Avoiding the pitfalls of white-collar overtime

Elizabeth Howell
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A short while ago, Ottawa lawyer John Westdal heard from a local Avaya employee with an interesting situation: the tech company had sent around a missive banning its workers from checking e-mail on evenings, weekends or holidays.

avoiding overtime

The scenario is one example that Mr. Westdal, a partner at labour and employment law firm Sevigny Westdal LLP, is encountering as overtime legal cases hit the headlines. In March, the Supreme Court of Canada allowed two class-action suits against CIBC and Scotiabank to proceed.

Scotiabank (TSX:BNS) Thursday agreed to settle an overtime class action lawsuit involving some of its retail branch bank employees.

Details of the settlement weren't made public by the bank and are subject to court approval. A hearing is scheduled for Aug. 12. in Toronto.

If the settlement is approved, Scotibank says it will invite all eligible class action members to make claims for any overtime that was worked, but not previously compensated during the claim period identified in the suit.

These cases are making managers re-examine their policies.

“It’s really forced employers to get a true understanding of their overtime liability and risks, and put in place all of those things we talk about to try to limit their exposure,” Mr. Westdal  says.

The law

The Ontario Employment Standards Act mandates employers in most sectors to pay overtime after a worker has put in 44 hours of work in a single week. That pay must be at least at 1.5 times the rate of regular pay.

The situation depends on the employer, however. Some receive permits under the act to have employees work more than 60 hours. Also, different industries have different standards. Banking, transportation and telecommunications fall under the Canada Labour Code, which has different standards for overtime. Federal public servants, meanwhile, have collective agreements. Ontario employees in the private sector could have their own collective agreements in the workplace.

But Mr. Westdal and local lawyer Martin Thompson – a partner in McMillan Ottawa’s employment and labour relations group – say the best protection for both employers and employees is to have written agreements in place before the overtime claim comes up, and to keep careful track of the hours people work.

“Be diligent about what work the employees are doing,” Mr. Thompson says. This includes having a sign-out sheet, monitoring those employees who work before or after the boss is there, and maintaining consistent records to avoid pricey lawsuits.

Overtime policies begin with an employment contract that ideally states that overtime will not be available unless it is pre-approved, Mr. Westdal says. That contract should refer to a more detailed employment policy easily available to all employees, showing under what scenarios overtime is available.

If employees do find the need to work more than what is expected, Mr. Westdal urges communication. “Talk to them. Ask how often is this happening. Realize that they are exceeding these limits and make some new practices,” which would involve restructuring the work somehow so that overtime is no longer needed.


Some methods could include banked time and “side deals,” where employers informally agree to give employees time off in exchange for time worked, Mr. Thompson says. But there are dangers inherent in both practices. Banked time is still treated as billable time when doing accounting. Also, “side deals” can go sour if neither side is keeping written records or the professional relationship between the employee and employer deteriorates. This is why written policies set out ahead of time are best, he says.

A more proper method under the act would be what is called an averaging agreement, in which employees agree to a situation where they might be working overtime on one week, then fewer hours the next, for example. “It requires a properly drafted agreement and weekly limits,” Mr. Thompson cautions.

Both lawyers recommend that written records should be carefully kept by the HR department and employers, not only to keep track of hours worked, but also to protect against frivolous lawsuits.

“Just having good HR practices – that’s the best way for employers to limit or avoid their exposure in this issue,” Mr. Westdal says.

- originally published in Ottawa HR magazine

- with additional files from the Canadian Press

Organizations: Sevigny Westdal, Supreme Court of Canada, CIBC Scotiabank HR department Ottawa HR magazine

Geographic location: Ontario, Canada, Ottawa

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