Like a Boss: the Managerial Exception to Overtime Pay under the Ontario Employment Standards Act

A short while ago, someone who follows me on Twitter reached out to me looking to ask me questions about practising employment law in Ottawa. Having a rough idea of who this individual was, I agreed to meet him to discuss the market and opportunities that might exist. I was impressed not only by his initiative to reach out to me but by his accomplishments while articling. Accordingly, I advised him that if he took the further initiative to write a guest post for this blog I would post it. Mr. Daniel Pinsky upheld his end of the bargain, so, in upholding my end, below one will find his post, which he titled Like a Boss: the Managerial Exception to Overtime Pay under The Ontario Employment Standards Act.

*By Daniel Pinsky

As an articling student, one of the many things I learned was that I was not covered by the rules governing overtime. Articling students, along with many others, are exempt from selected provisions of the Employment Standard Act (“ESA”), set out in Regulation 285/01, the Exemptions, Special Rules And Establishment Of Minimum Wage. Though the exemptions for students in training in the ESA regulation are rarely disputed, other overtime exemptions are more often considered. A particularly contentious exemption is the one to overtime for "managers" and "supervisors" under section 8(b) of the regulation, which states:

Part VIII [overtime pay] of the Act does not apply to a person whose work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis;

Recently, the Ontario Superior Court of Justice considered this exemption in Tsakiris v. Deloitte & Touche, 2013 ONSC 4207. The case involved a senior manager at an accounting firm who made a number of claims including that he was entitled to overtime pay for the two years prior to his termination. The employer argued that the employee was a manager and therefore was not entitled to overtime.

While the plaintiff held the title of “senior manager,” the court looked beyond his title and used a two part test to determine whether the employee was exempt from overtime pay. The Court set out the test as follows:

[130] [F]irst, there must be a determination of whether the “character” of the employment is managerial or supervisory; second, if the answer to the first question is yes, there must be a determination of (a) whether the individual performs non-managerial or non-supervisory tasks, and, if yes, (b) whether these tasks are done on an irregular or exceptional basis.

In performing this analysis, the court considered the feedback forms provided by subordinate employees, which included questions regarding the employee plantiff’s leadership and delegation of tasks. Further, the court examined in the employee’s performance review where he was:

[E]xpected to demonstrate an ability to guide and facilitate the preparation of work, and effectively delegate work by establishing team deliverables and milestones, explain objectives clearly, monitor progress and hold people accountable for results. He was also responsible for assigning tasks to team members that furthered their knowledge and skill development, achieving a climate of participation and team involvement in decision-making and communicating decisions and modifications relating to the project to the team in a timely manner.

The court additionally considered that the employee had commented in his own performance reviews on his ability to delegate and organize work for subordinate employees and the cooperation he encouraged among them.

These factors led the court to find that the substance of the employee’s position was supervisory or managerial. Though he performed some duties and tasks that were more secretarial in nature, these activities did not change the nature of his employment or constitute the performance of non-supervisory or non-managerial duties on a regular or ordinary course basis.

Interesting Note: The 50% rule 

The Tsakiris case is a straightforward example of an employee holding a high level position that clearly was managerial in nature. However, the ESA also considers the situation of an employee who may be responsible for a mix of both managerial and non-managerial tasks. The ESA provides a solution for the balancing of both exempt and non-exempt work in s. 22(9):

If an employee who performs work of a particular kind or character is exempted from the application of this section by the regulations or the regulations prescribe an overtime threshold of other than 44 hours for an employee who performs such work, and the duties of an employee’s position require him or her to perform both that work and work of another kind or character, this Part shall apply to the employee in respect of all work performed by him or her in a work week unless the time spent by the employee performing that other work constitutes less than half the time that the employee spent fulfilling the duties of his or her position in that work week. 

Essentially, if someone performs both exempted and non-exempted work, then if the non-exempted work is more than or equal to half their work time, they may be entitled to overtime.

This was the issue under consideration in Glendale Golf and Country Club Limited v. Sanago, 2010 CanLII 4265 (ON LRB). In this case, an executive chef whose duty was to oversee the kitchen at a country club, was compelled to work in the kitchen performing the functions of subordinates due to high turnover in the kitchen staff which resulted in understaffing. The employee was required to perform this work for a period of approximately 2 months.

The Ontario Labour Relations Board first considered whether the chef’s performance of the work of subordinates was done “regularly” or on an “exceptional” basis. The Board held:

[50] In the present circumstances, the Board finds that the duration resulted in a regular daily pattern developing. However, that regular pattern can trace its origin back to the “out of the ordinary” events that took place in the kitchen. The fact that the duration of the crisis lasted for approximately two months is consistent with a finding that exceptional events did occur. Therefore, the Board finds the duration of the crisis (ie. approximately two months), before the situation was brought under control and a state of normalcy returned, does not militate against a finding of “exceptional”. The Board finds that the events that created the crisis proportionally contributed to the depth and breadth of the crisis and hence the length of time it took before the crisis was resolved. The Board finds the events which necessitated the Executive Chef performing non-managerial/non-supervisory duties, to be “out of the ordinary” be properly characterized as “exceptional”.

However, unlike in Tsakiris, the Board continued its analysis in regard to the application of ESA s. 22(9). The Board found that there is, “no reason why, a managerial/supervisory employee (whose duties require him or her to perform both exempt and non-exempt work), should not receive overtime pay in respect of all of the overtime work performed in a work week when irregular or exceptional circumstances result in 50% or more of that employee’s working time being devoted to performing the non-exempt duties”. The final result was an award of damages in the amount of approximately $10,000 for 5 weeks worth of overtime.

For Employers 

Simply granting an employee the title of manager does not make them exempt from the overtime provisions of the ESA. Managers or supervisors will only be exempt so long as they perform non-exempt work on an irregular or exceptional basis for less than 50% of their work week. It is important to keep records of both what is expected of an employee and of the work that is actually being done.

For Employees 

While you may be entitled to overtime that is not being paid to you, a judge will not simply grant overtime pay because it is requested. It is important to document the work that is being done and the amount of time spent on tasks that are not managerial or supervisory in nature.

Commentary by Sean Bawden

Daniel's post is good and his comments are valid. Overtime, like many employment issues, is vexing. The ability for an employee whose business card says "manager" to be found not be a "manager" under the law may seem perplexing. However, like almost all things in law, substance prevails over form; what matters is not what you're called, what matters is what you do.

If you are an Ontario employee and you believe that you might be entitled to overtime, the employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to you.

If you are an Ontario employer and one of your employees is asking for overtime pay, which you feel you do not have a legal obligation to pay, it may be prudent to seek a legal opinion from a professional. The employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization as well.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals. He is a trustee of the County of Carleton Law Association for 2013.