Managers and supervisors have long been exempted from the right to overtime pay in Ontario under the Employment Standards Act (ESA). However, a new class-action lawsuit is demanding a second look at the exemption requirements, and when exactly the exemption should apply.

When is Overtime Payable in Ontario?

Overtime is paid at a rate of 1.5 times a person’s hourly rate of pay, often referred to as ‘time and a half’. Per the ESA, employees are entitled to receive overtime rates once they have worked 44 hours in a standard workweek. Of course, it should be noted that individual employers can offer overtime after fewer hours worked. Such a policy should be addressed in individual employment contracts and/or general workplace policies.

Exemptions from Overtime Entitlement

The ESA does not apply to employees in certain fields, including any federally-regulated industries, such as airlines, banks, and broadcasting companies. For those who work in industries that are governed by the ESA, there are exemptions for overtime for managers and supervisors. However, this exemption does come with a caveat. The work performed by the manager or supervisor must be ‘managerial or supervisory’ in nature.

The “50% Rule”

Not all managerial or supervisory jobs, however, consist of purely managerial functions. In many cases, managers or supervisors may be required to perform tasks that their staff also performs. This can lead to confusion regarding the overtime exemption, and so what is known as the ‘50% Rule’ was created to help clarify matters.

The 50% Rule says that if at least 50% of a person’s tasks fall within a category that would normally entitle a person to overtime, then they will be entitled to receive overtime.

For example, let’s say that a supervisor oversees a team of IT professionals in an office environment. If the supervisor spends 26 hours in a week performing the same IT duties as the rest of their team, and 24 hours performing other tasks such as scheduling, recruiting, project managing, and other supervisory tasks, they have worked 6 hours over the minimum threshold of 44 hours. Since more than 50% of those hours were spent in non-supervisory functions, they would qualify to earn 6 hours of overtime for that week.

Starbucks Class Action

The 50% Rule is at the heart of a class action recently filed on behalf of Starbucks managers across Canada. As managers, they have been exempt from overtime pay, however, managers claim that they often work up to 80 hours per week and largely perform the same duties as non-managerial staff. The suit claims the managers have been unfairly exempted from overtime due to the ‘systemic misclassification’ of their roles.

The representative plaintiff in the case claims that while he was scheduled to work 40 hours per week as a manager at various downtown Toronto locations, he often worked between 50-80 hours per week, to cover for staff who failed to show, or called in sick for their shifts. Further, he says that while non-managerial staff clocked in and out to record their hours worked, managers were not permitted to do so, and were dissuaded from reporting hours worked in excess of their schedule.

Most importantly, he claims that managers are allotted 12 hours per week to attend to managerial functions such as payroll and schedules, the remainder of their time is spent performing the same tasks as their staff, including serving customers, preparing drinks and washing dishes.

Potential Effect for Canada’s Retail Industry

The circumstances described in the Starbucks class action echo similar working conditions for managers and supervisors throughout the retail and customer service industries. While managers are required to attend to scheduling, performance management and other supervisory functions, they are often also required to perform staff duties as well, including operating the cash registers, serving customers, restocking shelves and more. This class action has the potential to shake up how these roles are classified, or the functions they perform, going forward. We will continue to monitor this case and provide updates as they become available.

Get Advice and Know Your Rights

If you have questions about your compensation or any other issues related to your employment, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.