It does not matter how you are paid, be it hourly, or salary paid weekly, bi-weekly or monthly, you are by default entitled to overtime pay under Part VIII of the Employment Standards Act (“ESA”). You would also be entitled to premium pay and public holiday pay.
Being paid via salary has many advantages. There are likely no longer issues of scheduling shifts and not knowing how much each paycheck will be. Salary also carries an implicit degree of job security, as the employer is committing to a longer-term relationship.
However, some employees have the critical misconception that they are no longer entitled to overtime pay since they are on salary. Usually, this arises out of a current or former employer telling them as such.
A related misconception is that salaried employees do not get paid for public holidays. Like hourly employees, salaried employees are entitled to public holiday pay and premium pay if they work on that public holiday.
This salary removes entitlement idea does not stand up to a simple test. We have a minimum wage that entails the least amount someone can be paid an hour, which is as of October 1, 2020, is $14.25. If you worked 44 hours a week and got a salary of $30,000, you would be working for $13.11 an hour. This practice of using salary to try to avoid minimum wage is expressly prohibited by Section 23 (4)(a) of the ESA.
The same applies to overtime. Under the ESA, if an employee works more than 44 hours a week, those extra hours are overtime hours and are paid at 1.5 times the regular wage. It is essential to note overtime is calculated on a weekly basis, not a daily one.
Section 23 (4)(b) mirrors 23 (4)(a), except it concerns overtime. Salaried employees are still entitled to overtime. A rate per hour would be calculated using the salary and regular hours of work. Overtime pay would 1.5 times per hour.
For example, take a salary of $45,760, and an employee who works the standard 44 hours. If that employee instead did 50 hours, they would be entitled to roughly an additional $180 for that week’s pay. If that had happened every week for two years, that is around $18,000 that employee is owed. To obtain this, an employee would make an ESA claim, which a lawyer can help the employee with —understanding what to claim and how can be a daunting process.
Having a lawyer complete the application on behalf of the employee has two main benefits. Employment law firms do these types of applications on a very regular basis, so are experts in what should be included. With the above example, the employee could also be entitled to an additional $720 in vacation pay.
Employers do have one alternative to paying overtime pay, which is time off in lieu. In simple terms, this is converting overtime pay into vacation pay and time. There are strict rules about how this has to be done, such as there being a requirement the agreement be in writing or electronic. The conversion must also be done on the same basis as overtime. This means 1 hour of overtime is 1.5 hours of paid vacation time. In the example above, the employee would be getting one paid vacation day roughly every week.
There are exceptions to the rule that salaried employees are entitled to overtime pay, but most will not apply. Professionals such as doctors, lawyers, engineers, and dentists are not eligible for overtime pay nor minimum wage. The reason is that these groups are understood to be paid well already, are sophisticated legal actors who can negotiate for themselves, and in most cases, are paid based on billing hours or services provided.
The most common and contentious exception is the managerial exception. The law assumes that managers and supervisors, just like professionals, are sophisticated legal actors and will already be compensated well for the extra time they put in.
Companies saw this rule and realized it was the exact salaried employee loophole they had been lying to employees about. This led to fake promotions to “manager,” where the actual job was the same as when the person was a regular employee. As managers were exempt from overtime, the hours they worked would not be recorded by the company, making any future claim much harder.
This is further complicated because the job description and the actual work performed can often be completely different. The ESA Officers in charge of enforcing the law know this, as does the Ontario Labour Relations Board.
If you are a salaried employee who is working more than 44 hours a week and is not being provided overtime pay, we encourage you to contact De Bousquet PC.