Overtime and Employer-Paid Smartphones: The Misconceptions and the Cost of Non-Compliance

If you’re like many Ontario employers, it is possible that you do not completely understand your overtime pay obligations and in these days of smart phones and easy accessibility to the workplace, employers can create liability by expecting additional work, particularly when it comes to email and smartphones.

In recent years, there have been a few high-profile class-action claims for unpaid overtime. It is becoming increasingly common for individuals to complain they are working extra hours, without compensation, often due to being provided with an employer-paid smartphone and then being expected to check/respond to email messages while off-duty.

Unfortunately, many companies unknowingly violate overtime pay requirements and, as a consequence, have accumulated significant financial liability. Many employers are also the subject of overtime claims because they have no records to defend themselves with. Some common misconceptions regarding overtime pay requirements are:

1. Paying a fixed annual salary exempts an employee from overtime. Not true. Just because someone is paid by annual salary does not mean they can be required to work extra hours without compensation. The employer is still responsible for calculating and paying overtime when its non-managerial non-exempt employees work qualifying hours.  It is critical that employers have a process to monitor and control overtime hours for all eligible employees, whether salaried or not.
2. Managers/Supervisors are not entitled to overtime. Not always true. Although Employment Standards legislation does exempt the overtime pay requirement for managerial roles and for certain types of duties, our courts and tribunals will look beyond the job title and examine specific duties to ensure a claimed overtime exemption is legitimate. Giving someone a managerial or supervisory title simply to avoid overtime is not a good plan.
3. If an employee chooses to work longer, it’s on their own time. If an employee works extra hours in the workplace and/or responds to emails after hours, their “normal” work week can easily grow beyond the standard week. In Ontario, any hours over 44 per week are considered overtime and payable at time and a half.  So, a salaried employee could be racking up a weekly entitlement of overtime pay and those hours count even if the employer hasn’t specifically asked them to be worked.
4. Smartphones and After-Hours Activities. Increasingly Dangerous territory. The widespread use of smartphones and the expectation individuals check their email away from work has been a hot topic for a while. Doing so counts in the calculation of the individual’s work hours and unless they are “overtime exempt”, this may result in a significant liability. Even if an employer has a policy prohibiting after-work email use, it is only as strong as the corresponding practice.
5. My employees are salaried, so I don’t have to track their hours. Huge risk. Many feel that tracking a salaried employee’s hours is somehow demeaning, so many employers don’t do it and, therefore, have no record of the actual hours worked by an individual. In recent years, typically after a termination, an individual may have combined a claim for unpaid overtime with their wrongful dismissal claim. The individual would have handwritten or other informal records of their hours, and the employer would have nothing, resulting in the employer having exposed itself to liability for overtime pay.
6. Claims are rare. Not true. Today’s workers are more knowledgeable about their rights. It is now expected that a terminated employee will seek legal advice about the reasonableness of the employer’s severance offer and demand more, and the discovery of a hidden overtime claim will increase that liability. Sometimes, these allegations of unpaid overtime are quite legitimate. Unfortunately, there are some workplaces where vulnerable employees are taken advantage of and forced to work extra unpaid hours.

In short: an organization must be proactive in assessing its compliance with basic employment regulations, or risk legal entanglements and/or government regulators challenging your practices and procedures.

At HR Strategic Partners, we have developed an HR Audit tool that we use to help employers achieve compliance with employment regulations, including Overtime practices and policies, thereby reducing the risk of employee claims and damage to company reputation caused by embarrassing litigation.  It is an invaluable tool in helping employers navigate the increasingly complex employment laws and mitigate risk.

You can follow HR Strategic Partners on Twitter at @HRSP_CA, or check out their website at www.hrsp.ca.

Andrea MacLean is the Managing Director for HR Strategic Partners, an HR Consulting company.