If you're like most Canadian employers, it is likely you
have not looked deeply into your overtime pay obligations.
My experience in acting for employers as a partner in Labour and
Employment law at
McCarthy Tétrault is that many companies unknowingly
violate overtime pay requirements and, as a consequence, have
accumulated significant financial liability. Here are three common
misconceptions employers have regarding overtime pay
1. Paying a fair and fixed salary "covers off"
overtime. Wrong. Most salaried employees are not required
to punch in or to formally record their time. However, a fixed
salary and a flexible work environment do not negate overtime pay
obligations. An employer is still responsible for calculating and
paying overtime when its non-managerial employees work hours that
qualify for overtime pay. It is critical that employers have a
process to monitor and control overtime hours for all eligible
employees, whether salaried or not.
2. If the employee chooses to work longer than standard
hours on a fixed salary, it is his/her responsibility. Not
true. Consider this common scenario. A salaried employee works
fewer hours in some weeks and more in others due to the usual ebb
and flow of the workload, but generally his hours average out at 40
per week. Your company's business picks up but you decide not
to hire additional staff. Without being asked by his manager, the
employee starts coming into work early, eating lunch at his desk,
leaving late and responding to numerous emails on evenings and
weekends. Soon, the employee's new "normal" is 50
hours a week. In Ontario, any hours over 44 per week is considered
overtime and payable at time and a half. So, unbeknownst to you,
this salaried employee is racking up a weekly entitlement to 6
hours of overtime pay on top of his base salary.
3. Claims are rare. This is simply not true.
Today's work environments are evolving and workers are more
knowledgeable about their rights. It is now expected that a
terminated employee will seek legal advice about the reasonableness
of the employer's severance offer and demand more. The
discovery of a hidden overtime claim by the employee's lawyer
will increase the demand and the liability. The liability magnifies
if numerous employees are part of the same "downsizing".
In a recent class action case, a group of laid off workers is
claiming unpaid overtime totaling over $1,000,000.
The point is this: an organization has to be proactive in
assessing its compliance with basic employment regulations.
Otherwise, plaintiff-side lawyers and/or government regulators will
have a field day challenging your practices and procedures.
At McCarthy Tétrault, we have developed an
HR Compliance & Risk Management Diagnostic tool. We use it
to help employers achieve compliance with employment regulations,
reduce the risk of individual employee claims and multi-employee
class actions, and mitigate reputational damage caused by
embarrassing litigation. We see it as an invaluable tool in helping
employers and HR managers navigate increasingly complex employment
laws and their inherent nuances.
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