Bookkeeper’s processing of unearned overtime an honest mistake: Court

Bookkeeper gave herself unearned overtime pay but her weekly hours weren't clarified by employer

A British Columbia company should not have fired an employee for mistakenly claiming overtime to which she was not entitled, the British Columbia Court of Appeal has ruled.

Glenna Palidwor was the bookkeeper for Julian Ceramic Tile (JCT), in Burnaby, B.C., for 12 years. When she was hired, she believed her standard work hours were 35 hours per week and whenever she worked more than that, she would be entitled to overtime pay. Because it was her job to gather, collate and verify the company’s payroll data, whenever she worked overtime she processed her overtime payment herself.

However, JCT had intended her normal work hours to be 40 hours per week and was unaware that between January 2003 and April 2004, Palidwor had processed overtime pay for hours past 35 and less than 40 for several weeks. When the company discovered the mistake, the total overtime pay Palidwor had received above what she was entitled to during the 15-month period was $10,697.60. JCT felt Palidwor had fundamentally breached her employment contract and fired her.

The trial court agreed Palidwor had been hired to work 40 hours per week at straight time and was not entitled to the overtime payments she had processed for herself. However, the court determined Palidwor made an honest mistake and was operating under the assumption her job was 35 hours per week of straight time. This was a reasonable assumption because JCT hadn’t formally outlined her work hours in writing and didn’t catch the mistake.

“If more attention had been paid by management to the detailed pay reports, it would have been abundantly clear (Palidwor) was regularly receiving payment for overtime beyond 35 hours per week,” the trial court said. “There was no attempt by (Palidwor) to bury or hide the fact of the claim and payment.”

The B.C. Court of Appeal upheld the trial court’s decision, finding Palidwor did not act dishonestly or intentionally use her position to derive a benefit without her employer’s knowledge.

“She did not know the overtime payments she received were contrary to the terms of her employment,” the Court of Appeal said. “An employee, who in the complete absence of any dishonesty makes a mistake about an employment benefit she is entitled to receive, cannot be said to have fundamentally breached her employment contract by receiving the benefit.”

JCT was ordered to pay Palidwor six months’ pay in lieu of notice, totalling $13,870.66, plus interest. See Palidwor v. Julian Ceramic Tile Inc., 2008 CarswellBC 2151 (B.C. C.A.).

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