Major employers are paying millions in overtime lawsuits. We should fix our labour laws instead
(Thomas Barwick/Getty)
According to renowned Canadian employment law specialists Bachman-Turner Overdrive, takin’ care of business—every day—means working overtime. Ooh, yeah.
Now, however, legal battles about the whole concept of overtime threaten to upend how the labour market takes care of its own business. A costly saga of multimillion-dollar class-action lawsuits over allegations regarding unpaid overtime has been playing out in Canada for years. In 2008, KPMG paid an estimated $10 million to settle a suit with its employees, prompting other firms to make similar arrangements. A $350-million claim against Scotiabank on behalf of its personal banking officers was settled this summer, although the final price tag has not been announced. A $650-million suit by CIBC tellers is still wending its way through the courts, as is another between BMO Nesbitt Burns and its commission-only investment advisors.
Some background: Labour laws differ from province to province, but typically anyone who works more than 40 to 44 hours per week is owed overtime at one and a half times the usual rate. While it’s traditionally been understood this referred only to hourly wage earners, in fact, the law makes no distinction: Everyone, even those on salary or commission, is technically owed compensation for extra hours worked, unless they’re specifically exempted by law. This gap between the legal fine print and common labour market practice has created a gold rush for class-action lawyers.
But anyone who thinks this craze for overtime lawsuits is about forcing employers to treat all workers fairly is wrong. Exceptions to the rules are everywhere. Any employee with managerial responsibilities is not owed overtime. Neither are professions such as lawyer, dentist and architect. Plus, every province has a curious list of other exempt jobs. In British Columbia, for example, anyone classified as a “high-technology professional” can’t get overtime. In Ontario, the same applies to swimming pool installers, ambulance drivers, mushroom growers, janitors and summer camp leaders, as well as IT professionals.
MORE: Office hours are dead. How do you manage in a 24-7 workplace? »
These lengthy lists of provincial exemptions aren’t signs of Dickensian-style worker exploitation, as is often alleged. Rather, they underscore how employees and employers have always negotiated their own labour standards, regardless of what the law says. Computer game designers in B.C. may put in long and crazy hours, but they’re also lavished with attractive salaries and perks. An inability to claim overtime is compensated for in other ways. As much as the law must be obeyed, I suspect most salaried workers suing for overtime freely accepted their wage and benefit packages on the understanding they weren’t going to get overtime. From this perspective, the lawsuits are an attempt to rewrite good-faith labour contracts after the fact.
Consider more closely the BMO Nesbitt Burns suit, which argues its investment advisors put in far more than 40 hours per week without appropriate compensation. (Yegal Rosen, the representative complainant, says he clocked 65 to 70 hours a week.) This may be true, but it’s a huge misrepresentation of the real deal both sides agreed to at the start. Commission-only jobs attract hard-driving Type-A personalities who accept long hours in exchange for big paycheques. For these folks, a lack of overtime pay is more than made up for by the unlimited earnings potential. Such a trade-off might not be for everyone, particularly if library-style working conditions are more your speed. But a simple job mismatch is not the court’s problem to solve.
MORE: Alberta’s labour shortage solution: pay everyone to work a ton of overtime »
The overtime lawsuit phenomenon is not about the exploitation of workers, but rather class-action lawyers exploiting arbitrary and nonsensical labour codes: Investment advisors can sue for overtime but swimming pool installers, mushroom growers and video game designers can’t. Why? It would make more sense to exempt everyone on salary or commission from overtime and let workers and firms hash out their own arrangements. As they’ve always done.
Peter Shawn Taylor is a writer specializing in economic issues
Blogs & Comment
Canada’s outdated laws on overtime pay make absolutely no sense
Major employers are paying millions in overtime lawsuits. We should fix our labour laws instead
By Peter Shawn Taylor
(Thomas Barwick/Getty)
According to renowned Canadian employment law specialists Bachman-Turner Overdrive, takin’ care of business—every day—means working overtime. Ooh, yeah.
Now, however, legal battles about the whole concept of overtime threaten to upend how the labour market takes care of its own business. A costly saga of multimillion-dollar class-action lawsuits over allegations regarding unpaid overtime has been playing out in Canada for years. In 2008, KPMG paid an estimated $10 million to settle a suit with its employees, prompting other firms to make similar arrangements. A $350-million claim against Scotiabank on behalf of its personal banking officers was settled this summer, although the final price tag has not been announced. A $650-million suit by CIBC tellers is still wending its way through the courts, as is another between BMO Nesbitt Burns and its commission-only investment advisors.
Some background: Labour laws differ from province to province, but typically anyone who works more than 40 to 44 hours per week is owed overtime at one and a half times the usual rate. While it’s traditionally been understood this referred only to hourly wage earners, in fact, the law makes no distinction: Everyone, even those on salary or commission, is technically owed compensation for extra hours worked, unless they’re specifically exempted by law. This gap between the legal fine print and common labour market practice has created a gold rush for class-action lawyers.
But anyone who thinks this craze for overtime lawsuits is about forcing employers to treat all workers fairly is wrong. Exceptions to the rules are everywhere. Any employee with managerial responsibilities is not owed overtime. Neither are professions such as lawyer, dentist and architect. Plus, every province has a curious list of other exempt jobs. In British Columbia, for example, anyone classified as a “high-technology professional” can’t get overtime. In Ontario, the same applies to swimming pool installers, ambulance drivers, mushroom growers, janitors and summer camp leaders, as well as IT professionals.
MORE: Office hours are dead. How do you manage in a 24-7 workplace? »
These lengthy lists of provincial exemptions aren’t signs of Dickensian-style worker exploitation, as is often alleged. Rather, they underscore how employees and employers have always negotiated their own labour standards, regardless of what the law says. Computer game designers in B.C. may put in long and crazy hours, but they’re also lavished with attractive salaries and perks. An inability to claim overtime is compensated for in other ways. As much as the law must be obeyed, I suspect most salaried workers suing for overtime freely accepted their wage and benefit packages on the understanding they weren’t going to get overtime. From this perspective, the lawsuits are an attempt to rewrite good-faith labour contracts after the fact.
Consider more closely the BMO Nesbitt Burns suit, which argues its investment advisors put in far more than 40 hours per week without appropriate compensation. (Yegal Rosen, the representative complainant, says he clocked 65 to 70 hours a week.) This may be true, but it’s a huge misrepresentation of the real deal both sides agreed to at the start. Commission-only jobs attract hard-driving Type-A personalities who accept long hours in exchange for big paycheques. For these folks, a lack of overtime pay is more than made up for by the unlimited earnings potential. Such a trade-off might not be for everyone, particularly if library-style working conditions are more your speed. But a simple job mismatch is not the court’s problem to solve.
MORE: Alberta’s labour shortage solution: pay everyone to work a ton of overtime »
The overtime lawsuit phenomenon is not about the exploitation of workers, but rather class-action lawyers exploiting arbitrary and nonsensical labour codes: Investment advisors can sue for overtime but swimming pool installers, mushroom growers and video game designers can’t. Why? It would make more sense to exempt everyone on salary or commission from overtime and let workers and firms hash out their own arrangements. As they’ve always done.
Peter Shawn Taylor is a writer specializing in economic issues