I have defended many companies before the Employment Standards Branch (“ESB”), and without fail, one of the most frustrating (and potentially costly) complaints for business owners is when a manager makes a claim for overtime wages.
One of the primary reasons for this frustration is because there is often a disconnect between an employer’s idea of a manager and the definition of manager under the Employment Standards Act. As many employers have learned the hard way, just because someone is referred to as “kitchen manager” or “operations manager” does not necessarily mean that they will satisfy the ESB’s analysis.
A Tale of Two Managers…
Employment Standards Regulations very clearly state that “managers” are exempt from the rights and protections provided under Part 4 (Hours of Work and Overtime) and Part 5 (Statutory Holidays) of the Act. So while most workers are entitled to overtime for any hours worked in excess of 8 hours a day or 40 a week, managers do not benefit from this right. Similarly, managers do not receive other statutory protections and rights such as mandatory breaks, minimum hours free from work and paid statutory holidays.
With these important exemptions to Employment Standards norms, many businesses are attracted to the idea of providing someone the title of “manager” in order to avoid paying overtime and other entitlements. This approach should be approached with some caution.
Under the Employment Standards Regulations, a manager is defined as:
- a person whose principal employment responsibilities consist of supervising or directing, or both supervising and directing, human or other resources, or
- a person employed in an executive capacity
This definition is not very helpful. Thankfully, the ESB offers additional policy language to help identify whether someone is acting as a manager. Typically, managers have the ability to act independently and make decisions using their own discretion, which may include actions such as:
- Ensuring company policies are followed
- Authorizing overtime, time off or leaves of absence
- Calling employees in to work
- Altering work processes
- Establishing or altering work schedules
- Training employees
- Committing or authorizing the use of company resources
- Managing a budget
The Employment Standards Branch also provides useful examples which help illustrate common questions with managers:
Example 1: An individual works for a large retail chain as a Pharmacy Manager. The employees she supervises are hired by the retail chain. This individual is not a pharmacist but is responsible for supervising and directing the day-to-day activities of the department. The individual is in charge of merchandising, advertising and other administrative functions related to the operation of the pharmacy.
This individual is a manager because she supervises human resources and directs other resources for the employer.
Example 2: A floor manager in a department store is responsible for ensuring stock is maintained in good order and customers are served quickly. The floor manager is required to approve any customer refunds within stated company policy. The floor manager can recommend staffing actions but has no direct authority to hire and fire employees. The floor manager also serves customers.
This individual is not a manager. Although there are elements of supervision and managing resources in the job, the floor manager has limited authority to act independently.
It is also important to consider that in assessing whether an individual is working as a manager or not, the ESB will not look at job titles, how compensation is paid (i.e. paying an annual salary does not make someone a manager) or whether someone is responsible for opening or closing the business.
For businesses, the biggest risk of improperly labelling someone a manager is an Employment Standards complaint for unpaid wages and overtime. Recognizing this, there are some strategies to reduce the likelihood of a complaint and to increase the probability of successfully defending one.
- Have a written employment contract. There are many benefits to properly drafted employment contracts, including the ability to include a description of job duties consistent with management responsibilities and a clause recognizing that the individual is a member of management and therefore not entitled to overtime. A contract in itself will not disentitle a worker to overtime pay, however it may be persuasive in showing the parties’ intentions.
- Have clear expectations on hours of work, and keep records. Especially for employees where there may be confusion over whether they are management or not, avoid allowing staff to essentially be able to set their own hours. No company wants to be in a position where an employee presents a complaint claiming unpaid overtime hours, and the organization has no records of hours worked or a consistently enforced overtime policy.
- Don’t try to make someone who is clearly not a manager, a manager. A title does not change legal obligations under Employment Standards. Improperly labelling someone a manager can result in a complaint, thousands of dollars in back pay and multiple fines.
If you have any questions regarding managers, overtime or any other British Columbia employment standards obligations, please contact the writer.