Employers Must Control Overtime Work
Under employment standards legislation, the employer has the burden of controlling its employees’ performance of overtime work. If the employer allows its employees to perform overtime work, even without express permission, it must pay them at the prescribed rates.
There are a number of ways for employers to control their employee’s performance of work beyond the thresholds of 8 hours in a day or 40 hours in a week.
The best way to start is including a provision in an employment contract making the company’s overtime policy contractually binding. The contract should also emphasize the employee’s obligation to obtain express permission before performing overtime work.
The overtime policy should confirm that overtime work will only be performed with the prior authorization of management. The policy should identify a standard form on which overtime work will be recorded and which will be the basis for the overtime pay calculation. The completed overtime forms should be kept by the employer for a minimum of 2 years.
The overtime policy should also allow for performance of overtime work in an emergency, but should state that repeated, unauthorized, overtime work will result in disciplinary measures.
Most importantly, the employer must be proactive to ensure that its employees are complying with the policy. It is not enough to make a blanket policy statement and then ignore it. An employer who turns a blind eye to employee’s performance of overtime work will find itself liable for retroactive pay at overtime rates as well as for (now) mandatory fines.
The B.C. Employment Standards Act also provides several avenues for employers to minimize their liability for overtime pay. First, at the employee’s request, the employer can implement an overtime bank instead of paying the wages as they are earned. All banked overtime must be paid out within six months of being earned and must be paid at the applicable overtime rates.
Second, employers can now implement overtime averaging agreements over a repeating cycle of up to four weeks’ duration. Using an averaging agreement, employees may work up to 12 hours in a day and an average of 40 hours in a week at straight-time pay rates.
Overtime averaging agreements do not have to be filed with the Employment Standards Branch, but they do have to comply with specific requirements. Employers should educate themselves about these requirements before attempting to implement an agreement.
Third, an employer can apply to the Employment Standards Branch for a variance of the overtime provisions. If, however, the sole purpose of the application is to allow the employer to avoid paying overtime rates (such that the employees obtain no benefit from the proposed arrangement) it is unlikely to be approved by the Branch.
Employers who have been using so-called flexible work schedules should be aware that, as a result of the most recent changes to the Employment Standards Act, such schedules are no longer valid.
Regardless of the options provided in the Employment Standards Act, the best strategy for controlling liability for overtime pay is limiting the performance of overtime work. There is simply no substitute for the employer’s proactive control of the workplace.