Saturday, 27 April 2013

Changes to Canada Labour Code Limit Rights to Claim Overtime Pay

The issue of unpaid overtime in federally regulated workplaces, banks and railroads being chief among them, has been a hot topic in Canadian employment law over the past few years. There have been no fewer than three proposed class actions on the subject: Fulawka v. Bank of Nova Scotia, 2012 ONCA 443 (CanLII); Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 (CanLII); and McCracken v. Canadian National Railway Company, 2012 ONCA 445 (CanLII).

A recent change to the Canada Labour Code has now changed the amount of recovery an underpaid worker can recover.

Claims for Overtime before April 1, 2014

Prior to April 1, 2014, the Canada Labour Code permited an employee who worked in an applicable, federally regulated industry to make a complaint to the federal Labour Program that his employer has failed to pay him overtime pay. The Code has very specific criteria for when overtime pay must be paid to workers, which is beyond the scope of this post, but on which topic I would happy to be of service to you. Once a complaint is made, an "Investigator" will be appointed.

Section 251.1 of the Code provides that:

(1)Where an inspector finds that an employer has not paid an employee wages or other amounts to which the employee is entitled under this Part [of the Code,] the inspector may issue a written payment order to the employer, or, subject to section 251.18, to a director of a corporation referred to in that section, ordering the employer or director to pay the amount in question, and the inspector shall send a copy of any such payment order to the employee at the employee’s latest known address.
(2) Where an inspector concludes that a complaint of non-payment of wages or other amounts to which an employee is entitled under this Part is unfounded, the inspector shall so notify the complainant in writing.

The section is clear, relatively easy to read (for statutory language) and to the point: if, after an investigation by a federally appointed investigator a finding is made that an employer owes a worker money on account of wages (of which overtime wages are a subset), then the investigator can order the employer to pay the employee what is due.

In Delaware Nation v. Logan, 2005 FC 1702 (CanLII) affirmed on appeal 2007 FCA 170 (CanLII), the Honourable Justice Michael L. Phelan had opportunity to review the limitation period applicable to such payment orders.

The issue before the court in that case was whether there was an implied three-year limitation period on any such claims for unpaid overtime.

Justice Phelan decided that there was no limitation period applicable to such orders. In his reasons for that decision Justice Phelan wrote:

[24] The Applicant argued that Barton [a referee appointed to make an earlier decision] erred in not limiting the period for which overtime is due to the last three years. The Applicant's position is that since the Code imposes a three-year limitation period in respect of penalties and the Standards regulations requires employers to retain employment records for three years, Parliament must have intended a three-year limitation period on other claims. The Applicant further argues that it is only just and fair to impose a three-year limitation since the Band was not culpable in failing to pay overtime.
[25] In the face of the limitation period for specific matters such as penalties and document retention, the fact that Parliament has not seen fit to establish a more general limitation period suggests that it deliberately refrained from doing so. It is not the Court's function to create a limitation period.
[26] Even though the Band is not deliberately culpable in not paying overtime, the purpose of the legislation in this regard is to ensure that workers are paid what they are owed. It is not a fault based analysis.
[27] In the end, the responsibility for triggering the dispute may rest with the Ontario government in trying to effect cost savings measures and sending an assessor in to examine the program. The Respondent Logan is entitled to assert her rights to overtime for the whole period of her employment.

In that case, the employee, Logan, was entitled to payment of 13 years of unpaid overtime at a value of $192,000.

Changes Made by Jobs and Growth Act, 2012

In mid-December 2012 the Harper Government passed the Jobs and Growth Act, 2012.

Amongst the plethora of other changes brought about by that 430-page statute, section 224 of that Act adds to section 251.1 of the Canada Labour Code, cited above, the following:

(1.1) A payment order must not relate to wages or other amounts to which the employee is entitled for the period preceding
(a) in the case where the employee made a complaint… the 12 months before the day on which the complaint was made or, if there was a termination of employment prior to the complaint being made, the 12 months before the date of termination; and
(b) in any other case, the 12 months before the day on which an inspection under this Part, during the course of which the inspector made the finding referred to in subsection (1), began.

Newly created subsection 251.1(1.2) will expand the timeline for orders in respect of vacation pay to 24 months.

Impact of Jobs and Growth Act

What section 251.1(1.1) will means for employees, at least as I read it, is that they will only have the ability to seek one year of unpaid overtime by way of a complaint to the federal Labour Program.

