Although legislatively mandated, paying overtime to employees is rarely enjoyable for employers.
Overtime pay is triggered when employees entitled to overtime pay under the Ontario Employment Standard Act, 2000 (the “Act”)work over 44 hours in one work week. Often referred to as “time and a half,” overtime pay is calculated as 1 ½ times the employee’s regular rate of pay.
Before rushing off to indiscriminately pay your employees overtime, it’s important to remember that not all employees are entitled to overtime pay even when they work over 44 hours. For example, lawyers, accountants, and IT professionals are not entitled to overtime pay (that’s right, I don’t earn any overtime pay for writing this blog – so, you’re welcome). Mangers and supervisors are also not entitled to overtime pay if the majority of their tasks are supervisory in nature. Lines can get blurred for managerial roles, so it’s helpful to get a legal opinion to determine if there is any overtime entitlement.
Interestingly, under the Act, employers can come to an arrangement with employees to offer additional days off in lieu of overtime pay. However, the employer and employee must agree electronically or in writing to this arrangement of “banking hours”.
If your employee has agreed to bank overtime hours, they must be given 1½ hours of paid time off work (at their applicable regular rate) for each hour of overtime they work. Their paid time off must be taken within three months of the week in which the overtime is earned. If the employee agrees electronically or in writing, these three months can be extended to 12 months.
Overtime pay can be tricky. Be sure that you are only paying it when required and consider alternatives like banking hours to ease the financial burden overtime pay can create.
Robin K. Mann, Associate Lawyer