One of the most common problems employers face in today’s workplace—where technology and the demand for employee responsiveness blur the line between work and non-work time—is determining which employees are entitled to be paid overtime compensation and are subject to hours of work rules (under the Employment Standards Act, 2000) and which are not.
There’s no simple solution to who is and is not exempt from overtime and hours of work rules. The fact that an employee is paid a salary or that his or her title contains the word “manager,” is not sufficient. Instead, employers need to consider the precise job duties performed by the employee and apply the correct list of exemptions. That list varies by province. And if an employee does not fit within a listed class of exemption, that employee is entitled to overtime compensation and hours of work protection.
In Ontario, there are numerous exemptions from overtime and hours of work rules (some are total exemptions, some partial). Some of the most commonly considered exemptions include:
- Managers and supervisors: “[A] person whose work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis.”
- Duly qualified practitioners of various regulated professions, such as law, professional engineering, medicine, and public accounting, and students in training for such a profession.
- Information technology professionals: “[A]n employee who is primarily engaged in the investigation, analysis, design, development, implementation, operation or management of information systems based on computer and related technologies through the objective application of specialized knowledge and professional judgment.”
- Outside salespersons: “[A] salesperson, other than a route salesperson, who is entitled to receive all or any part of his or her remuneration as commissions in respect of offers to purchase or sales that, (i) relate to goods or services, and (ii) are normally made away from the employer’s place of business.”
- Other industry-based exemptions such as those applicable to construction employees, landscape gardeners, residential caretakers, and a host of other specific exempt classes of employees.
In many cases, there is no rhyme or reason as to why a category of employee is or is not exempt. Many employees who one would not expect to be paid overtime—such as highly paid financial professionals—are legally entitled to overtime compensation. This can be jarring for both employers and employees because many highly-paid professional employees work long hours and neither they nor their employers expect to have to record hours of work or to account for overtime when structuring compensation.
Other provinces have different lists of exempt employees. While most have some form of managerial or supervisory exemption, the other exemptions regimes are patchworks covering various combinations of regulated professional, IT professionals, and salespersons, alongside additional industry-based and other exemptions.
The risks for employers that do not carefully apply the overtime exemptions can be significant; the failure to pay overtime could result in an employee making a one-off demand for payment (usually when the employee is discharged or quits), an investigation and demand for payment from the Ministry of Labour, or even a class action against the employer.
The best course of conduct for employers may well be to make sure that they understand the overtime law in the provinces in which they operate and have a sound policy and practice for determining who is and is not overtime eligible.