are salaried employees entitled to overtime
26Mar

Do Salaried Employees Get Overtime in Ontario?

Many employees and employers assume that salaried workers are not entitled to overtime pay. However, under the Employment Standards Act, 2000 (ESA), eligibility for overtime pay depends on job duties, not the method of compensation. In Ontario, many salaried employees qualify for overtime when they work beyond 44 hours in a workweek.

This article outlines overtime rules in Ontario, how overtime pay is calculated for salaried employees, and what steps to take if overtime is unpaid.

Overtime Entitlement Under Ontario Law

The ESA establishes that most employees, including those on salary, are entitled to 1.5 times their regular pay for every hour worked beyond 44 hours in a week. Employers must ensure compliance with these rules to avoid legal disputes and potential penalties.

Key Overtime Rules in Ontario:

  • Overtime applies after 44 hours in a single workweek.
  • The overtime pay rate is 1.5 times the regular hourly rate.
  • Eligibility is determined by job duties, not pay structure.

Employers are responsible for tracking hours worked and compensating employees accordingly.

Calculating Overtime Pay for Salaried Employees

Overtime pay for salaried employees is calculated based on their weekly salary and standard work hours.

Step-by-Step Calculation:

  1. Determine the Regular Hourly Rate: Divide the weekly salary by the number of hours the salary is meant to cover.
  2. Identify Overtime Hours: Any hours worked beyond 44 in a week are considered overtime.
  3. Apply the Overtime Rate: Overtime hours must be paid at 1.5 times the regular hourly rate.

Example Calculation:

  • Weekly Salary: $1,200
  • Standard Workweek: 40 hours
  • Regular Hourly Rate: $1,200 ÷ 40 = $30 per hour
  • Total Hours Worked: 50 hours
  • Overtime Hours: 50 – 44 = 6 hours
  • Overtime Pay Rate: $30 × 1.5 = $45 per hour
  • Total Overtime Compensation: 6 × $45 = $270

Employers must keep accurate records of hours worked to ensure compliance with overtime laws.

Exemptions from Overtime Pay

Not all employees qualify for overtime pay. The ESA exempts certain professionals and managerial roles from overtime requirements.

Who Is Exempt from Overtime in Ontario?

  • Managers and Supervisors: Employees whose primary responsibilities are managerial do not qualify for overtime.
  • Certain Professionals: Lawyers, doctors, engineers, and architects are exempt from overtime provisions.
  • IT Professionals: Employees working in software design, programming, or system analysis may not be eligible.
  • Outside Sales Representatives: Sales employees who work primarily outside the employer’s premises on commission-based income are generally exempt.

Proper employee classification is essential to ensure compliance with Ontario’s employment laws.

Alternative Overtime Arrangements

Employers and employees may agree to alternative overtime arrangements, provided they comply with the ESA.

Common Overtime Agreements:

  • Averaging Agreements: Employers and employees can agree to average hours worked over multiple weeks, rather than calculating overtime weekly. This requires a written agreement and approval from the Director of Employment Standards.
  • Time Off instead of Overtime Pay: Instead of receiving overtime pay, employees may bank overtime hours and take paid time off later. Each hour of overtime worked grants 1.5 hours of paid time off.

Employers must ensure these agreements are properly documented and meet ESA requirements.

Employer Responsibilities for Overtime Compliance

Ontario employers must adhere to overtime regulations to avoid legal action.

Key Compliance Steps:

  • Correctly Classify Employees: Ensure employees are categorized properly to determine overtime eligibility.
  • Maintain Accurate Records: Employers must keep detailed records of hours worked and overtime payments.
  • Communicate Overtime Policies: Employers should have clear overtime policies and communicate them to employees.

Non-compliance with Ontario’s overtime laws can lead to penalties, lawsuits, and Ministry of Labour investigations.

What If Overtime Is Unpaid?

Employees who believe they are entitled to overtime pay but have not received it should take the following steps:

  1. Review Employment Contracts: Check for overtime-related terms.
  2. Document Hours Worked: Keep a record of work hours, including overtime.
  3. Raise the Issue with the Employer: Discuss the matter with the employer to seek a resolution.
  4. File a Complaint or Seek Legal Advice: If unpaid overtime remains unresolved, employees can file a claim with the Ministry of Labour or consult an employment lawyer.

How Achkar Law Can Help

Navigating overtime pay laws in Ontario can be complex for both employers and employees. Achkar Law provides legal guidance on:

  • Overtime Eligibility: Determining whether an employee qualifies for overtime pay.
  • Employment Contracts: Drafting and reviewing contracts to ensure compliance with Ontario employment laws.
  • Legal Representation: Assisting employees and employers in overtime-related claims.

Contact Achkar Law

If you are an employer seeking compliance guidance or an employee with unpaid overtime concerns, Achkar Law can help.

Call us toll-free at 1-800-771-7882 or email [email protected] for legal assistance on overtime pay matters in Ontario.