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Understanding Overtime Eligibility

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HR Governance Total Rewards

There is a common misconception among employers and employees alike that salaried employees are not eligible for overtime pay. Others believe that employees with “manager” in their titles are similarly exempt from legislation pertaining to overtime pay. However, the situation is actually far more complex than that.

Pay Type vs Overtime Eligibility

In Alberta, whether a person is paid hourly or is on salary is a separate matter from whether he or she is eligible for overtime pay. Overtime eligibility is not related to the pay type or pay frequency that is chosen by the employer. Employee eligibility for overtime pay is by their individual role and responsibilities, including whether or not they have true management authority (e.g., hiring and terminations). For example, two employees with the title Office Manager may be subject to different overtime eligibility rules based on the nature of their specific roles and who or what they are tasked with managing.

Certain occupations including professionals such as architects and lawyers are automatically exempt from overtime eligibility, along with various other positions including certain sales and farm positions. In other industries such as trucking and oilfield servicing, overtime rules are in place but take effect after a different number of hours worked than for other occupations.

How to Minimize Uncertainty

Rules pertaining to overtime eligibility and accrual can change. In fact, different government bodies in the US and Canada are looking at the issue right now. Hence, it is imperative for employers to be aware of how those changes may impact their bottom line and take the appropriate steps to stay compliant. For instance, Alberta is currently revisiting overtime rules in relation to Overtime Agreements which allow employees to work longer on some days at regular rate, taking paid lieu time at a late date. In the U.S., potential changes to the Fair Labor Standards Act could expand the number of employees who are eligible for overtime. This is one reason why Organizational Design is critical – among other things, it provides a clear picture of the roles within the organization and the risk of overtime-related cost fluctuations enabling finance leaders to forecast overtime costs.

Here to Help

Understanding the nuances between different roles and the overtime eligibility rules that apply can be daunting. We can be reached for a free confidential consultation at +1-403-470-5350 or [email protected].

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Further Reading

Alternative Work Arrangements: Navigating the Waters

Setting Up Your Compensation Structure

Time is Money: Tracking and Monitoring Hours and Absences

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