying attention to multiple jurisdictions with different rules, “which would add its own level of complications,” says Steve Bestvater, product manager at Payworks in Winnipeg.
“Pretty much in every jurisdiction in Canada, there's that daily overtime limit, and then there's usually a weekly overtime limit,” he says, so in most provinces, the daily limit is around eight hours, and the weekly is between 40 and 48 hours.
Overtime pay is usually time-and-a-half, but that’s based on your regular pay, not just your base salary, “which means it could include any commissions you make, and any other compensation you would have made,” says Chris Achkar, employment lawyer at Achkar Law in Toronto.
“I wouldn't say it's straightforward, but there are certainly a lot of other things in the Employment Standards Act, to be honest, that are a lot harder to decipher than this.”
There may also be special provisions, such as offering lieu time, says Sinal.
“The employer and employee can agree in advance that instead [of overtime pay] you'll get time off that's equal to the same amount of time… You just need to make sure that the proper provisions are in your policy and your employment contracts too, to constitute that agreement.”
A further challenge? People working from home more often, says Achkar.
“Remote is also a factor now that makes it harder to track. When people are working remotely, often… the work fades away into the night at random hours, you work late a lot of the time and then you don't track what you need to track. And employers have less of control about when they shut down the business versus if they are working in the office.”
Exemptions to consider
Speaking of not being straightforward, there are several exemptions to the rules. For example, in some industries, there may be scenarios such as split shifts, “which can cause complications,” says Bestvater, while certain industries, such as firefighting or policing, have different amounts, limits or cutoffs for overtime pay.
In addition, managerial or supervisory roles may have exemptions, says Sinal.
“The challenge that folks will sometimes face is do they actually fall in that exemption or not? And that'll depend on a variety of things like: What are actually their day-to-day tasks? How much of their time do they focus on [them]? What do you do with someone who spends three-quarters of their time managing a restaurant, but then the other quarter of the time they spend serving? So you can run into situations where the underlying facts can be complicated.”
Managers are exempt from overtime pay, but only when doing managerial duties, says Achkar.
“Let’s say you manage a call center, you don't get overtime pay for time you’re managing, even if it goes more than 44 hours; but if it goes above 44 hours by six hours, and three of those hours… were spent on actually answering the phones… you would still get paid for those three hours of overtime,” he says.
“A misconception is that managers don't get overtime pay at all, and that's not true.”
In the recent decision of Branimir Avramovic v Multi-Mold Plastics Inc., the board examined whether the “managerial/supervisory” exception applied to a former employee who made a claim for unpaid overtime pay.
Approvals not always easy
It’s recommended that employer’s have a policy around pre-approval for overtime “as an added layer of protection, says Achkar.
That should be included in the employment agreement “right off the bat,” he says, so that overtime “is the exception, not the rule, and it will only be allowed upon written consent from your direct manager.”
But a totally separate overtime policy isn’t really necessary, says Achkar, “unless there’s a record of abuse of overtime pay.”
The rules can vary by province but generally, a person has to be paid for the work that they do, says Sinal.
“That's the starting position. So, what can happen if you work overtime and it's not approved? You need to be paid for it. But you can be disciplined for not having that approval in advance because you've breached a policy,” he says.
“The challenge that some employers face is, intuitively, it would seem like ‘If I didn't approve the work, I shouldn't have to pay for it.’ But many of the legislative provisions are written so that if the work is performed, it has to be compensated — people don't work for free.
“But that doesn't mean the person can't face consequences for working when they weren't supposed to.”
When it comes to approvals for overtime, that’s “a bit of a gray area,” says Bestvater, and can vary by company.
“Obviously, if someone's in the middle of doing a job and the manager says, ‘Hey, can you just finish this up?’ You wouldn't necessarily have any kind of pre-approval scenario, the manager has verbally said, ‘This is what's going to happen.’”
But approvals may be needed more when a project is involved, such as a professional setting, he says.
“You'll see a lot more, I think, tightness around that being done in those kinds of scenarios, where they would expect that there is some form of pre-approval for you to do that work when projects are trying to stay on budget.”
There are a number of labour cases where employees have been denied recovery for overtime in excess of that which was authorized by the employer on the basis that management had the right and discretion to manage overtime obligations and did so.
Best practices
When it comes to best practices around overtime pay, the first thing that employers can do is make sure the policies exist, and that people understand how overtime works, and what their entitlements are, says Sinal.
“And then the second part, which is arguably the more important part, is making sure that people are aware of those policies, including all levels of management. Because if you have a very good policy and HR is aware of it, but frontline managers who are actually assigning the work, or not, or don't understand them properly, then the utility of the policy probably is limited,” he says.
“In any large organization, with multiple moving parts, the challenge becomes making sure that people understand what the applicable policies, whatever they're about, and that that knowledge and awareness actually finds its way into practice, and people are actually doing it.”
Employers need monitoring mechanisms to make sure that that compliance is continuing over time, says Sinal.
“Because if I introduce a policy today, and do broad, sweeping training across the organization today, if people five years ago have forgotten that, then again, the utility is limited. And so there needs to be that constant engagement and awareness of: Are the policies still up to date? And are they still being followed?”
Along the same lines, the active engagement of managers and supervisors is one of the most important things for companies to make sure that they're complying with their legal obligations, he says.
“It is a vital piece of the puzzle.”
Managers play an important role in containing overtime issues by staying on top of any potential issues, says Bestvater, “making sure that people aren't working large overtime hours, that it isn't something that they're expecting them to be doing. And then really trying to understand why they're doing that,” he says.
“A manager's job, in a lot of cases, is to control the costs in their department or in their restaurants… or in their store… so that keeping a close eye on those types of records really is important if they want to stay within budget.”
And it’s important to put those policies in writing, in an employee workbook or employee agreement, and to ensure employees understand the requirements, which “really reduces your risk as a business,” says Bestvater.
And anything you can do to establish that clarity is important, he says.
“The whole concept of clarity of policy and understanding the proper process for tracking and the way these things should be treated probably can't be overstated enough, even down into the small business level.”
Finally, know your business, know your employees and know your departments, says Achkar.
“That will allow you to have a stronger hold of what's going on to avoid claims. Whether they're in the form of class actions by multiple employees or it's in the form of a Ministry of Labour complaint, it still will cost you more rather than proactively avoiding it from the get-go.”
