Top 10 Overtime Tips for Employers

otDo your employees work overtime? If so…

  • Do you know when and how much to pay them?
  • How – and how well – do you keep track of their hours?
  • Do you have an OT policy in place that is fair, transparent, and consistently applied?

A series of class action employee lawsuits out of Ontario over the past few years offers a sobering reminder to employers about the need to know (and fulfill) your overtime obligations under the law. The most recent of these, Baroch v. Canada Cartage, 2015 ONSC 40 involves a claim brought by one employee of a national trucking company on behalf of 7,800 others. If successful, his claim could cost the employer over $100 million.

While the Baroch case raises specific and legally complex issues relating to Canada Cartage’s overtime policies and practices that our BC clients may never face, it did cause us to pause and reflect on the topic of overtime more generally. This month, we share with you the results of these reflections, which we have compiled in our list of Top 10 Overtime Tips for Employers. Enjoy!

ot2Kent Employment Law’s Top 10 Overtime Tips for Employers

1. Know your legal obligations. As obvious as this sounds, it still bears saying. Part 4 of the BC Employment Standards Act (the ESA) contains a comprehensive set of rules regarding hours of work and overtime that all employers should know by heart. While we touch on many of these rules below, this list is by no means a comprehensive summary of your ESA responsibilities.

2. Develop an overtime policy that fits the realities of your workplace. Does the nature of your business often require extra work hours? Is it reasonable in your particular circumstances to require your workers to get pre-approval before working overtime?

3. Put the policy in writing and communicate it to your employees. It is crucial to be clear with your workers about what you will and won’t allow in terms of extra hours of work. The BC Employment Standards Tribunal has consistently confirmed that it is your responsibility to control and direct your employees’ hours of work if you want to avoid overtime liability. If you don’t want your employees to work extra hours, you must tell them so and make sure they don’t.

4. Regardless of what your policy says, don’t “let” your employees work overtime unless you are willing to pay them for it. Under the ESA, employees may work a maximum of 8 hours a day or 40 hours a week before being entitled to overtime pay. If you “directly or indirectly” allow an employee to work beyond these hour thresholds, you must pay her overtime. This means that even if you didn’t require her to work those extra hours, but simply allowed her to do so, you are still liable for overtime.

5. Don’t forget that “in lieu” hours are calculated on the same basis as overtime wages. If you decide to create a time bank for an employee’s overtime hours and allow him to take time off in lieu of receiving overtime pay, remember that he is entitled to 1.5 hours of paid time off for every extra hour he worked (or 2 hours for any hour he worked over 12 hours in a day).

6. Don’t hand out the title of “Manager” in an attempt to avoid your overtime obligations. Although it’s true that managers are not entitled to additional pay for working overtime, just calling a person a manager is not enough to make him one. In BC, it is the substance of a person’s employment – what the worker actually does on a daily basis – that determines whether he is a manager or employee. If a worker’s principal employment responsibilities consist of supervising or directing (or both) human or other resources, he’s a manager (and exempt from the overtime provisions of the ESA).

7. An employee’s travel hours may attract overtime wages if they involve “work” (and exceed the daily and weekly hour thresholds). Whether travel time is “work” under the ESA will depend on various factors, including whether the employee has assigned duties en route, whether you have provided her with the vehicle, and whether her travel expenses are compensable. If her travel time is properly considered commuting rather than work, don’t include that time in your overtime calculations.

8. Maintain proper records of your employees’ work hours. Even though an employee has the initial responsibility to prove he worked extra hours, you won’t be able to avoid your statutory duty to pay overtime simply by failing to keep daily work records. In fact, if you don’t keep proper payroll records, the Employment Standards Tribunal may rely on the employee’s records (or testimony) to determine his overtime entitlements.

9. Ensure that your managers, supervisors and payroll staff understand and are properly applying the ESA rules and your policies. As your representatives, it is their responsibility to help implement the system you have created.

10. And finally, follow your legal obligations. The Part 4 rules are not optional. For example, although it may seem reasonable to reach a side agreement with an employee regarding reduced overtime wages, such an agreement violates the ESA and will be unenforceable.

Oh, and Tip #11? When in doubt, consult your employment lawyer!

While there is no way to completely prevent employee overtime claims from being made, following these tips will at least strengthen your position should you have to defend against them.

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