Overtime pay in Ontario is governed by Part VIII of the Employment Standards Act, 2000 (the “ESA”).
In a nutshell………
Many employees in Ontario are entitled to overtime pay. For most employees, whether they work full-time, part-time, are students, temporary help agency assignment employees, or casual workers, overtime begins after they have worked 44 hours in a work week. Their hours after 44 must be paid at the overtime pay rate. Overtime pay is 1½ times the employee's regular rate of pay (often called "time and a half”). Unless An employment agreement or collective bargaining agreement provides otherwise, an employee does not earn overtime pay on a daily basis by working more than a set number of hours per day. Overtime is calculated only: on a weekly basis; or over a longer period under an “averaging agreement”.
However, there are some exceptions. Some employees have jobs that are exempt from overtime pay under the ESA. Others may work in jobs where the overtime threshold is more than 44 hours in a work week. For example: EMS, healthcare and health professionals; manufacturing, construction and mining; hospitality services and sales; transportation; agriculture, growing, breeding, keeping and fishing; household, landscaping and residential building services; government employees and professionals. More information about exemption from overtime pay can be found at: www.ontario.ca/document/your-guide-employment-standards-act/overtime-pay.
In addition, managers and supervisors do not qualify for overtime if the work they do is managerial or supervisory. Even if they perform other types of tasks that are not managerial or supervisory, they are not entitled to get overtime pay if these tasks are performed only on an irregular, or exceptional, basis.
Furthermore, employers may be permitted to have written overtime averaging agreements with their employees. If so, they agree to average the employees’ hours of work over a period of two or more weeks to calculate overtime pay – effectively, employees would only qualify for overtime pay if their average hours worked per week during the averaging period exceed 44 hours. For non-union shops, averaging agreements must terminate two years after made. Any averaging agreement must be approved by the Ministry of Labour and, if so, the agreement cannot be revoked before the termination date, unless otherwise agreed. This Ministry approval requirement may change in the near future, however.
In Ontario, there have been several class action lawsuits dealing with alleged non-payment of overtime pay by (large scale) employers, leading to very significant out-of-Court settlements or damage awards against employers. For example:
Fulawka v Bank of Nova Scotia, 2016 ONSC 1576 (CanLII)
Rosen v BMO Nesbitt Burns Inc., 2016 ONSC 4752 (CanLII)
Eklund v. Goodlife Fitness Centres Inc., 2018 ONSC 4146 (CanLII)
Aps v. Flight Centre Travel Group (Canada) Inc., Court File No.: CV-19-00614755-00CP (recently initiated; unresolved)
EMPLOYERS – PROTECT YOURSELVES:
Therefore, employers who do not take adequate precautions may be exposed to claims by non-exempt employees for unpaid overtime pay. To minimize this risk, employers should:
ensure they have an adequate system to track, monitor and compensate employees for actual hours worked;
classify properly all employees (i.e., exempt, non-exempt, managerial, supervisory), including to avoid potential retroactive exposure;
effectively monitor, track and record the hours worked by non-exempt employees, particularly overtime hours;
develop tracking systems, or use a third party service provider experienced in this area;
require that overtime be approved before it is worked;
ensure they have a clear procedure for approving overtime before it is worked and that this is properly recorded at the time
implement a clearly-written workplace policy for overtime pay, specifying clearly, for example, that: overtime must be pre-approved; when and for what purpose overtime may be worked; and who is authorized to approve overtime; and
negotiate with employees to enter averaging agreements, rather than attempt to unilaterally impose those on the employees, particularly at the time of hiring.
It unclear how far back a non-exempt employee could claim for unpaid overtime pay. The prevailing wisdom appears to be the standard two-year limitation period in Ontario, but that has yet to be tested fully by the Courts for every case.
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