Overtime pay is a common workplace issue that employers need to be aware of. In Ontario, there are several laws and regulations governing overtime pay that employers must follow to ensure compliance and avoid potential legal issues. In this blog post, we will outline 5 important laws that employers need to know about overtime pay in Ontario.
1. Overtime Pay Is 1.5x the Employee’s Regular Rate of Pay
Overtime pay is a premium that employers are required to pay to employees who work more than 44 hours in a work week. The overtime pay rate is 1.5 times the employee’s regular rate of pay, also known as “time and a half”. For example, an employee who has a regular rate of $17.00 per hour will have an overtime rate of $25.50 per hour (17 x 1.5 = 25.50).
2. Overtime Is Calculated on a Weekly Basis, Unless Specified Otherwise
Unless a contract of employment or collective agreement states otherwise, overtime is calculated on a weekly basis. This means that employees do not earn overtime pay on a daily basis by working more than a set number of hours per day. Overtime is only calculated based on the total number of hours worked in a week.
3. Some Employees Are Exempt from Overtime Pay
Not all employees are entitled to overtime pay. Many employees have jobs that are exempt from the overtime provisions of the Employment Standards Act, 2000 (ESA). These include managers and supervisors, as well as employees who work in certain industries or occupations. Employers should consult the special rule tool to determine if an employee is exempt from overtime pay.
4. The “50% Rule” Applies to Employees with Multiple Job Duties
Some employees have jobs that require them to perform more than one kind of work. In these cases, the “50% rule” applies to determine whether the employee is entitled to overtime pay. If at least 50% of the hours the employee works is in a job category that is covered by overtime pay, the employee is entitled to overtime pay for the entire week.
5. The Overtime Rate Is Based on the Regular Rate for the Work Performed in That Hour
If an employee is paid on an hourly basis and performs multiple types of work that attract different hourly rates, the overtime rate for each hour of overtime is based on the regular rate that applies to the work performed in that hour. For example, if an employee works as a punch press operator earning $17.00 per hour and also as a shipping logistics coordinator earning $20.00 per hour, the overtime rate for the 45th and 46th hours would be $25.50 per hour (based on the regular rate for punch press operator), while the overtime rate for the 47th and 48th hours would be $30.00 per hour (based on the regular rate for shipping logistics coordinator).
Overtime pay is an important issue for employers and employees in Ontario. By understanding and following the laws and regulations governing overtime pay, employers can ensure compliance and avoid potential legal issues. By knowing their rights and entitlements, employees can ensure that they are properly compensated for the hours they work.