In Ontario, the Employment Standards Act, 2000, (“ESA”) provides provincially regulated employees the opportunity to work beyond a standard number of hours per week and receive additional compensation for doing so. While this may appear to be clear cut on the surface, the ESA contains numerous procedures and exceptions surrounding overtime work and pay. It’s important for employers to be aware of the details of proper overtime work and pay, so as to not unintentionally violate the ESA.
How is Overtime Defined?
The ESA defines the overtime threshold as work in excess of 44 hours in one week. This means working in excess of your regular hours in one day does not itself entitle you to overtime pay—you must have exceeded 44 hours worked for the week. However, the ESA provides certain exceptions, where certain industries or lines of work are exempt from the general threshold of 44 hours in a week, and may instead follow a different scheme when it comes to overtime pay.
Managers and supervisors that are performing managerial or supervisory work do not qualify for overtime pay. Likewise, even if the manager or supervisor is performing non-managerial/non-supervisory work, they will not qualify for overtime if such work is not performed regularly.
How is Overtime Pay Calculated?
Overtime work is paid based on what is known as the overtime rate. The standard overtime rate defined by the ESA is 1.5 times the normal rate of pay in the case of an hourly employee.
Employees can also make agreements with the employer to have their hours averaged over a set period for the purposes of determining entitlement to overtime paid, with the permission of the Director of Employment Standards.
For employees on a set salary, the rate of pay to be used when calculating overtime pay is obtained by taking the employee’s weekly compensation and dividing it down to an hourly amount. The overtime rate is then applied to that hourly figure.
There are exceptions when it comes to the overtime rate based on the specific type of job. For example, some positions may have an overtime threshold greater than 44 hours per week. Employees and employers should always confirm whether an exception applies when it comes to overtime work.
Employers should also note that they cannot enter into agreements with employees for the employee to give up their rights to overtime pay or to the overtime rate. Such an agreement would not be considered enforceable at law.
Employees additionally have the option, if agreed to by the employer, to receive paid time off from work in lieu of overtime pay. Under this option, employees would be provided 1.5 hours of paid time off for every hour of overtime worked in a week, provided this time off is used within three months. The employer can also allow the time off to be used within twelve months with the employee’s agreement.
Considering the large numbers of exceptions and differences depending on the type of job, employers should consult an employment lawyer to ensure no mistakes are made regarding an employee’s overtime pay.
If you are an employer and want to ensure you are complying with overtime laws, or an employee who wants to know more about your rights, our team of experienced legal professionals at Achkar Law can help. Contact us by phone toll-free at 1 (800) 771-7882 or email us at firstname.lastname@example.org and we would be happy to assist.
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