Overtime Eligibility in Ontario

“I don’t have to pay overtime because my employees are salaried.”

“I don’t have to pay overtime because my employees are making so much money they are already getting paid for it.”

If you are a business owner or manager that thinks this way, there is a chance that the Employment Standards Act of Ontario is not being followed. If the law is not being followed and back pay is required, the employer could be responsible for back payments up to two years.

This is a complaint based process, so disagreements may have to be addressed by the Employment Standards Branch following a call from a disgruntled employee. Often these complaints are filed by an employee that has just been terminated.

Job duties are the deciding factor in determining overtime eligibility for working more than 44 hours in a week. Exemptions include landscapers, ambulance drivers, taxi cab drivers, IT workers and certain managers and supervisors who spend more than half their time managing others. Managerial duties include budgeting, hiring/firing, assigning tasks, granting time off, setting goals and performance managing employees.

The law applies to part time and casual as well as full time employees. If eligible, the rate of pay for each hour or part hour over 44 in a week is 1.5 times the hourly rate of pay or in the case of salaried employees the rate of pay is calculated by dividing the employee’s weekly salary by the number of hours regularly worked and multiplying that hourly rate by 1.5.

For decision makers willing to gamble that a complaint will not be made, there are potential implications for this strategy aside from back pay. It sends a negative message to employees that you are not respectful of the law. It could also prompt an employee to consider that they are being discriminated against under the Human Rights Code based on their race, ancestry, place of origin, religion or sex, to name some of the categories. It may lead to a union organizing drive.

What should you do? You should review how you have been classifying employees to ensure legal compliance. Rectify any violations of the law. We advocate properly written policies and communication of those policies. Updated written employment contracts are a must. Keep accurate records of time worked for at least two years. Require all managers to approve overtime in advance and mange workloads to minimize overtime. Review your priorities and ask yourself if the overtime is necessary and if job duties need to be redistributed. Avoid informal arrangements that are out of compliance with the ESA.

Scott Forbes is the Sr. HR Advior with BBCi Performance Management Group. We are Human Resources advisors to small and medium sized businesses in Ontario.

You can email him at [email protected]

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