As employers know, employees who are covered by British Columbia’s Employment Standards Act ("ESA") must be paid overtime when they work in excess of the hours stipulated in the ESA. What many employers may not know, however, is that in certain circumstances the Employment Standards Branch may even require compensation for overtime to employees who are not actually covered by the ESA. In addition, because of recent legal developments employers are now vulnerable to breach of contract lawsuits by employees for unpaid overtime.
Overtime for "Excluded" Managers?
Because of the decision in Kamloops Golf and Country Club Ltd. v. British Columbia (Director of Employment Standards),1 a "manager" may be entitled to be paid straight time for all hours worked if there are any references in his or her employment contract to a specific number of hours of work that the employee is expected to work. In Kamloops, the employee’s employment contract stated that his "standard" work week was 40 hours, but provided that overtime hours during the busy season were to be credited for time off during the remainder of the year. Although the ESA overtime provisions did not apply to the employee because he was a "manager", the Employment Standards Branch held that he was entitled to be paid wages (at straight time) for all hours worked over and above a normal work week as set out in his employment contract.
Civil Actions for Overtime
In addition, because of the BC Supreme Court’s recent decision in Macaraeg v. E Care Contact Centers Ltd. ("Macaraeg"),2 employees may now seek recovery of overtime in civil lawsuits. Prior to Macaraeg it was thought that employees could only make a claim to the Employment Standards Branch for unpaid statutory overtime. In Macaraeg, the employee alleged that shortly after she commenced her employment she began routinely working twelve hours per day during the week and eight hours on Saturdays. Her employment contract set out an annual salary but was silent on overtime pay. Upon being terminated without cause, the employee brought a wrongful dismissal action in which she sought damages in lieu of reasonable notice and payment of overtime hours she had worked during her employment. The court held that where an employment contract is silent on the issue of overtime, the minimum overtime requirements of the ESA are implied terms of the employee’s employment contract. The court also held that the employee was entitled to bring a civil action to enforce her ESA right to overtime pay and that the Employment Standards Branch did not have exclusive jurisdiction to adjudicate such claims. Macaraeg is significant for two main reasons. First, unpaid overtime claims are particularly well-suited for class action suits. Ms. Macaraeg has in fact filed a class action suit for unpaid statutory overtime, as have two employees in Ontario who worked for the retail arts and crafts chain Michaels’ Stores, Inc. (Cotton v. Michaels’ Stores, Inc.). Second, normally under the ESA current employees can only claim unpaid wages that became payable in the period beginning six months before they made a complaint, while former employees are limited to the wages that became payable in the six month period before they were terminated. Based on Macaraeg, however, it appears that there may be no such limitation for employees who pursue their overtime claims in a civil suit. In summary, employers must be mindful that even employees who are normally excluded from the ESA may seek recovery for overtime from the Employment Standards Branch, and that now employees may also seek recovery for overtime in civil lawsuits. The easiest and most obvious way to minimize potential liability is to pay overtime to employees in accordance with the ESA. Other practical measures that can be taken are entering into averaging agreements and/or establishing time banks in accordance with the ESA, managing the amount of overtime employees covered by the ESA work and amending managers’ employment contracts to make it clear that they are not entitled to overtime.
Footnotes
1 2002 BCSC 1324
2 2006 BCSC 1851
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