Last summer a former manager of Starbucks brought a class action lawsuit against Starbucks Coffee Canada Inc. The plaintiff in this action brought the suit on behalf of themself and that of all current and former managers of Starbucks in Ontario, who were employed by the defendant from 2014 onward.
The reason for the lawsuit? The plaintiff claimed that Starbucks had misclassified its managers as exempt from overtime pay and failed to pay them what they were due. The plaintiff class is now looking for $50 million in general damages from Starbucks.
We know what you’re wondering – will this effect the price of my Venti Iced Blonde Vanilla Latte? Well, it might, but the more important and relevant question (as it is in the title of this post) is: are managers entitled to overtime?
In Ontario, overtime pay, also known as “time and a half,” is 1½ times the employee’s regular rate of pay.
Most employees, regardless of whether they are employed on a full-time or part-time basis become entitled to overtime pay when they work more than 44 hours in a work week.
We say “most employees” because there are exceptions to this rule. Among these exceptions are managers and supervisors.
Managers and supervisors do not qualify for overtime pay if the work they do is managerial or supervisory in nature. Even if these particular employees perform other kinds of tasks that are not managerial or supervisory, they are not entitled to get overtime pay provided these non-managerial tasks are performed on an irregular or exceptional basis.
So here is where it gets interesting – if managers are not entitled to overtime pay, why are the former Starbucks managers bringing a class action suit for overtime pay?
The answer – the 50% rule.
The 50% rule provides that if an employee (like a manager), who ordinarily is exempt from overtime pay, completes more than 50% of their weekly work hours doing work that would entitle them to overtime pay (non-managerial work), they must be paid overtime.
In the Starbucks lawsuit, the plaintiffs claim that Starbucks managers were required to regularly perform non-managerial tasks, such as serving customers, preparing drinks, and cleaning the store like the staff they manage, but that they were never paid overtime due to their titles.
While we will need to wait and see what the verdict will be in the Starbucks case, you should remember to carefully consider the overtime entitlement of your employees – it could cost you some big “bucks” in the future. Okay, don’t roll your eyes.
Now to order my Grande Iced Chai Latte…
Robin K. Mann, Associate Lawyer