First Reference company logo

First Reference Talks

News and Discussions on Payroll, HR & Employment Law

decorative image

Applying overtime rules in Ontario can sometimes be complicated

With the collaboration of Christina Catenacci

Section 22 of the Ontario Employment Standards Act provides that, in most circumstances, an employee who works more than 44 hours in a given week shall be paid at least one and one-half times his or her regular rate of pay for overtime hours worked. However, this simple rule can become complicated and lead to lawsuits, as several employers have found out recently due to their failure to pay statutory overtime.

Employers may get confused in applying overtime rules because of the myriad of exemptions, special rules and different industry thresholds. Legal exemptions and special rules arise because of the job or the industry sector and are not based on method of payment or employment status. Many employees have jobs that are exempt from the hours of work and overtime provisions of the ESA. Some work in jobs where the overtime threshold is more than 44 hours in a workweek. For example, certain hotel, motel, tourist resort, restaurant and tavern workers get paid overtime after 50 hours a week.

For a full list of excluded workers and special rules, consult Employment Standards Act, 2000 – O. Reg. 285/01.

Let’s examine one specific exemption that complicates the overtime rule. Generally speaking, managers and supervisors are not eligible for overtime pay. Briefly, for managers or supervisors to be denied overtime pay, they must actually manage a part of the business, including other employees, and they must devote the greater part of their workday to doing so.

The Ontario Labour Relations Board recently awarded overtime and vacation pay to a manager whose work included both managerial and non-managerial duties. Since the employee’s non-managerial work exceeded 50 percent of his working hours, this arrangement resulted in the employer owing him overtime and vacation pay for those hours worked, as outlined in the Employment Standards regulation.

The worker was hired as Executive Chef to supervise and administer the employer’s kitchen operations, including food selection, purchasing, employee management and coordination of the kitchen service with other departments.

His duties included:

  • Supervising food preparation, quality and inventories; planning the kitchen budget
  • Interviewing and hiring job applicants
  • Administering the training program and proper placement of employees
  • Setting up work schedules and job requirements
  • Preparing inventories and revising work schedules
  • Reporting on payrolls, overtime, absenteeism and accidents
  • Assisting line cooks during peak hours

The chef was paid a salary and received benefits and a bonus based on a percentage of food costs, unlike the kitchen staff who were paid hourly and did not receive benefits or bonuses.

Due to a combination of employees quitting and being terminated for not meeting standards, the chef had lost five kitchen staff only two weeks after starting the job. The short-handed situation lasted approximately two months until he was able to bring it back under control. During this time, he typically worked seven days a week, 12–16 hours a day. He was performing the non-supervisory/non-managerial duties of line cooking.

Even though the position was viewed as managerial, and hence not entitled to overtime, the owner made a gratuitous payment to him in the amount of $5,000 for his hard work and long hours. The worker made a claim with the Employment Standards Branch for overtime and vacation for all hours worked, and was successful. The owner of the company appealed, claiming the chef was a manager and thus exempt from overtime and vacation.

The board decided the following:

  • The worker’s duties clearly indicated that the fundamental character of the Executive Chef position was managerial and supervisory
  • The performance of line cooking, in the given circumstances, did not alter the essential character of the Executive Chef position
  • The board held that the non-managerial/non-supervisory duties were not irregular in nature, but they were exceptional or “out of the ordinary”
  • Thus, the worker was a person whose work was supervisory or managerial in character, and who performed non-supervisory or non-managerial tasks on an exceptional basis
  • Section 22 of the ESA states that for an employee who performs work that the regulations (s.8(b), Ont. Reg. 285/01) exempt from overtime pay (e.g., managerial or supervisory), and whose position requires the employee to perform both exempt and non-exempt work (line cooking, in this case), overtime pay applies in respect of all work performed in a workweek, unless the time spent performing that non-exempt work constitutes less than half the time that the employee spent fulfilling the duties of his position in that workweek
  • In this case, due to the crisis in the kitchen, there were weeks when the worker’s position required him to perform both overtime-exempted work and work of another kind of character (i.e., the line cooking). In some of these weeks, the evidence indicated that the employee spent more than half of his time performing the other work (i.e., line cooking).

Therefore, the worker was to be compensated for overtime performed in a workweek, so long as the non-exempt work in that workweek constituted 50 percent or more of the time the employee spent working. The overtime pay and associated vacation for time worked amounted to about $9,443. The gratuitous payment of $5,000 was to be deducted from this amount, leaving $4,443 owing to the worker.

What can employers take from this principle?

The Employment Standards Act and Regulations make it clear that a managerial worker who spends more than 50 percent of his or her work time performing non-managerial tasks must receive compensation for those hours. That means, if the managerial employee spends at least half of her or his time performing non-managerial tasks, and at some point works some overtime hours, the employer must pay overtime for these hours.

Employers are recommended to:

  • Be as clear as possible regarding workers’ job duties, and whether the worker is a full-fledged manager
  • Monitor how much time a manager is spending on managerial tasks versus non-managerial tasks so those hours can be tracked as well as overtime owed

But overtime and manager/supervisors is just one issue when it comes to applying Ontario’s overtime rules, and many other variables can increase the complexity. That is why First Reference Inc. has prepared a 36-page guide that will help you keep your overtime practices and procedures up to date and ensure compliance with employment standards overtime rules in Ontario. The guide provides easy-to-understand explanations of what employers need to know and do to comply, as well as practical guidelines, tips, techniques, sample policies, forms and checklists needed when dealing with an employee overtime issue.

Check out our new guide available now on Overtime rules in Ontario. Guides on overtime rules for other jurisdiction will follow shortly.

Yosie Saint-Cyr and Christina Catenacci
First Reference Human Resources and Compliance Editors

Follow me

Yosie Saint-Cyr

Managing Editor at First Reference Inc.
Yosie Saint-Cyr, LL.B., is a trained lawyer called to the Quebec bar in 1988 and is still a member in good standing. She practiced business, employment and labour law until 1999. For over 15 years, Yosie has been the Managing Editor of the following publications, Human Resources Advisor, Human Resources PolicyPro, HRinfodesk and Accessibility Standards PolicyPro from First Reference. Yosie is one of Canada’s best known and most respected HR authors, with an extensive background in employment and labour across the country. Read more
Follow me

Latest posts by Yosie Saint-Cyr (see all)

Kindle

, , , , , , , , , , , , , , , , ,

Comments are currently closed.

One thought on “Applying overtime rules in Ontario can sometimes be complicated
  • Pay very close attention to the information provided in this article! As an employment law trainer I can confirm that employers often misunderstand overtime rules. Consider that if you are getting it wrong the amount you will owe the affected employees in increasing by the hour, literally.