Overtime: A Ticking Time Bomb?

Published April 26, 2009

Curiously, we have been approached three times in the last month by sport organizations confronted with requests from employees to be paid out for significant accumulated overtime hours.  In all cases, these claims have proved legitimate. A warning bell is ringing here! We would like to share this information with our newsletter readers.

Under provincial employment law in most provinces, the number of hours worked in excess of 44 hours per week are deemed overtime hours. Overtime hours are compensated at 1.5 times the employee’s wage. Employers and employees may enter into agreements to exchange time-off-in-lieu of payment of wages for overtime hours.

Well, that’s nothing new you say. You’re right! We’ve all known that, for a long time. We also know that working in the sport community often means working unusual hours including evenings, weekends and, depending on the sport and the season, working a lot of overtime hours.

Less well-known, however, are these two stipulations in many employment statutes in Canada:

• Overtime may be offset by time off only if the employer and employee enter into a written agreement to do so, and
• Compensating time off must be taken within 90 days, and if not, the employer must pay the overtime hours.

The reality is that not all employees have a written contract that stipulates a time-off-in-lieu policy. In fact, many employees have no written contract at all! Furthermore, the inclusion of a time-off-in-lieu policy in the organization’s personnel policy is alone, insufficient unless it is referenced in a separate written contract with the employee.

A further reality is that not all employers pay attention to the 90-day rule. A more common practice is that employees are instructed to take overtime before the end of the year. In some organizations, there is no firm policy and employees take the overtime whenever they can, which sometimes means that they don’t take it at all.

Taken together, these somewhat stringent employment rules and the less-than-stringent employment practices that we observe in parts of the sport community, add up to a significant potential liability for employers. A risky situation all around! One of the organizations that came to see us had an employee claiming approximately $40,000 in unpaid wages. As noted at the top of this piece, the claim was legitimate and we advised the organization to go back and try negotiating a deal combining paid time off and payment of salary. Failing a deal, the employee in question may have succeeded in having the Ministry of Labour order the employer to pay the entire amount.

Fortunately, this employment risk can be easily mitigated by paying careful attention to employment practices.  At a minimum:

• Have a current written employment contract with all employees
• Include in this contract a provision for time-off-in-lieu of overtime
• Require that all overtime incurred have supervisory approval in advance, and have the supervisor also approve when the time off will be taken
• Maintain a careful written docket of overtime worked and time off taken
• Enforce the 90-day rule

We acknowledge that the details of this may vary from province to province, so if you have questions, contact the Centre for Sport and Law to learn more.

Originally published: Centre for Sport and Law Newsletter Vol. 5(1)