High Tech Employers Can Avoid Overtime Rules
One of the more challenging, and sometimes frustrating, aspects of employment standards in B.C. is managing the obligation to pay at overtime rates. The overtime rules are not exactly simple, their impact can create a heavy cost burden, and many employers view them as restrictive of flexibility in scheduling.
In very general terms, employers must pay employees at the rate of time-and-a-half for hours worked beyond 8 hours in a day. They must pay at double-time for all hours worked over 12 hours in a day. And, they must pay at time-and-a-half for all hours worked in excess of 40 in a week.
There are, however, certain exceptions to the overtime rules. The most broadly available exception is known as an overtime averaging. The overtime averaging provisions allow employers to schedule employees to work non-standard shifts without having to pay at overtime rates (as long as the shifts work out to an average of no more than 40 hours per week over the averaging cycle).
The overtime averaging provisions are particularly suited to a situation where employees are regularly scheduled to work a non-standard day. An example would be a consistent workweek comprising 4 shifts, each of 10 hours’ duration. Using an overtime averaging agreement, employers can utilize this sort of schedule without incurring any obligation to pay at overtime rates. But for overtime averaging, the employer would be paying an employee on this shift schedule 2 hours of overtime each day. The overtime averaging provisions are not suited, however, to work schedules which are inconsistent or which feature unforeseeable occurrences of overtime work.
The Employment Standards Act also provides some very useful exceptions to the overtime rules for employees and employers within the high technology field. The first, and broadest, exception relates to what are known as “high technology professionals”.
A high technology professional is a person primarily engaged in applying specialized knowledge and professional judgment in relation to information systems, computer and related technologies, scientific or technological products, and scientific or experimental research and development. This designation includes jobs such as computer systems analysts, internet development professionals, and computer programmers. To qualify for the high technology professional designation, employees must perform these activities for at least 75% of their work time.
Any employer utilizing high technology professionals is excused – in relation to those employees – from virtually all of Part 4 (Hours of Work and Overtime) and Part 5 (Statutory Holidays) of the Employment Standards Act. This means that the employer need not limit an employee’s work schedule to 8 hours in a day or 40 hours in a week. If the employee’s work schedule exceeds those thresholds, no overtime pay is required.
In effect, these exceptions to the overtime rules make the high technology professionals equivalent to managers. Their salary is paid in exchange for all hours worked regardless of the number (as long as those hours are not deemed by the Employment Standards Branch to be “excessive”).
The second broad exception relates to what are known as “high technology companies”. A high technology company is one in which more than 50% of the employees meet the definition of high technology professional (or are executives or managers of high technology professionals).
An employer meeting this 50% threshold has the opportunity to be excused, in relation to all its employees (not just the high technology professionals), from certain of the overtime pay provisions. The high technology employer simply has to implement the required overtime averaging agreements.
Having done so, the employer will not have to comply with the requirement to limit the employees’ work schedule to 40 hours (or an average of 40 hours) in a week. But, high technology companies are not excused from the overtime pay provisions in their entirety, so employers should carefully scrutinize the Act to understand their obligations.
The high technology provisions of the Act are designed to give employers in that field a broader discretion in arranging their work schedules. These provisions recognize high technology employers’ tendency to engage in project schedules which call for irregular, intense periods of work.
The degree to which employers are aware of these exceptions to the overtime rules is not entirely clear to me. What is clear is that if your business is in the high technology world, you need to learn about these exceptions to the overtime rules in order to remain competitive in your field.