Class-action lawsuit highlights need for careful monitoring
What exactly is overtime? And when is an employee entitled to it? The answers to these questions are not always clear. And being wrong can be costly.
A class-action lawsuit was brought against the Canadian Imperial Bank of Commerce in June, claiming $600 million in damages for unpaid overtime.
The case is just one of a number of lawsuits highlighting the critical need for employers to carefully monitor overtime in the workplace and ensure overtime policies are fully compliant with labour standards legislation.
Whether or not employees are entitled to overtime pay for time spent traveling to mandatory training, in excess of their regular work hours, was the subject of a case before the Canadian Public Service Labour Relations Board in January.
In Lamothe c. Canada (Agence Canadienne d’Inspection des Aliments), veterinarians working for the Canadian Food Inspection Agency filed 10 grievances, arguing they were entitled to be compensated for travel time between their accommodations and a training site for two primary reasons — attendance was mandatory and transportation had been arranged by the employer.
The veterinarians maintained they should be compensated for travel time because the employer “controlled the use of their time” during the time they spent traveling whereas, ordinarily, they would have “been at liberty” to travel by their own means. In response, the employer argued travel time in this context should not be compensated as it is equivalent to the time employees would ordinarily spend traveling to and from work.
The adjudicator sided with the veterinarians, stating they were entitled to overtime for travel time beyond their ordinary work hours. She noted the employer had implicitly recognized training constituted work by compensating employees for hours of training exceeding their regular work schedule. With that in mind, travel to and from the training site was a necessary consequence of the training required by the employer and, therefore, the veterinarians were entitled to be compensated for the travel time.
Distinction between types of travel
This decision drew a distinction between travel from the employees’ accommodation to the training center, according to a schedule set by the employer, and time spent traveling from the employees’ residences to the workplace — the difference being control and personal choice.
When travelling from home to the workplace, employees are free to determine how they will use their time and the best mode of travel based on their own time constraints. In contrast, when the travel is arranged by the employer, the employee must comply with the employer’s schedule.
This decision illustrates the type of activity that should be included when calculating an employee’s overtime entitlement. Lamothe was decided under the Canada Labour Code (CLC) where the definition of overtime is broad. The code defines overtime as any hours “required or permitted to be worked” in excess of standard hours. In most cases, standard hours are defined as eight hours a day or 40 hours per week.
Under provincial employment standards legislation, the definition of overtime is often even broader. For example, under Ontario’s Employment Standards Act, 2000 (ESA), overtime is payable on “each hour of work.” Other provinces have similar standards. Under the ESA, an employer is liable for overtime pay even if the employee worked without consent or prior approval. In contrast, the overtime provision in the CLC contemplates requiring or permitting the employee to work overtime.
Lessons for payroll
So what are the implications for payroll professionals?
For federally regulated employers governed by the CLC, it is essential payroll professionals accurately track hours in excess of regular work hours, recognizing that if training or other activities are mandatory, time spent traveling to and attending such programs may be included in the calculation.
Travel time will definitely be included if it is scheduled by the employer. However, based on the definition in the CLC, there is a strong argument that travel to mandatory events outside the workplace in excess of the employee’s ordinary travel time to work should also be included, regardless of which party arranges the travel.
For provincially regulated employers, the payroll department should confirm the definition of overtime based on the provincial labour standards legislation. In most cases, the definition will be broad and include hours worked, regardless of whether they were approved or compliant with internal policies.
This means employers cannot ignore unauthorized overtime hours. In Ontario, directing an employee to stop working overtime is not sufficient. The employer must go one step further and ensure the person is following the direction. Similarly, simply having a policy prohibiting overtime will not insulate against liability. The ESA makes payment for overtime mandatory, regardless of the terms of employment.
Overtime is an issue that can never be ignored. In workplaces where overtime is commonplace, employers must be ever vigilant to ensure it is being accurately tracked. Otherwise, the only way to avoid paying overtime is to make sure no employee is working beyond the standard hours prescribed by legislation.
For more information see:
Lamothe c. Canada (Agence Canadienne d’Inspection des Aliments), 2007 CarswellNat 1682, 2007 PSLRB 60 (Can. P.S.L.R.B.)