In speaking to the passage of the bill, the Honourable Dr. Kellie Leitch (then-Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour; now Minister of Labour) said the following:

As members can see, these proposed changes to part III of the code are mainly administrative in nature. Some of them simply formalize existing policy directives.
I should also mention that these proposed amendments will establish provisions in the Canada Labour Code that are similar to existing provincial legislation.
Many of these changes we have proposed to part III of the Canada Labour Code were recommended by the Federal Labour Standards Review Commission, also known as the Arthurs Commission, in a 2006 report. Overall, these changes will not significantly alter the balance of rights or obligations of employees and employers under the Canada Labour Code. I think both employers and employees will benefit from these amendments, which will reduce the administrative burden and hopefully will result in a quick resolution of complaints.

(Source: Hansard, October 25, 2012)

“Overtime pay” does not appear to be mentioned anywhere in the debate of Bill C-45, which became the Jobs and Growth Act. Indeed, the Canada Labour Code itself was barely mentioned.

With the greatest of respect to Dr. Leitch, I must disagree with her opinions. These changes undoubtedly will significantly alter employee rights under the Canada Labour Code, and I fail to see how employees will benefit from these particular amendments.

What Do These Changes Mean?

Any application made to the federal Labour Program before April 1, 2014, continues to follow the old rules, i.e. the employer can be made to pay overtime back to the date that the employee was first hired. The transition provisions in the Jobs and Growth Act ensure that the Canada Labour Code, as it read immediately before the day on which the above-mentioned changes come into force, applies to complaints received by the Minister of Labour before that day. (See Jobs and Growth Act, 2012 section 230.)

However, if you did not file your claim by that deadline, then while you can still file a complaint of unpaid overtime, the amount for which you can now claim is limited.

Sean Bawden has experience assisting federally regulated workers make complaints of unpaid overtime and would be pleased to be of service to you if you are located in the province of Ontario. He can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321 x260.

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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 P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals.



2 comments:

  1. The Professional Engineers are not entitled for being paid overtime as per Employment Standard Act. I am professional engineer. If I analyze my day I find that many activities I do during the day have nothing to do with "professional engineering" as it is defined in the Professional Engineers Act. For example: mentoring junior personnel, excessive number of review of drawings prepared by incompetent designers, participation in meetings, administrative functions, budget preparations, compilation of requests for proposals, proposals, etc...
    Most consulting companies do not pay overtime while impose the workload which is unrealistic to finish with reasonable quality in 8 hours day. How to engineer employee of private or public company can deal with this situation?

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    Replies
    1. You are correct in that certain parts of the Ontario Employment Standards Act do not apply to certain professions. For example, the provisions with respect to Overtime Pay (Part VIII of the Employment Standards Act) do not to:

      (a) as a duly qualified practitioner of,

      (i) architecture,
      (ii) law,
      (iii) professional engineering,
      (iv) public accounting,
      (v) surveying, or
      (vi) veterinary science;

      (b) as a duly registered practitioner of,

      (i) chiropody,
      (ii) chiropractic,
      (iii) dentistry,
      (iv) massage therapy,
      (v) medicine,
      (vi) optometry,
      (vii) pharmacy,
      (viii) physiotherapy, or
      (ix) psychology;

      (c) as a duly registered practitioner under the Drugless Practitioners Act;

      (d) as a teacher as defined in the Teaching Profession Act;

      (e) as a student in training for an occupation mentioned in clause (a), (b), (c) or (d);

      (f) in commercial fishing;

      (g) as a salesperson or broker, as those terms are defined in the Real Estate and Business Brokers Act, 2002; or

      (h) as a salesperson, other than a route salesperson, who is entitled to receive all or any part of his or her remuneration as commissions in respect of offers to purchase or sales that,

      (i) relate to goods or services, and

      (ii) are normally made away from the employer’s place of business.

      (2)... a person employed on a farm whose employment is directly related to the primary production of eggs, milk, grain, seeds, fruit, vegetables, maple products, honey, tobacco, herbs, pigs, cattle, sheep, goats, poultry, deer, elk, ratites, bison, rabbits, game birds, wild boar and cultured fish.

      That's a lot of professions.

      As to your direct question, one answer may be contract. While the ESA sets minimums, the law also provides for a betterment of those minimum standards by contract.

      If you'd like to discuss further, I'd ask that you contact me by phone or email.

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