The vast majority of non-unionized employers don't fully understand employment legislation as it pertains to overtime. Many believe, for example, that salaried employees are exempt from overtime compensation. Some choose to ignore the rules, arguing that paying overtime isn't standard practice in their industry, while others will try to designate the majority of their workers as managers, who are generally exempt from receiving overtime entitlement in Canada. Others have trouble defining exactly where overtime begins in flex-time and telework situations.
A recent Ontario Court of Appeal ruling may have you rethinking how you manage employee overtime. The court decided that two major unpaid overtime lawsuits against CIBC and Scotiabank can proceed as class actions. Both actions allege that bank employees were expected to work late regularly, but overtime policies made it difficult for staffers to get paid for their extra work. The lawsuits also accuse the banks of poor maintenance of their record-keeping systems—a key employer obligation. The allegations have yet to be proven in court, but these cases shine a spotlight on an uncomfortable issue for employers—particularly small businesses, which often rely on workers to put in extra hours to get the job done.
While it's unlikely this ruling will result in unpaid overtime lawsuits raining down on employers, all it takes is one complaint to land a company in hot water with provincial employment standards inspectors, which can result in fines and compensation for unpaid wages, and damage to workplace morale. I've seen cases in which employers were forced to pay multiple employees $10,000 each to settle issues relating to unpaid overtime.
Worse, provincial and federal departments tend to flag offenders and share information, which means an unpaid overtime complaint could result in a visit from a health and safety inspector. These officials will be looking for records and evidence that you're in compliance with applicable legislation. If you can't provide that evidence, you could be on the hook for further penalties. Moreover, the last thing any business owner wants are multiple government agencies snooping around for non-compliance.
Read: How Not To Get Sued By Employees for more ways business owners can stay out of court
Ensure your HR policies comply with provincial overtime legislation in five simple steps:
Become a diligent record keeper: When an employee lodges a complaint with a provincial labour ministry alleging she's been forced to work overtime without pay—and has unofficial documentation tallying her hours such as her own notes—but you lack written evidence proving otherwise, recent decisions have sided with the worker on almost every occasion. Approve and track every hour of time your staffers work and have them sign time sheets acknowledging their accuracy, where appropriate, even if your attendance is honour based.