Policies can help keep employers out of court
Class action court cases for overtime have been in the news lately as some major employers have been challenged about their practices for paying.
“The fact that these class action decisions have received significant coverage in the Canadian mainstream press can only raise awareness of hours of work and overtime issues and could lead to an increase in claims,” said Blair McCreadie, a partner at Fraser Milner Casgrain in Toronto.
Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce are both cases where “off the clock” work is involved. Employees claim the banks’ policies required approval for overtime before the work took place but that the extra work was required or allowed by the companies despite the lack of formal approval.
They were not paid for the overtime they allege they worked because it was not previously approved as per company policy.
It’s important to remember the judgments in these cases from the Ontario Court of Appeal only deal with the threshold question to see if the cases could be heard. The cases have not yet been heard on their merits in court, said McCreadie.
Policies that state employees would not be paid for overtime that had not been pre-approved are at the crux of the issue here. The Canada Labour Code, the workplace legislation that covers federally-regulated employers, requires workers be paid for time worked, said Stuart Rudner, a partner at Miller Thomson in Markham, Ont.
“This relates to a common misconception that employers do not have to pay for overtime unless they specifically requested or authorized it,” said Rudner. “In fact, in most cases, if an employee works overtime, they are entitled to be paid for it.”
Class actions on overtime open doors
These cases may mean more employees could sue for overtime even if they don’t have good, specific evidence, said Ranjan Agarwal, a partner at Bennett Jones in Toronto.
If employees don’t have good, clear records of the overtime they worked, such as a written log of all the hours, they can use statistical evidence as a group instead.
There is also an anonymity that comes with class action suits, said Agarwal.
“I can see a group of employees, for example in a plant where they are all relatively new immigrants or maybe they don’t speak English as a first language, there’s some concern about how their manager or their employer is going to treat the. If they have a complaint, I can see them pursuing this by way of an overtime class action,” said Agarwal.
Mitigating risk of a class action
There are actions employers can take to reduce the risk of an overtime class action.
“I think that first and foremost employers, in the sense of the corporation, but also HR managers and the managers who are assigning hours of work at the local level, all have to know what the rules are around overtime,” said Agarwal.
Employers should establish clear overtime policies which specifically state employees are not to work overtime without prior approval, said Rudner.
“Similarly, policies should provide that employees are not permitted to ‘clock in’ more than a few minutes before the start of their shift or ‘clock out’ more than a few minutes after it ends, unless they have permission,” said Rudner.
Agarwal recommends employers do an audit of overtime policies and practices.
“And I say that carefully,” he said. “I mean policies and practices. Because it’s one thing to have a written policy, but you want to make sure it’s being managed at the local level.”
But even with clear policies it’s important to remember an employer can’t refuse to pay overtime for work simply because it wasn’t authorized, said McCreadie.
It is important for employers to review policies and related approval forms to confirm there is a mechanism to get approval after the fact if overtime is worked, he said.
“The key thing that employers need to remember is that if an employee is failing to comply with a policy around overtime pre-authorization and approval, an employer can take appropriate disciplinary action,” said McCreadie. “What it can’t do is refuse to pay.”
Employers should go over their records to see if there are any patterns of overtime complaints, said Agrawal.
“For example, if you had an overtime complaint to the local employment standards officer from four or five employees — all of them around the same issue — then you probably want to nip that in the bud and make sure that issue is not something more widespread or symptomatic, so it doesn’t turn into a class action.” he said.
Beware of email overtime
With work so easily extending past the workday employers should be cautious in their provision and use of smartphones, said Rudner.
If an employer establishes an expectation, employees will read and respond to email when they are off duty. Whether that expectation is explicit or implicit, they could face a claim for overtime on that basis, said Rudner.
“The bottom line is that employers can’t bury their heads in the sand when it comes to overtime,” said Rudner. “They need to draft appropriate policies and then ensure that they are followed.”
