Unauthorized overtime

Does an employee have to provide overtime pay to a remote employee who presents a log of unauthorized overtime hours and work email exchanges that occurred outside regular hours?

Unauthorized overtime

Question: Does an employer have to provide overtime pay to a remote employee who presents a log of unauthorized overtime hours and work email exchanges that occurred outside of regular hours?

Answer: Employers are obligated to pay employees for overtime hours actually worked. The obligation lies solely with the employer to communicate and prohibit employees from working overtime hours if the employer does not intend to pay employees for this time. This issue is further complicated by remote work as it is increasingly difficult to monitor when employees are working. If appropriate policies and recordkeeping systems are in place and an employee still submits unauthorized overtime hours, that employee can be subject to appropriate progressive discipline. However, this cannot include withholding payment for the overtime hours even where they are in violation of the employer’s policies.

Employment standards legislation sets out the hours per week after which overtime pay is owed. There are exemptions for specific subsets of employees and industries.

In Alberta and British Columbia, if the employer has a clear policy prohibiting unauthorized overtime or requiring pre-approval, it is possible to avoid paying employees for unauthorized overtime. However, courts have consistently held that employers must do more than tell employees not to work overtime hours through policies. Rather, employers must act to make certain that employees do not work unapproved overtime. Where policies are enforced inconsistently or are inconsistent with other terms of the employment contract, employers will not be able to rely on their policies in denying payment of unauthorized overtime.

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. The employees, knowing that these hours were not permitted, unilaterally chose to work overtime anyways: see Cooper Tool Group Ltd. v. U.S.W.A., Local 6497; Northwest Territories (Minister of Personnel) v. Union of Northern Workers (1996); and Nova Scotia (Attorney General) v. P.A.N.S.

While the concept of remote work is at the forefront of every employer’s mind during this time, the issue of having to pay out unauthorized overtime work is not entirely new. In fact, this issue was the basis for numerous class actions prior to the onset of the COVID-19 pandemic. The most famous of which was the Ontario Superior Court decision of Fresco v. Canadian Imperial Bank of Commerce, which was released in December of 2020 after 12 years of litigation.

In Fresco, CIBC’s policies required employees to obtain pre-approval prior to incurring overtime or, under extenuating circumstances, to obtain post-approval as soon as possible for overtime hours. The decision found that CIBC’s overtime policies and recordkeeping systems contravened the Canada Labour Code, which governs banks and other industries that fall under federal authority. More specifically, CIBC’s policy did not explicitly prevent overtime hours and the code provided that overtime hours had to be compensated whenever they were required or permitted. By prescribing otherwise, CIBC’s overtime policy was overly restrictive. The court found that CIBC failed to pay 31,000 customer service employees for all of the overtime hours required or permitted to be worked — further compounded by CIBC’s failure to adequately track the overtime hours worked by its employees.

The following practical considerations are also important:

  • Employers should review their employment contracts and respective employment standards obligations with their employees to ensure that employees are aware of the requisite rest periods and overtime limitations to help avoid violations.
  • Employers should review their policies and recordkeeping systems to ensure that all hours are being tracked accurately and regularly and that employees are well trained on these requirements.
  • Employers should consider implementing a work-from-home guideline that explicitly outlines the expectations around working (and reporting) overtime hours or working outside of regularly defined business hours.  
  • If employers are concerned about overtime hours, they could consider implementing averaging agreements whereby an employee’s hours of work may be averaged over a specific period of time for the purpose of determining overtime eligibility. Each province has different requirements regarding overtime averaging agreements, and these requirements should be reviewed as part of any assessment undertaken on whether these types of arrangements could be beneficial to a specific organization.

For more information, see:

  •     Delta Enterprises, Re, 2005 CarswellBC 4342 (B.C. Emp. Stds. Trib.).
  •     Cooper Tool Group Ltd. v. U.S.W.A., Local 6497, [1975] O.L.A.A. No. 40 (Ont. Arb.).
  •     Northwest Territories (Minister of Personnel) v. Union of Northern Workers (1996), 52 L.A.C. (4th) 353 (N.W.T. Arb.).
  •     Nova Scotia (Attorney General) v. P.A.N.S., [1993] N.S.L.A.A. No. 8 (N.S. Arb.).
  •     Fresco v. Canadian Imperial Bank of Commerce, 2020 ONSC 75, 2020 ONSC 4288 (Ont. S.C.J.).

Tim Mitchell practises management-side labour and employment law at McLennan Ross in Calgary. He can be reached at (403) 303-1791 or [email protected]. This article was co-written with Michelle Tremblay, a Student-at-Law with McLennan Ross in Calgary.

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