Standard hours of work in Ontario are 44 hours or less per week. Employees are entitled to their regular wage rate for work during these 44 or fewer hours per week. If employees work more than the standard hours in a week, overtime kicks in and employees must be paid at the overtime rate.
Overtime applies to weeks, not days
Overtime is calculated by weeks only, not individual days. In other words, an employee does not earn overtime pay on any daily basis by working more than a set number of hours in a single day. Rather, section 22 of the Ontario Employment Standards Act says than an employee only earns overtime after they have worked 44 hours or more in a single week.
Overtime rate Ontario
Hourly Employees: Overtime Ontario pay is 1½ times the employee’s regular rate of pay. For instance, if an employee who has a regular rate of $25.00 works more than 44 hours in a week, each hour after 44 must be paid an overtime rate of $37.50 an hour ($25× 1.5 = $37.5).
Salary Employees: Just like hourly employees, after 44 hours, a salaried employee is entitled to overtime pay. There is no exemption to overtime for salaried employees. The math is a bit more complicated however because we have to determine what the employee’s hourly rate is. For instance, let’s say an employee earns $100,000 per year. That means they make $1,923.07 per week ($100,000 / 52 = $1,923.07). This means they make $43.70 per hour ($1,923.07 / 44 hours = $43.70). Next, the employee’s overtime rate is calculated as $43.70 x 1.5, which equals $65.55. Accordingly, every hour the employee works per week past 44 hours must be paid at an overtime rate of $65.55. Therefore, on the next paycheck, the employee must get his or her regular pay plus another amount for all the overtime earned that pay period.
Exemptions to overtime
Managers and supervisors do not qualify for overtime if the work they do is truly managerial or supervisory. To that end, some employers misclassify some of their employees as managers and supervisors to get out of paying overtime. This is illegal.
There is a three-part legal test to determine if a “manager” or “supervisor” is truly entitled to the overtime exemption. Simply calling an employee a “manager” or “supervisor” is not a part of the legal test because some employers in Ontario made up bogus titles to get out of paying overtime. The legal test to determine if an employee is truly exempt from overtime as a manager or supervisor is as follows
“A person whose work is (1) supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an (2) irregular or (3) exceptional basis is exempt from overtime.”
1. “Supervisory or managerial in character”
The first step to determine if the overtime exemption to managers and supervisors applies is to determine if the position is truly “supervisory or managerial in character” and in substance.
Work that is “supervisory or managerial in character” generally refers to the supervision of employees rather than the supervision of machines. Although supervision of other employees is a primary indication of a managerial employee, this factor is not the only one to be considered. Some employees can be considered managerial even though they do not supervise other employees. Some examples of managerial functions are hiring and firing of employees, responsibility for making substantial purchases, financial control and budgeting, and production planning. Other management functions would include the regular exercise of discretion and independent judgment in management affairs (See the Employment Standards Act Policy and Interpretation Manual).
Remember, if there is any doubt, the Ministry of Labour or a court or tribunal is the one who determines if an employee is a manager or a supervisor, not the employer.
The second step to determine if the overtime exemption to managers and supervisors applies is to determine if the employee only does non-supervisor or non-manager jobs in their day-to-day job “irregularly”. If it is determined that the “manager” or “supervisor” actually does a few non-manager or non-supervisor jobs “regularly”, then the overtime exemption will not apply.
“Irregular” implies that although the performance of non-supervisory or non-managerial duties is not unusual or unexpected, their performance is unscheduled or sporadic. For example, if a manager is expected or required to cover staff duties for non-supervisory staff as a result of an unexpected rush of customers, or because a non-supervisory employee has called in sick, these duties may be considered irregular because they are not performed at a scheduled or otherwise regular time. However, if a pattern developed with the result, for example, that a manager was performing staff duties every day during the lunch rush between 11:30 a.m. and 1 p.m., under the law, that employee’s position would be that the performance of those duties was clearly no longer irregular, and therefore the exemption to overtime will no longer apply (See the Employment Standards Act Policy and Interpretation Manual for more).
For another example, if a manager at a fast-food restaurant spends an hour or more of each shift assisting at the cash or in food preparation, these non-supervisory or non-managerial duties may be considered a regular part of his or her duties because they are performed on a “daily basis”, even though the hour of non-supervisory work is not scheduled or performed at a set time each day. Similarly, if a manager spent three or four hours of an eight-hour shift performing non-managerial duties once a week, these non-managerial duties may be considered regular duties and the exemption would not apply (See the Employment Standards Act Policy and Interpretation Manual for more).
The exemption to overtime will not apply even though the employer has not assigned the non-supervisory or non-managerial work, but places the employee in such a position that he or she has no alternative but to regularly perform day-to-day duties of non-supervisory/managerial employees in order to keep the business in operation. An example would be the manager of a small shoe store who operates the business by himself or herself on Monday and is provided with part-time help for the rest of the week. This person is performing non-supervisory or non-managerial work on a regular basis. He or she is, each Monday, required to run the entire operation, including arranging displays, assisting customers, etc., in addition to his or her managerial duties (See the Employment Standards Act Policy and Interpretation Manual for more).
Alternatively, the third step to determine if the Ontario overtime exemption to managers and supervisors applies is to determine if the employee only does non-supervisor or non-manager jobs on an “exceptional” basis.
“Exceptional” suggests that non-supervisory or non-managerial duties may be performed so long as they are being performed outside of the ordinary course of the employee’s duties. That is, their performance is not in the normal course. For example, if, as a result of a severe snowstorm, the manager were to assist a staff member to clear the snow from the entrance to the employer’s establishment (ordinarily the responsibility of the staff member), the performance of this non-supervisory duty could be considered exceptional (see the Employment Standards Act Policy and Interpretation Manual for more).
If it is determined that an employee was wrongfully classified as a “manager” or “supervisor”, then the employer would owe the employee overtime pay going back two years!
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.