Introduction
Overtime pay continues to be one of the biggest issues in employment law, especially given the millions the employers are potentially liable for to settle unpaid overtime in class action suits. For instance, in Fulawka v Bank of Nova Scotia,[1] the court approved $41.6 million compensation to the 1600 class members for the unpaid overtime. Admittedly, such huge awards can financially cripple a firm, necessitating measures to protect against them. Unfortunately, preventing these claims is difficult since the rules are numerous and easily subject to misinterpretation.[2] To demystify this problem, this paper reviews key issues regarding overtime pay, such as the misclassification of employees, erroneous exemptions, poor policies, and coercion by employers. It then offers recommendations on how to avoid such pitfalls. The paper begins by defining overtime pay and the framework for its application.
Definition and Framework for Application
Overtime pay refers to the compensation accrued to the employees for each hour worked more than the prescribed hours in a week. In Ontario, these hours are prescribed by the Employment Standards Act and vary depending on the industry. For instance, Section 13(1) prescribes a maximum of 55 hours per week for road builders, while Section 18(1) prescribes 60 hours for employees in highway transport.[3] At the federal level, provisions on overtime pay are found in the Canada Labor Code, which also exempts professions like doctors and lawyers. In Ontario, further exemptions are made for ambulance drivers[4] and firefighters[5] as their services are critical.
[1] Fulawka v. Bank of Nova Scotia, [2012] ONCA 443.
[2] Peter Spiro. “Class Actions in Employment Related Disputes.” The Canadian Class Action Review 11, no. 1 (2015).
[3] Employment Standards Act, 2000, SO 2000 c 41.
[4].Section 8 (1) (a), Employment Standards Act.
[5]Section 8 (1) (k), Employment Standards Act.
In determining whether overtime is due, those involved assess whether the number of hours worked in a week is over the prescribed ones. The period is considered maybe weekly or more, but not daily. Notably, these extra hours attract a remuneration of at least one and a half times that of the normal hourly wage the individual receives, as per the wording of the various enabling provisions like section 13(1). [1] For instance, if a road builder worked for 60 hours and received $18 an hour, he would receive 27 dollars for the 5 hours over the prescribed 55 hours. As such, his total compensation would be $1125. Notably, this extra remuneration is his right, not a privilege accorded by the employer.
As noted in the preceding, overtime pay is usually a right guaranteed by federal and statutory regulations. The employer cannot divest them of this right, even if the employee signed a contract stating that he had given up the right. Such means that the employee can always claim the pay, even if they are no longer working for the employer. For instance, in the recently concluded Fresco v Canadian Imperial Bank of Commerce,[2] the class comprised 31,000 current and former frontline bank employees who worked for the defendant between February 1993 and June 2009. Given the possibility that even past workers may come to claim, firms must guard themselves against these claims by preventing their occurrence. Unfortunately, overtime pay is usually misunderstood, as evident in the key issues discussed below.
Key Issues
Disputes on overtime pay usually seek to redress the exploitation of the worker by the employer, who are unjustly enriching themselves. Such is especially true in precarious employment like migrant work and temporary agency work, where the employer can easily coerce the employees. Such even happens in banks, as evident in Fresco v. Canadian Imperial Bank of Commerce, where the employees complained that the employer directed them to describe their work hours as no more than their regular daily hours, even when overtime was due. [3] In such scenarios, the employers get to enrich themselves at the expense of the worker, which they can further undertake through misclassification.
Misclassification of employees is another troubling issue in overtime pay disputes. Such misclassification involves identifying employees as managers, yet their work does not reflect the title’s legal requirements, even the most basic ones like supervising other workers. [4]. Even though it may be unintentional, such misclassification deprives the employees of overtime since managers are statutorily exempted from claiming overtime pay under section 4(1) (b). [5] By eliminating their right to overtime pay, employers benefit immensely, especially when their workforce is huge. In Rosen v BMO Nesbitt Burns Inc,[6] Justice Belobaba recognized this injustice and approved a $12 million settlement for the 1800 misclassified employees. Such served as a warning to other employers undertaking such measures and further illuminates the issue of erroneous exemptions.
