Overtime Part 2: The Manager Exemption

manager exemption for overtime
Photo by Jonas Leupe on Unsplash

Last week we wrote about ways employers can manage overtime liabilities with Averaging Agreements and Time in Lieu. This week we will tackle a commonly litigated overtime issue – the manager exemption. 

The Manager Exemption 

Not every worker is entitled to overtime pay. Exemptions are set out in section 8 of Ontario Regulation 285.1 under the Employment Standards Act, 2000. Included in the list of the exempt is the manager or, to be exact, “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.” Who exactly falls under this exemption can be unclear. 

Looking Past Title and Salary

Contrary to what many employers think, simply giving an employee the title “manager” or “supervisor” will not suffice to exempt the employee from overtime entitlements. Similarly, paying an employee a salary will not exempt them from overtime. 

Legal decision-makers will look past salaries and title to determine the true character of the employee’s job and whether the individual performs work that is “non-supervisory or non-managerial” on a more than an “irregular or exceptional basis.”

The True Character of the Job

In determining the true character of a job, and if that true character is supervisory or managerial, decision-makers will consider if the employee:

  • Is able to take independent action
  • Has autonomy and discretion about how to perform their job
  • Has the ability to determine work processes of those they supervise 
  • Makes final decisions regarding the business 
  • Has authority to hire, fire or discipline employees
  • Has authority to authorize employee overtime, call employees into work or send them home 
  • Trains other employees 

The other important aspect of the analysis is that any non-managerial duties are performed only exceptionally or irregularly.  Here’s a fun quote to illustrate: 

“One single non-managerial act does not necessarily destroy the essential nature of the job as being only managerial in character. If the managing editor of the New York Times writes a single editorial or reports a single story, that does not necessarily destroy the essential character of his job as being only managerial. It is a question of degree.” Kennedy v. William C. Cavell Enterprises Ltd., [1987] O.J. No. 1050, 18 C.C.E.L. 52 (Ont. Div. Ct.)

The takeaway here is that legal decision-makers will really dig into what that managerial employee actually does to determine if they are exempt.

How Does a Salaried Worker Get Paid Overtime?

As noted, provided that they are not exempt, even employees who are paid a salary may be entitled to overtime. What’s a salaried employee’s overtime rate? This is determined by taking their weekly salary and dividing it by 44 hours, then multiplying that hourly rate by 1.5. 

A salaried employee’s salary compensates them for up to 44 hours per week. After 44 hours, an employee is entitled to overtime pay.  

More questions about overtime? Get in touch for a consultation. And don’t forget the vacation pay which is due on all wages!

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