I recently had a client whose management team was feeling increasingly frustrated by the large amounts of additional hours they were being expected to work on a regular basis. They were told that they were managers and therefore, not entitled to overtime. Which, may or may not be true. Just because you give someone a manager title, doesn’t mean they are automatically exempt from overtime pay, according to Employment Standards.
To determine whether an employee is exempt from overtime the law requires a deeper examination of the role, not just the title. Managers are often misclassified, which can actually cause issues for an organization. Paying overtime when you’re not required to can be a huge expense; but not paying employees the overtime to which they’re legally entitled can lead to overtime claims, as well as lower levels of satisfaction and engagement which puts the organization at risk of losing good employees.
So how do we determine if an employee is truly a “Manager”? To answer this question you have to look to your provincial Employment Standards to help provide a guideline. For the purposes of this blog post, I am going to focus on Alberta Employment Standards and the criteria they set out to help make this determination.
In Alberta, the individual must be “employed in” a managerial or supervisory capacity to be exempt from mandatory overtime. In order to determine if an individual is truly a manager, one of the first things courts look at is whether the employee supervises or directs other employees. Meaning, they may have the authority to do some, or all of the following:
- Hire and fire employees;
- Set work schedules;
- Evaluate employees’ performance;
- Make or recommend promotions;
- Assign tasks to employees;
- Access payroll information;
- Authorize overtime; and/or
- Grant time off.
Furthermore, they may also get paid a higher salary or rate of pay then the employees they supervise; they may participate in business or policy decisions; they may have cheque signing authority or the ability to order supplies without approval.
The more of these responsibilities an individual has, the more likely it is that they have a Manager status according to Employment Standards. If the individual does not fit the criteria of a Manager as outlined above, they can keep their Manager title, but they are in fact, entitled to overtime pay.
So going forward, distinguish your overtime exempt and non-exempt Managers by more clearly identifying the criteria that gives them Manager status. Ensure job descriptions outline the management or supervisory responsibilities of the role, including identifying the positions that report to them and the associated level of authority. Ensure your organizational charts indicate the reporting relationship as well.
One of the major concerns for any organization is ensuring your Managers aren’t getting burned out and disengaged because they feel overworked, underappreciated and undervalued. So monitor the number of additional hours they are putting in; and just because Employment Standards says they are exempt, doesn’t mean you can’t come up with creative ways to compensate Managers for their extra time and commitment.
For more information on managing overtime, or for support regarding overtime in Ontario and other provinces across Canada, contact Salopek & Associates toll free at 1-877-681-1232 to speak with one of our HR Consultants specialized in the Employment Standards relevant to your province.
Sources: Alberta Employment Standards Code; Employment Standards Toolkit for Employers; HR Insider