Casual Legal: Overcoming overtime confusion

DISCLAIMER: This article is meant to provide information to Alberta Municipalities members only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated. This content is not intended for the general public.

By Maddison Croden
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

The rules around overtime pay can often cause confusion for employers and employees. When does overtime pay kick in and how is it calculated? Let’s take a closer look at when those extra hours start to pay off.

Absent one of the statutory exemptions applying, the Employment Standards Code indicates that an employee must be paid overtime pay when an employee works more than eight (8) hours on each workday in the work week or when an employee works more than 44 hours in one work week – whichever results in a greater overtime entitlement to the employee.

Take, for example, an employee who works six eight-hour days in a work week for a total of 48 hours. While this employee has not worked more than eight hours in any one day, they have worked 48 hours during the work week. Therefore, this employee would be entitled to four hours of overtime pay.

Overtime pay 

Where an employee has earned overtime, an employer must pay the employee for their overtime hours at a rate that is at least 1.5 times the employee’s regular wage rate unless:

• a written employment agreement specifies a rate greater than 1.5 times the employee's regular wage
• the employee is earning overtime while working on a holiday
• the employee is subject to an overtime agreement.

Banked overtime

Some employers may be familiar with what is often referred to as "banked" overtime. It is an arrangement by which an employer may provide an employee with paid time off instead of overtime pay. To exercise this option, an employer must enter into an overtime agreement with employees who will be banking their overtime instead of receiving overtime pay. Pursuant to that agreement, time off with pay instead of overtime pay will be taken and paid at the employee’s regular wage rate. The time off with pay must be provided, taken, and paid to the employee within six months of the end of the pay period in which it was earned. If time off with pay instead of overtime is not properly provided, taken, and paid, the employee will be entitled to overtime pay at a rate of at least 1.5 times the regular wage rate for overtime hours worked.

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or casuallegal [at] abmunis.ca (email) to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or riskcontrol [at] abmunis.ca (email) to connect with Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.