EMPLOYMENT STANDARDS ACT AND OVERTIME
At triOS college in the HRM component of the business program we familiarise students with the key aspects of the employment law. Employees feel that they know the employment laws fairly well, but a small misinterpretation of law can unnecessarily expose an employer to potential legal action.
At triOS we seek ensure that students have an accurate understanding of key elements of the employment law to help a graduate minimise the legal risk for a new employer. For example, let’s consider the case of overtime. Every worker in Ontario would probably feel they understand this law fairly well. They would be able to accurately tell you that if an employee is working more than 44 hours in a week that they are entitled to time in half for each extra hour worked over 44 hours. Of course the employer does not have to pay the employee if they give the employee time in lieu.
This of course is true and is accurately applied when the employees are paid by the hour, but it seems that both employers and employees are uninformed in regards to the nature of overtime salaried employees. Research shows that employers assume that if you are a salaried employee that you are not entitled to overtime. (45% of organizations expected non-management staff on full-time salaried physicians to work overtime without pay). At triOS we seek to make graduates aware of this common misconception.
This belief that salaried staff are not entitled to overtime has left organizations exposed to unnecessary legal risk and has seen any series of class-action lawsuits for unpaid overtime for salaried workers being brought before the courts. CIBC, KPMG and in the Bank of Nova Scotia have experienced lawsuits brought by salaried staff seeking unpaid overtime in recent years. The employment standards act clearly states that salaried workers are not excluded from overtime pay and have the same rights as their hourly colleagues.
The belief that salaried workers do not have to be a paid overtime could perhaps come from the complicated nature of the employment standards act. The act grants exceptions from overtime pay to a range of different jobs such as, lawyers, and doctors, landscapers, information technology professionals to name but a few. So perhaps we could be forgiven in assuming that no salaried staff is entitled due to the nature of all these exceptions. At triOS we learn that the ESA also exempts managers from overtime pay. However, the ESA also recognizes that just because the employee job title contains the word manager, does not mean that they are actually engaging in managerial activities. So the areas question is what is the manager according to the ESA? Managerial duties include hiring, firing, promoting, disciplining employees, making decisions, budgetary responsibilities etc. 30% of organisations don’t understand ESA’s definition of a manager. But we also have to be aware of is the 50% rule; the “entitlement to overtime pay will hinge on whether at least 50 per cent of the working hours were spent in a job category that is covered by overtime pay rules. If they were, the employee is entitled to overtime pay if he or she worked more than 44 hours in that week.”
Graduates will be able to assist their new employers and help them revisit the ESA and improve their understanding of what a manager and is and is not. They may need to investigate if salaried employees qualify for overtime via the 50% rule. Clear records need to be kept of all hours worked by all employees (hours worked at home can be included – so it might be best to refrain from sending emails after hours), so it would be prudent to have employees sign off on hours worked. To ensure that organizations are getting their return on investment in employees they may need to closely police what their employees are doing. Be careful if you are allowing employees to bank overtime in lieu as that time must be calculated at time and half of hours worked. It is also prudent to ensure the employees have signed agreements to extend the period which the overtime in lieu must be taken from 3 months to a year. Employers should also entering into averaging agreements for hours of overtime worked as a standard part of their employment contract.
Written by: Philip Hanan
Business Faculty Head
ABOUT THE AUTHOR
Phil instructed in England for the past 7 years and recently moved to London, Ontario. He graduated with BA Honours in Business, Accounting and Economics from Trinity College Dublin in Ireland. He also established a University Foundations program for the Auckland University of Technology in both Accounting and Economics. Phil is an excellent mentor and coach to our students and he is eager to continue his love of teaching Accounting and Bookkeeping at the London campus!