David Whitten is an employment lawyer with the Toronto firm of Rubin Thomlinson LLP. He can be reached at (416) 847-1814 ext. 110 or [email protected].
A class-action lawsuit was brought against the Canadian Imperial Bank of Commerce in June, claiming $600 million in damages for unpaid overtime.
The case is just one of a number of lawsuits highlighting the critical need for employers to carefully monitor overtime in the workplace and ensure overtime policies are fully compliant with labour standards legislation.
Whether or not employees are entitled to overtime pay for time spent traveling to mandatory training, in excess of their regular work hours, was the subject of a case before the Canadian Public Service Labour Relations Board in January.
In Lamothe c. Canada (Agence Canadienne d’Inspection des Aliments), veterinarians working for the Canadian Food Inspection Agency filed 10 grievances, arguing they were entitled to be compensated for travel time between their accommodations and a training site for two primary reasons — attendance was mandatory and transportation had been arranged by the employer.
The veterinarians maintained they should be compensated for travel time because the employer “controlled the use of their time” during the time they spent traveling whereas, ordinarily, they would have “been at liberty” to travel by their own means. In response, the employer argued travel time in this context should not be compensated as it is equivalent to the time employees would ordinarily spend traveling to and from work.
The adjudicator sided with the veterinarians, stating they were entitled to overtime for travel time beyond their ordinary work hours. She noted the employer had implicitly recognized training constituted work by compensating employees for hours of training exceeding their regular work schedule. With that in mind, travel to and from the training site was a necessary consequence of the training required by the employer and, therefore, the veterinarians were entitled to be compensated for the travel time.
Distinction between types of travel
This decision drew a distinction between travel from the employees’ accommodation to the training center, according to a schedule set by the employer, and time spent traveling from the employees’ residences to the workplace — the difference being control and personal choice.
When travelling from home to the workplace, employees are free to determine how they will use their time and the best mode of travel based on their own time constraints. In contrast, when the travel is arranged by the employer, the employee must comply with the employer’s schedule.
This decision illustrates the type of activity that should be included when calculating an employee’s overtime entitlement. Lamothe was decided under the Canada Labour Code (CLC) where the definition of overtime is broad. The code defines overtime as any hours “required or permitted to be worked” in excess of standard hours. In most cases, standard hours are defined as eight hours a day or 40 hours per week.
Under provincial employment standards legislation, the definition of overtime is often even broader. For example, under Ontario’s Employment Standards Act, 2000 (ESA), overtime is payable on “each hour of work.” Other provinces have similar standards. Under the ESA, an employer is liable for overtime pay even if the employee worked without consent or prior approval. In contrast, the overtime provision in the CLC contemplates requiring or permitting the employee to work overtime.
Lessons for payroll
So what are the implications for payroll professionals?
For federally regulated employers governed by the CLC, it is essential payroll professionals accurately track hours in excess of regular work hours, recognizing that if training or other activities are mandatory, time spent traveling to and attending such programs may be included in the calculation.
Travel time will definitely be included if it is scheduled by the employer. However, based on the definition in the CLC, there is a strong argument that travel to mandatory events outside the workplace in excess of the employee’s ordinary travel time to work should also be included, regardless of which party arranges the travel.
For provincially regulated employers, the payroll department should confirm the definition of overtime based on the provincial labour standards legislation. In most cases, the definition will be broad and include hours worked, regardless of whether they were approved or compliant with internal policies.
This means employers cannot ignore unauthorized overtime hours. In Ontario, directing an employee to stop working overtime is not sufficient. The employer must go one step further and ensure the person is following the direction. Similarly, simply having a policy prohibiting overtime will not insulate against liability. The ESA makes payment for overtime mandatory, regardless of the terms of employment.
Overtime is an issue that can never be ignored. In workplaces where overtime is commonplace, employers must be ever vigilant to ensure it is being accurately tracked. Otherwise, the only way to avoid paying overtime is to make sure no employee is working beyond the standard hours prescribed by legislation.
For more information see:
Lamothe c. Canada (Agence Canadienne d’Inspection des Aliments), 2007 CarswellNat 1682, 2007 PSLRB 60 (Can. P.S.L.R.B.)
David Whitten is an employment lawyer with the Toronto firm of Rubin Thomlinson LLP. He can be reached at (416) 847-1814 ext. 110 or [email protected].
