Employment Law

Guide: Overtime Pay and Compliance with Employment Standards

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Employment lawyers in Calgary will agree that most employees, regardless if they are full or part-time, are entitled to overtime pay.

Overtime pay is protected under the Employment Standards Rules of Alberta. The guideline lays the minimum that companies and businesses need to meet for their employees. It includes things such as hours of work, wages, leaves, termination, and of course, overtime pay.

Other regulations are also applicable, such as the right not to be discriminated against under the Canadian Human Rights Act and regulations to bring equal opportunity to historically discriminated groups under the Employment Equity Act.

Employers need to be compliant with all guidelines, and provincial or federal applicable laws in order to operate smoothly, and that includes making sure you are getting compensated accordingly. In this article, we will look into Overtime Pay and how companies need to comply with minimum standards in Alberta.

Knowing your rights is the first step to ensuring that your best interests are protected.

Overtime Hours and Overtime Pay

As previously mentioned, the majority of workers are eligible for overtime compensation. The Employment Standards Rules of Alberta mention a few exceptions, and depending on the category of work it has a few different applicable rules, but overall overtime is all hours of work that go over “8 hours a day or 44 hours a week, whichever is greater (8/44 rule)”.

Usually, unless there is a clause on the employee’s contract for it, overtime pay is at least 1.5 times the employee’s normal wage rate for all hours of work above the 8/44 rule.

Let us look over a few rules of overtime pay and its exceptions.

Banked Overtime Hours 

Banked hours depend on the agreement between you and your employer. Banked overtime works in the sense that instead of paying your overtime hours, your employer gives you paid time off work with at least a 1:1 ratio of wage payments.

Unless there is an agreement with your employer, you must use all your banked overtime hours within a 6-month period of the end of the pay period in which you earned it.

Change of Ownership

Many people get rightfully worried when the company they work for is sold or merged with another and how it will affect them. Thankfully, this does not mean you will be negatively affected.

Your previous employer will still need to pay for all overtime hours that you worked until the date that the change in ownership occurred. And your new employer will need to give you any banked overtime hours.

Employee Eligibility

Whether you are paid weekly, monthly, or have an annual salary, you are likely to be eligible to be paid overtime hours.

However, there are exceptions in different professional fields. For a full list, we recommend checking the full non-eligible employees list on Alberta’s Employment Standards Rules. But some of the professionals that are not eligible are managers and supervisors, professionals such as architects, dentists or lawyers, salespersons of vehicles or real estate, and domestic employees.

Different Overtime Rules

Some industries have different guidelines for overtime hours and how applicable it is to them. For a full list of exemptions from the general rule, refer to the full table on Alberta’s Employment Standards Rules.

Examples vary, but we will look into some examples of occupations that have different guidelines.

Ambulance attendants can have up to 10 hours daily of work, and overtime pay is only applicable after 60 weekly hours have been worked. Oil Well servicing can have up to 12 hours daily for work, and overtime pay is only applicable after 191 monthly hours have been worked. Firefighting services start receiving overtime hours after 44 weekly hours of work, but this is not applicable if the firefighter has been scheduled to work more than 44 hours in a week – in those situations, the scheduled hours become the limit for overtime hours.

Overtime Pay

Calculating overtime pay is relatively simple. For salaried employees, it is calculated both on a daily and weekly basis, but some exceptions apply since some industries or occupations are calculated monthly.

The Employment Standards Rules of Alberta state that “overtime hours are whichever is the greater number of overtime hours of the daily, weekly, or (if applicable) monthly totals”.

An important aspect to keep in mind is that overtime pay is always based on the work week and not the pay period, even if it ends mid-week.

For employees that are not salaried, overtime pay is usually 1.5 times your wage rate multiplied by the number of overtime hours.

Exceptions

As mentioned before, there are a few situations in which the usual guidelines are not applicable. One of them we have already tackled is paid time off from work using banked overtime hours. In this exception, your employer may give you time off from work at a rate of 1:1. Every hour banked counts as 1 hour of paid time off. If your employer and you have an agreement for it, it is the only exception to paying the usual 1.5 times your wage rate.

The 8/44 Rule

We talked before about the 8/44 rule, but there are also a few exceptions to it besides the ones we looked at before.

The most common and likely for you to come across is if your employer schedules you to work less than 44 hours weekly. As an example, if you are scheduled to work 40 hours weekly, your overtime pay is still applicable under the 8/44 rule.

However, it is possible to have an exception to it if there is a mutual agreement between you and your employer that is in writing that overtime hours are to be counted differently after working less than 8 hours daily or 44 hours weekly.

Commission and Incentive Pays

Since workers that are paid by incentive pay such as commission or similar regimes have no established wage rate, for calculation purposes of overtime pay we must assume that the wage rate is the minimum wage. If the incentive pay is less than $15/hour (the usual minimum wage in Alberta), then the employer must top up the incentive pay earnings.

If the work agreement is a combination of salary and incentive pay, then the salary is used to determine the wage rate. The exception is if the salary part of the employee’s earnings is less than the minimum wage – in those cases, the minimum wage is used to determine overtime hours.

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