Canadian HR Reporter

CANADIAN HR REPORTER November 30, 2015 FEATURES 15 PAYROLL An overview of overtime Employers should have a strategic plan that clearly defi nes overtime pay By Nicole Stewart and Amanda Soloway C onfusion regarding over- time pay is common across Canada. Unless organizations have prepared a strategic overtime plan that clearly defi nes overtime pay and have eff ectively communicated this plan to employees, it is likely many employees don't under- stand how to interpret overtime legislation and how it relates to their own positions. For employers — particularly those with multiple locations across the country that are subject to confl icting provincial legisla- tion — remaining compliant can be challenging. Canada's Labour Code sets standards that apply to employ- ers and employees under federal jurisdiction, and several provinces mirror these standards. According to federal standards, the maximum hours an employee can work before overtime is ap- plicable is eight hours per day and 40 hours per week, except in the case of averaging, modifi ed work schedules or special regulations for certain industries and types of work. Provincial diff erences Provincially, these standards range from weekly calculations only (at a maximum of 48 hours per week in Nova Scotia and Prince Edward Island), to various other daily and weekly thresholds. In general, the minimum over- time rate is 1.5 times an employ- ee's regular hourly wage and this calculation varies across provin- cial legislation, with some prov- inces basing the overtime rate on the current minimum wage (such as New Brunswick, Newfound- land and Labrador), the employ- ee's hourly wage or a prescribed rate for specifi c employees (such as Quebec). Several jurisdictions allow em- ployers and employees to agree to replace the payment of overtime with paid leave equivalent to 1.5 times the overtime hours worked or to establish averaging agree- ments that vary the overtime compensation otherwise required by provincial legislation. As well, some jurisdictions con- sider overtime to be optional and allow employees to refuse to work overtime. Provincial employment stan- dards provide the details. To manage the variance in maximum hours worked or rate discrepancies across provinces, national employers may consider making organizational policies compliant with standards beyond the minimum requirements of one specifi c jurisdiction. As well, because weekly stan- dard hours must be reduced by eight hours for each general holi- day that occurs, national employ- ers must pay special attention to provincially legislated holidays, even if they do not apply to the province or territory of the head offi ce. Aside from the challenges na- tional employers face when it comes to overtime rules, HR pro- fessionals and payroll practitio- ners face general challenges when it comes time to apply overtime rules to payroll. e manner in which overtime pay is calculated varies depending on whether an employee is paid on an hourly basis, on a fi xed sal- ary, on a fl uctuating salary or on commission. Additional challenges include the following: Calculating regular wage Overtime rate calculations are fairly simple when based on a provincial minimum wage rate or when employees' regular wage rates are clearly defi ned. But what happens when employees tem- porarily fi ll in for a position at a different wage rate and put in overtime? While best practices suggest an employee's overtime rate should be paid to the position actually worked, it is also common prac- tice to pay employees at the higher rate for the day. Capturing hours worked Employers are required to keep accurate records of all hours worked, but there is no prescribed standard method for time-keep- ing (manual timesheets or bio- metric fi nger readers are equally acceptable methods). It is advisable that some meth- od of time-capture be used or that all overtime require autho- rization, because if an employee legitimately works overtime, he is entitled to overtime pay or time- off in lieu. Non-compliance in this area can have legal implications, as illustrated by various Canadian court cases. Defi ning exemptions Misconceptions surround the topic of overtime pay for salaried workers. Salaried workers are equally as entitled to overtime pay as those who are paid by the hour. Certain occupations, including medical, legal and certifi ed ac- counting professions, are clearly defined as being exempt from overtime pay; however, manage- ment positions are also exempt, and the ambiguity surrounding the legal defi nition of the manage- ment role is where the misunder- standing arises. As a general rule, if a position is primarily of a managerial nature with duties including manag- ing direct reports, performance evaluations and hiring and termi- nation responsibilities or control over hours worked, it may be ex- empt from overtime. Organizations should clearly defi ne all management roles and employees' prescribed job duties to ensure appropriate overtime compensation. Provincial employment stan- dards determine which occupa- tions are exempt from overtime provisions. Mobile technology As mobile technologies such as tablets and smartphones be- come increasingly prevalent in workplaces, a new situation has developed as employees accrue overtime when using mobile de- vices to check email or work on documents after hours. Mobile technology also makes overtime diffi cult to track if spe- cific policies regarding its use haven't yet been created. e best way to avoid potential legal liabilities is to ensure the company has appropriate poli- cies and procedures are in place, and that a method for tracking after-hours or off -site work is es- tablished and communicated to all employees. ere is no quick solution to guaranteeing compliance with overtime legislation. Organiza- tions should clearly define all management and supervisory roles, keep on top of provincial legislation and updates, and es- tablish comprehensive overtime policies and procedures that outline all payroll calculations and how they are applied to vari- ous scenarios, including mobile technology. e key to ensuring compli- ance and preventing misunder- standings at the employee level is for HR to eff ectively commu- nicate company overtime proce- dures to all staff and to incorpo- rate overtime policies into train- ing programs. Nicole Stewart is director of human re- sources and Amanda Soloway is com- munications specialist at Payworks, a provider of total workforce manage- ment solutions, including payroll, HR and time management. For more in- formation, visit payworks.ca. Provincial highlights British Columbia: The overtime rate is 1.5 times the employee's regular wage for hours worked in a day in excess of eight, and double time for hours worked in a day in excess of 12. When calculating weekly overtime, only the fi rst eight hours worked in a day are taken into consideration, and the rate is 1.5 times the employee's regular wage. Alberta: Overtime is calculated on any hours worked in excess of eight hours per day or 44 hours per week at a rate of 1.5 times the employee's regular wage. Saskatchewan: Overtime is paid for each hour or part of an hour in which the employer requires or permits the employee to work or to be at the employer's disposal for more than 40 hours in a week; or either of eight hours in a day or 10 hours in a day. The overtime rate is 1.5 times the employee's regular hourly wage. Manitoba: Overtime is calculated on any hours worked in excess of eight hours in a day or 40 hours in a week at a rate of 1.5 times the employee's regular wage. Ontario: Overtime is calculated on any hours worked in excess of 44 hours per week, at a rate of 1.5 times the employee's regular wage. Quebec: Overtime is calculated on any hours worked in excess of 40 hours per week at a rate of 1.5 times the employee's regular wage. Newfoundland and Labrador: Overtime is calculated on any hours worked in excess of 40 hours per week at a rate of at least 1.5 times the minimum wage. New Brunswick: Overtime is calculated on any hours worked in excess of 44 hours per week at a rate of 1.5 times the current minimum wage. Employees who earn more than 1.5 times the minimum wage do not qualify for overtime compensation greater than their regular wage. Nova Scotia: Overtime is calculated at a rate of 1.5 times the employee's regular wage for hours worked in excess of 48 hours per week. Prince Edward Island: Overtime is calculated at a rate of 1.5 times the employee's regular wage for hours worked in excess of 48 hours per week. Northwest Territories/Nunavut/Yukon: Overtime standards don't differ signifi cantly from federal standards. Employers should clearly defi ne all supervisory roles, keep on top of legislation and have comprehensive policies and procedures. Credit: Songwut Satien (Shutterstock)

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