Overtime Pays Off: Court Expands Employees' Ability to Seek Unpaid Overtime
April 2023 - 2 min read
The Court recently determined that employees can claim more than six months of overtime pay in wrongful dismissal actions. Employers should ensure they have enforceable overtime agreements to avoid potentially significant awards for employees who have accrued unpaid overtime.
How far back can an employee go when seeking unpaid overtime hours in litigation? A new Court of King’s Bench decision has confirmed that employees are not limited to the six months referenced in the Employment Standards Code unless they are utilizing the complaint process.
Division 3 of the Employment Standards Code contains provisions pertaining to Employment Standards complaints, investigations, and determinations. Section 90 under Division 3 provides limitation period for orders. Subsection 90(1) provides:
90(1) An order under this Division may direct the payment of wages, overtime pay, vacation pay and general holiday pay, as applicable, earned during the assessment periods.
Subsection 90(3) defined “assessment period” as follows:
(b) “assessment period” means
(i) in the case of determining the payment of wages or overtime pay, or both, if no averaging arrangement applies, the period
(A) commencing six months before the earlier of
(I) the claim date, and
(II) the date the employee’s employment is terminated, if applicable,
(B) ending on a date before the date of the order, as determined appropriate by the officer…
Section 90 under Division 3 has been interpreted by courts to mean that, when seeking unpaid overtime, employees are limited to the period of six months before the termination. For example, in Riviera Hotel (1991) Corporation v Samborsky, the Court found no common law entitlement to overtime, but an employee who successfully sued for the same was entitled to six months, the maximum under the Employment Standards Code.
More recently, the Alberta Court of Justice in Walker v Alberta Communication Cable Services Inc. noted that the Employment Standards Code was the only source of entitlement for overtime pay (unlike common law notice). In that case, the Court stated that the six-month limitation in the Employment Standards Code applied whether the remedy was sought within or without the Employment Standards Code.
Going Against the Grain
In the recent Court of King’s Bench decision of Scheffler v Mourits Trucking Ltd., Justice Little declined to follow the previous cases. Scheffler worked as a truck driver and sued Mourits Trucking Ltd. (“Mourits”) for 719 unpaid overtime hours. There was no written agreement between the parties regarding overtime. Mourits argued there was an unwritten agreement regarding overtime, specifically “some kind of set off of a bonus against what would otherwise be overtime.”
On appeal, Mourits argued that Scheffler was limited to claiming overtime within the six months preceding his termination under section 90(3) of the Employment Standards Code. Justice Little reviewed three cases which limited claims for overtime to six months. He concluded that, although the Employment Standards Code establishes the right to overtime, “it would be inequitable to constrain an employee’s recovery to the six-month limit…when an employee uses conventional litigation instead of the Code”. He further stated that the remedies and restrictions prescribed under the Employment Standards Code only apply when an employee engages the resources and collection mechanism available under the Employment Standards Code. Since Scheffler had not made a claim for unpaid overtime under that Division, Justice Little determined that he was entitled to claim more than six months of overtime.
Takeaway for Employers
For most employees, paying overtime is a requirement under the Employment Standards Code unless there is an agreement saying otherwise. With employees no longer limited to six months, they can arguably claim overtime from two years from when the action was commenced. Employers should ensure they have enforceable overtime agreements to avoid potentially significant awards for employees who have accrued unpaid overtime.
If you require assistance drafting overtime policies or other employment agreements tailored to the specific needs of your business, contact Angela Beierbach in Edmonton, Steve Eichler in Calgary or any member of Field Law’s Labour + Employment Group.