In our connected age, work often creeps beyond the set hours of the workday. See my last post about legislating the right to disconnect for more on this. We often get questions from employers and employees about whether salaried workers should be getting paid for these extra hours and what exactly counts as “overtime.” Let’s dive in.
Maximum Hours of Work
Under the Ontario Employment Standards Act, 2000 (ESA) most employees can legally work a maximum of 8 hours per day and 48 hours per week. It is possible for an employer to require that the employee work more than this, but in this case an agreement must be made in writing and the employee must be provided with this information sheet about hours of work and overtime pay first. Other jurisdictions have similar rules.
The fact that an employee is paid a salary does not change that they are entitled to compensation for all the time that they spend working. If the employment agreement specifies a very clear 40-hour work-week, with no wiggle room for the employer to require them to stay late or come in for special events, then the employee could take the position that their salary compensates them for 40 hours only and that they are entitled to be compensated for any time they work beyond those 40 hours.
If on the other hand, the employment agreement builds in flexibility for the employer regarding hours of work, by for example saying something like:
- “You will work all the hours required to fulfill the demands of your position” OR
- “Your typical work week will be 40 hours, but operational needs may dictate that you occasionally work more than 40 hours. Subject to statutory requirements, your salary compensates you for all hours worked”
then the employee is likely not entitled to compensation for time worked beyond their regular 40 hours, unless it’s true overtime, which we will discuss next.
The ESA dictates that workers (with some exceptions) are entitled to overtime pay for any time worked beyond 44 hours per week. Overtime is paid at 1½ times the regular rate (i.e. “time and a half”) for each hour over and above 44 hours per week. If the employee is salaried, as opposed to hourly, the overtime rate is calculated by dividing their weekly salary by 44 to arrive at their hourly rate of pay.
If the employee has a very clear work week of 40 hours and a contract with no wiggle room for the employer to require more, their hourly rate will be their salary divided by 40. For these employees who may be entitled to compensation for hours beyond those set out in their contract, they would be paid straight pay, based on this hourly rate, for time above their usual work week up to the 44 hour threshold. At the 44 hour threshold the employee would be entitled to be paid at time and a half.
There are many categories of workers who are exempt from overtime and hours of work legislation. These include lawyers, IT professionals, high level managers, many workers in health care etc. The Ministry of Labour has a user friendly tool for determining which employment rules apply to which jobs.
Employers can save themselves a lot of headaches by tackling overtime and hours of work questions head on both in the employment contract and in good policies. Unaddressed employee claims for unpaid hours of work and overtime can be a big liability. If you think your workplace needs a tune up, feel free to reach out.
Employees who regularly find themselves working long after their supposed “end time” may want to look into whether or not they are being taken advantage of. While some workers are exempt, many people work extra time without claiming the extra compensation they may be entitled to.