On January 31, 2015 the Ontario Superior Court of Ontario
certified a $100 million dollar class action lawsuit for unpaid
overtime against Canada Cartage, a transportation company governed
by the Canada Labour Code. The case is a stark
reminder to employers of the potential costs of not complying with
provincial or federal overtime requirements.
Overtime claims usually arise in one of the following
An employer mistakenly believes that the employee is not
entitled to overtime because they are paid a salary rather than on
an hourly basis. Most provincial employment standards legislation
set out the specific exemptions to the overtime requirements.If an
employer can't fit within one of the exemptions, overtime will
be owed. In Ontario, for example, the method by which an employee
is paid is not relevant to the issue of entitlement – it is
the nature of the position that matters, not whether the employee
is paid a salary or an hourly wage. Regard must be had to these
specific exemptions in order to ensure an employee is being
An employer does not require an employee to keep track of hours
worked and then the employee makes a claim for overtime once they
leave the employ of the company. This is more common than people
may think as employees often keep their own records of hours worked
and then make a claim for those overtime hours after they have been
dismissed or resigned from their position. If these claims are
included in a wrongful dismissal action, an employee can claim up
to 2 years' worth of overtime. This practice and resulting
liability can be avoided by having a clearly written policy that
requires an employer's written consent before overtime hours
can be worked. Employers must be careful to make sure the policy is
consistently applied and avoid condoning extra hours being worked
by employees. Also, if an employer does discover that an employee
has worked and claimed overtime without authorization the
appropriate response for a first offence is to still pay the
overtime but apply progressive discipline in accordance with the
company's discipline policy;
An employer tries to assert that an employee's salary
includes a component of overtime as a defence to a claim that
overtime should be paid in addition to the salaried compensation.
Unless the employer can credibly identify the portion of the
salaried compensation that represents overtime and defend that
allocation through the use of time records/overtime hours actually
worked by the employee, it should be expected that additional
overtime will be awarded to the employee. The employer must be able
to show a predictable pattern of overtime that is worked by the
employee each week and the compensation terms must be set out in a
hiring letter or employment agreement;
An employer allows employees to take "lieu" time
instead of paying out the overtime but does not bank the time off
in accordance with the legislative overtime requirements. In
Ontario, for example, overtime is generally owing at time and a
half after forty-four hours in a week. While the practice of
banking time off is permitted under the Employment Standards
Act it must be banked at time and a half, not straight time.
Claims arise when employees seek compensation for the half time not
banked by the employer; and,
Once an individual employee makes a complaint to the Ministry
of Labour, many provincial employment standards statutes allow the
Ministry to conduct audits of the entire workplace to determine if
the overtime non-compliance is systemic or an isolated incident
with the employee who complained. These audits can result in
significant liability if overtime is not being paid in accordance
with provincial statutes.
It doesn't take a class action lawsuit for overtime to
become a significant liability for employers. Adherence to
applicable legislative requirements and carefully drafted policies
are the best defence against expensive overtime claims.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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