Overtime: To pay or not to pay?
Dear e-COACH,
What do you suggest doing about clerical/admin staff who are complaining because of overtime pay? They are on salary so we don't really have to pay them for their extra hours but I want to be fair. We don't dock them for coming in late and leaving early and they get the odd afternoon off for appointments. I figure it all works out about even but one of our new clerks is a troublemaker and she is getting the others all worked up by telling them that they should get extra money or time off. Any ideas on how to resolve this?
Dear Fair,
I don't know how to tell you this but your "troublemaker" is actually your guardian angel. Through her, you have been prompted to write to me, which could end up saving you a peck of trouble. You see, the fact that an employee is salaried does not mean that you don't have to pay overtime. Your assumption that being salaried means no overtime pay is a common misconception, but the mode or frequency of payment is not the issue.
The determining factor for payment of overtime is whether the employee is covered by, or exempt from, the overtime provisions in the Employment Standards Act (ESA). Those who are exempt, and therefore not entitled to overtime pay, include managers, certain professionals, selected construction workers, resort employees and other specific employees that are mentioned in the ESA. All others, and probably your clerical admin staff, are entitled to overtime pay at a rate of 1.5 times their regular rate after 44 hours of work per week. As an alternative, and with the employee's agreement, you may offer time off in lieu of overtime pay. The time off would also be at a rate of 1.5 times the regular rate. (Please check the ESA or with your employment lawyer for further important details.)
"But," you ask, "how do I know how much overtime they are working if they are salaried? We don't keep track of their hours!" This is another common misconception: that if your non-exempt employees are salaried, you don't have to record their hours worked. As an employer you do, in fact, have an obligation to keep track of their working hours, so that you can pay them appropriately. I suggest that you immediately set up a system whereby you can record the staff's daily working hours. You might also consider implementing a policy that requires the employees to get management approval before they work overtime hours. That way, you won't be surprised by submissions of extra hours that you didn't deem necessary.
As you have recognized, issues that affect the employee's paycheque are always very sensitive and deserve your immediate attention. Have a meeting and explain to the affected staff that in order to be fair, you will keep track of hours and pre-approve overtime worked with an aim to compensating them with either time off or payment. Remember that employees like to have the lines of communication wide open and prefer to participate in change rather than having it dictated to them, so be flexible and listen to their ideas. Also, you might want to thank your "troublemaker" for bringing the overtime concerns to your attention. Getting her working with you, not against you, will be in your and the company's best interest.
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