Erroneous exemptions are another issue in disputes over overtime pay. They involve disqualifying employees from claiming overtime on the wrong grounds. Admittedly, the most rampant case of erroneous exemption stems from the belief that salaried workers do not qualify for overtime pay as they have a fixed salary rather than an hourly one. [7]. Such an exemption is wrong since salary. An hourly basis is just a method for calculating how wages are paid, not determining whether the employee will receive overtime pay. Unfortunately, this belief persists even today, often to the peril of the uninformed employers and employees as they risk and incur losses through the erroneous exemption. Such gets further aggravated by the poor policies governing overtime pay.
Poor policies governing overtime pay are another problem that bedevils policies. Notably, such policies are usually an attempt by the employer to prevent overtime claims from occurring. For instance, in Fulawka v. The Bank of Nova Scotia, the employer required the employees to request advance authorization before undertaking overtime, a failure for which the firm would not compensate them. [8] The court found such a policy unconscionable since it actively discouraged the employees from getting their overtime pay. Additionally, the policy was erroneous since, once accrued, employees cannot waive the right to claim compensation. Notably, such poor policies problematize overtime pay which, in worst cases, employers have to pay millions of dollars as compensation to their employees.
Conclusion
The preceding discussion establishes the intricacies of overtime pay, one of the greatest issues in employment law. The discussion establishes how it occurs in Ontario when an individual works above the hours prescribed by the Employment Standards Act or the Canadian Labor Code. Additionally, it notes that not even the employees can divest themselves of the right to claim compensation once due, as established in cases where the courts award even employees who are no longer working for the organization. Such awards may even cripple the employer, especially when it is a class action suit. Such gravity demands that employers understand how the law works. Unfortunately, the ensuing confusion over the interpretation and application of overtime pay law renders such understanding difficult. To redress this, we offer the following recommendations.
Recommendations
As noted in the preceding, laws governing overtime pay are subject to misinterpretation, often to the employer’s peril if discovered. Therefore, employers’ understanding of the laws applicable to overtime pay is more important as they stand to lose the most in disputes. Employers should also keep meticulous records of hours worked even when they do not think they have broken any laws, as such is crucial to fending off the claims by employers. Lastly, employers should recognize that they cannot divest the employees of their entitlement to remuneration for overtime once accrued, even if the employee got it without their knowledge. As such, they should avoid trying to circumnavigate the laws through tradeoffs and prohibitory policies, as they become redundant once overtime is accrued.
References
- Canada Labour Code, RSC 1985, c L-2.
- Employment Standards Act, 2000, SO 2000 c 41.
- Fresco v. Canadian Imperial Bank of Commerce, [2010] ONSC 4724
- Fulawka v. Bank of Nova Scotia, [2012] ONCA 443
- Mirchandani, Kiran, and Sheldon M. Bromfield. “Roundabout wage theft: The limits of regulatory protections for Ontario workers in precarious jobs.” Journal of Labor and Society 22, no. 3 (2019), 661-677. doi:10.1111/wusa.12443.
- Rosen v BMO Nesbitt Burns Inc., [2016] ONSC 4752
- Spiro, Peter. “Class Actions in Employment-Related Disputes.” The Canadian Class Action Review 11, no. 1 (2015).
- Thomas, Mark P., Shelley Contratto, Danielle Landry, and Mercedes Steedman. “Flexibility for Who? Working Time, the Ontario Employment Standards Act and the Experiences of Workers in Low-Wage and Precarious Jobs.” Relations industrielles 75, no. 1 (2020), 78-100. doi:10.7202/1068716ar
- [1] Employment Standards Act.
- [2] Fresco v. Canadian Imperial Bank of Commerce, [2010] 324 ONSC 4724.
- [3] Fresco v. Canadian Imperial Bank of Commerce, [2010] ONSC 4724
- [4] Mark P. Thomas et al., “Flexibility for Who? Working Time, the Ontario Employment Standards Act and the Experiences of Workers in Low-Wage and Precarious Jobs,” Relations industrielles 75, no. 1 (2020): 79.
- [5] Employment Standards Act, 2000.
- [6] Rosen v BMO Nesbitt Burns Inc., [2016] ONSC 4752.
- [7] Kiran Mirchandani and Sheldon M. Bromfield, “Roundabout wage theft: The limits of regulatory protections for Ontario workers in precarious jobs,” Journal of Labor and Society 22, no. 3 (2019):664
- [8] Fulawka v. Bank of Nova Scotia, [2012] ONCA 443.