Make Overtime Policy Fair and Clear
January 06, 2010
Lang Michener LLP InBrief Winter 2010
Many employees consider it necessary to work overtime to finish their assignments. Employers view it as a crutch relied upon by the inefficient or as a voluntary act of contribution, intended to distinguish them from the mediocre. Should it be paid for or ignored?
In a court case decided this past summer, bank tellers claimed their jobs could not be completed without overtime hours. The bank insisted that without pre-approval, it would not be paid.
The tellers balked, initiating a class action for years of overtime pay. Hopeful that the court would view this unpaid work as rank exploitation, they even sought punitive damages.
Bank policy required pre-approval for overtime. The tellers claimed this was a sham since while they were effectively forced to work to complete their assignments, the bank actively discouraged them from claiming it. They alleged that the bank falsely recorded their regular hours despite knowing that the actual hours were much greater.
Tens of thousands of non-management bank employees across Canada would have benefited had they succeeded in bringing this class action. So too, awaiting the outcome, were scores of other employee groups intent on riding the coattails of these tellers.
After years of skirmishing, Madam Justice Lax resolved the issue, finding nothing improper in a policy that required an employer's approval before overtime could be claimed. She also concluded that there was no evidence that the bank had systematically required employees to work more than their regular time. As she denied the class action, employers breathed a collective sigh of relief.
Had the tellers succeeded in challenging overtime policies that required pre-approval, the aftermath would have rendered many workplace practices and policies illegal and ineffective. Groups of employees, likely in most white-collar industries, bolstered by this success, would have pounced, with massive class actions paralyzing Canadian workplaces.
Instead, a pall is cast over those hoping to challenge overtime policies. The judicial position is appropriate. Employee-initiated overtime work need not be paid if prior approval is not obtained when a policy requiring that is in place. Management should be allowed to plan the costs of conducting its business.
Despite this reprieve, employers should be cautious. A practice that effectively requires employees to work overtime could result in an order to pay overtime even if the policy requires pre-approval.
If your corporate practice consistently results in overtime work, to avoid exposure to the next massive overtime class action, heed the following:
- Review your overtime policy and hold it up to the light of the economic realities of your enterprise. Are there tasks that fundamentally require overtime?
- Ensure there is no systemic imposition of overtime.
- Eliminate employee discretion as to when overtime is allowed or required.
- Clearly communicate in writing the policy that any overtime work requires management pre-approval.
- Have a proper process in place for employees seeking prior approval of overtime work.
- Ensure all employees who are expected to and do work overtime have their time appropriately recorded.
- Modify and manage your employees' time and workload effectively.
- Create an emergency overtime provision so that if overtime is required and pre-approval not obtained, such overtime does not vitiate the general policy.
- Consult as required to ascertain which categories of your employees are exempt from overtime pay.
E.d.: This article appeared previously in Howard's weekely column on the first page of the Working section of the National Post.
This article appeared in the Lang Michener LLP InBrief Winter 2010.