Busting myths about employments standards: What employers need to know about overtime and vacation
When it comes to employment standards legislation, employers must remember that just because an employee agrees to something, that does not make it lawful. More importantly, parties cannot contract out of employment standards requirements, and employers that breach employment standards legislation expose themselves to significant risk, even if the employee in question appears to have acquiesced.
This often arises when it comes to overtime or vacation. To begin with, the common myth that people that are paid by salary are not entitled to overtime is completely wrong, but continues to persist amongst many employers and individuals. Employment standards legislation in every jurisdiction provides for overtime, though the specific details vary from one jurisdiction to another. What is consistent across the country is that the manner in which someone is paid (hourly, annually, or otherwise), is entirely irrelevant. Exemptions to the entitlement to overtime pay are based upon the nature of an individual’s duties, and not how they are paid. The most common exception is for supervisors and managers. However, simply giving someone a managerial title is not sufficient; tribunals will look at the actual duties and responsibilities in order to assess whether the job is truly managerial, supervisory, or otherwise. If it’s not, then the individual will be entitled to overtime pay in accordance with the legislation.
Even if someone is exempt from statutory overtime pay, that does not necessarily mean that they are not to be paid for extra hours worked. For example, if a manager has a contract which states that they will be paid $100,000 per year, and their hours of work will be weekdays from 9 o’clock to 5 o’clock, with a one hour break for lunch, then any hours beyond 35 in a week would be extra time and should be compensated.
It is not unusual to have employers indicate that they have employees “volunteer” to work evenings and weekends, and that they are quite happy to do so at straight time. However, again, parties cannot contract out of employment standards minimum requirements. While employers are often confident that the employees are quite happy and will never complain, it only takes one complaint, or even a random investigation, to trigger financial consequences.
Employers should take note that Ministry of Labour inspectors have, in many ways, greater powers than the police. Even if they received a complaint from one employee about, for example, overtime, they can investigate any and all potential infractions and demand to review all employee records. This can open an employer up to tremendous liability, in addition to the headaches and stress of dealing with such an inspection and potential prosecution.
With respect to vacation, employment standards legislation in Ontario and most provinces requires that every employee be given at least two weeks of vacation time each year. They cannot simply work through this time and receive vacation pay. However, the reality is that many people do, and many employers unwittingly breach employment standards legislation and risk liability as a result. Any vacation time beyond the statutory minimum can be “use it or lose it”; however, the statutorily required vacation time must be given. In some cases, I have had employer clients force individuals to take vacation time in order to avoid any issue.
Obviously, employment standards legislation addresses many other issues. However, overtime and vacation are where I most often see these “agreements”, whether they be explicit or implicit, that are in breach of employment standards legislation. Whether the employee agrees because they are not aware of their rights, or because they want to ensure they keep their job, or for other reasons, their consent is irrelevant. It is the employer that takes the risk when they adopt practices that are in breach of the applicable employment standards legislation. And as I said above, once the Ministry of Labour becomes involved, they have substantial powers to investigate and prosecute which go beyond the scope of any specific complaint that they might receive.