Are your overtime policies up to snuff? Several recent cases have highlighted the need for effective overtime policies to avoid potentially massive lawsuits. In June 2012, the Ontario Court of Appeal allowed class action lawsuits to go forward on behalf of employees at two national banks. In those actions the representative plaintiffs are claiming $350 million and $500 million, respectively. The employees are seeking compensation for unapproved overtime on the basis that the banks’ policies of requiring preapproval for overtime run contrary to federal employment legislation. In the United States, a representative plaintiff has successfully launched a similar class action, seeking overtime for all employees who use their Blackberries during off-duty hours.

Employment legislation in Alberta dictates that it is the employer’s duty to record, and provide a statement to the employee of, all hours worked. Further, employees are entitled to be paid for any hours worked. That might include some occasions when the employer did not request or authorize the work. It might even include, in some cases and depending on the employer’s policies, times when the employer was not aware that the work was being done.

Where an employee works in excess of 8 hours in a day or 44 hours in a week they must be paid overtime at a rate of at least 1.5 times their normal hourly wage. There are exceptions to the overtime requirement, but they are interpreted narrowly, so it is best to make sure before relying on one. For example, there is a common misconception that no salaried employees are entitled to overtime, but this is inaccurate. Such mistakes can be costly, as accounting firm KPMG learned in 2008 when they settled such a claim for $10 million.

In light of these obligations, Alberta employers must be vigilant to avoid claims for unauthorized or Blackberry-related overtime claims similar to those mentioned above. The following tips will help to minimize the risk of these sorts of claims.

Establish Clear Policies

It is important that your company’s overtime policies are clear and understood by all employees. In particular, it is important that employees be aware of the circumstances in which they are prohibited from working overtime and the consequences of violating the overtime policy.

Similarly, clear policies should be in place establishing when the use of Blackberries is permitted outside of working hours.

Another option is to establish overtime agreements. However, this will only prevent overtime if time off in lieu is taken within 3 months of the overtime hours being accrued.

Monitor, Record and Report Time

Employers ultimately have the onus of recording time worked and reporting it to the employee. Where an employer’s records are incomplete employees may be able to successfully claim overtime for unrecorded hours with little proof they were actually worked. For example, in the absence of employer records to the contrary, an employee’s journal will often constitute sufficient evidence to support a claim for unpaid overtime. Thus, meeting the recording and reporting obligation can help to protect an employer from large claims for unpaid overtime.

One way to do this is to require employees to report any unrecorded time worked outside regular hours at regular intervals. The employer can then deliver reports on each employee’s hours and require the employee to review and verify the report’s accuracy. While ultimate responsibility for recording time will remain with the employer, this will help to shift some of the onus back to the employee.

Other tools, such as software that monitors Blackberry use or controls the hours during which work emails can be sent, may also be beneficial. Ultimately, though, each employer will need to carefully assess the best options for their business.

Discipline Overtime Policy Violators

Even though an employer may have to pay for unauthorized or unrecorded overtime, they can also discipline an employee for violating their overtime policy. Thus, progressive discipline may be a useful tool for ensuring compliance. When paired with clear policies and an effective monitoring system, the employer’s early intervention into violations of overtime policies is an effective way to reduce the risk of large claims for unauthorized overtime emerging down the road.

Maintaining an effective overtime policy is an important step for all employers. Whether your policy needs a little tweaking, or a complete overhaul, it is important that you seek legal advice to help you create a policy that meets your business needs and is in line with current law.