Every province and territory has their own rules regarding overtime and whether employees are exempt from receiving compensation for overtime. Some situations are clear; others are complex.
Provinces like Manitoba, for example, can be more complex. Certain Manitoban employees are exempt from overtime for “having substantial control over their hours of work, as well as earning more than twice the average industrial wage.”[1]
Certain positions or jobs in certain sectors tend to be exempt from receiving overtime. For example, managers and supervisors are typically exempt based on their job duties. This, of course, is subjective and dependent on how an employer classifies their managerial positions. Referencing provincial/territorial Employment Standards is a good way to verify the accuracy of classifying jobs in different provinces. Additionally, your PEO HR Advisor can provide advice and their professional opinion on a case by case basis.
Ultimately, the employer of record is responsible for making the decision regarding whether exempt or not in each province. Our clients can then relay the information to their PEO Payroll Contact to compensate their employee(s) accordingly. We also recommend that our clients consider speaking with an employment lawyer to ensure the managerial positions are classified accordingly. PEO can provide a referral to clients that wish to consult with an employment lawyer.
Non-exempt employees who are scheduled or asked to work overtime outside of their normal working hours must be paid overtime.
Differences Between Canada and United States
| COUNTRY | EXEMPT | NON-EXEMPT | COMMENTS |
| CANADA | Exempt positions are roles that are not protected under Canadian employment laws. In most jurisdictions, executive, managerial, professional (IT Professionals, Engineers, Doctors, Research Scientists, etc.) and external sales are mostly exempt. Federally governed jobs in agriculture, fishing, construction and transportation are also exempt. | Non-exempt or federally regulated position are roles protected by the Canada Labour Code (CLC) with most positions being non-exempt in Canada. Please consult with Employment Standards, your HR Advisor or an employment lawyer. | This varies with each jurisdiction in Canada and we encourage you to address it with your PEO HR Advisor. In Quebec, for example, the absolute majority of jobs are non-exempt positions; Ontario has special rules for different industries vs a standard list of exempt/non-exempt positions. |
| US | Employees who are exempt from the Fair Labor Standards Act (FLSA) typically must be paid a salary above a certain level and work in an administrative, professional, executive, computer or outside sales role. [2] | Employees who are usually paid an hourly wage or earn a salary that’s less than a minimum amount determined by the Department of Labor (DOL). [2] | Based on our professional experience assisting US employers, the differentiation between exempt and non-exempt is much clearer in US than in Canada. |
Employer responsibilities:
- Identify applicable employment laws and regulations, including whether provincial legislation or federal legislation would apply.
- Accurately classify roles based on job duties, not job titles.
- Keep clear job descriptions.
- Maintain accurate records for hours worked for a set number of years, based on the employment standards regulations.
- Review job classifications regularly for ongoing compliance.
- Consult with your HR Advisor and in some cases seek legal counsel.
Frequently Asked Questions (FAQS):
What are the potential legal consequences of misclassifying a position that should be non-exempt?
If a position is incorrectly classified as exempt when it should be non-exempt, the applicable minimum Employment/Labour Standards for the province or territory will overrule the employment contract. This means that the employee may be entitled to overtime pay and can file a complaint with the Ministry of Labour or relevant authority.
What are the consequences if overtime has not been paid or will not be paid in the future?
If an employee believes they have not received wages or other compensation owed under applicable laws, they may file a complaint with the Ministry of Labour in their province or territory. The Ministry may launch an investigation and require the employer to pay outstanding amounts such as wages, overtime, vacation pay, statutory holiday pay, and termination pay. Employers may also face fines for non-compliance with Employment Standards.
How much am I required to pay back if I had a long-term non-exempt employee and did not pay premiums to them?
Generally, wage complaints are investigated for a period of 1-2 years prior to the date the complaint was filed, depending on the provincial legislation. Any unpaid amounts during that period will be assessed and may need to be paid to the employee as per the applicable Employment Standards.
After I have identified that the position is non-exempt, may I choose to offer time in lieu instead of premium pay?
Generally, yes, you may offer time in lieu instead of premium pay. Most of the jurisdictions in Canada requires an employee to agree in writing for such arrangement. The time off must be calculated at the appropriate overtime rate, and the time off must be taken within a certain period. You must comply with employment standards legislation in the applicable province or territory. If you have additional questions, or if you would like to draft an agreement, please reach out to your PEO HR Advisor for assistance.
How can I ensure I classify roles correctly in different jurisdictions in Canada?
Your PEO HR Advisor can assist you with research and provide a professional opinion; however, the determination of exempt status is based on an employee’s actual job duties rather than job title. As the employer, you are most familiar with the position’s responsibilities. It is often best practice for employers to contact the employment standards office of the relevant jurisdiction directly for guidance, when needed.
Can PEO Canada determine if a position is exempt or not since I am not an expert in this area?
As the employer of record, you are responsible for this decision. PEO Canada cannot determine exemption status on your behalf. However, your PEO HR Advisor can support you by offering guidance, resources, and advice to help you make an informed decision. For legal certainty, you may also contact the employment standards office in the applicable jurisdiction or in some cases it is best to consult with the employment lawyer.
Is there a nationwide law for exempt status in Canada?
No, employment standards in Canada are regulated at the provincial and territorial level, unless the position or industry is federally regulated (e.g., banks, transportation, airlines). Each jurisdiction has its own rules for determining exempt or non-exempt status. For more information, consult your PEO HR Advisor or the employment standards office in the appropriate jurisdiction.
Works Cited:
[1] Employment Standards | Employment Standards | Overtime Exemptions – Workers Who Substantially Control Their Hours of Work
[2] Exempt vs Non-Exempt Employee | ADP
Works Consulted:
What Are the Overtime Rules in Canada? – Canadian Payroll Services
What Is the Difference Between Exempt and Non-Exempt Positions? | Indeed.com Canada
What Are the Overtime Rules in Canada? – Canadian Payroll Services
Exempt vs Non Exempt Employees: What’s the Difference? | Ad Culture
Employment Standards for Various Provinces:
Ontario: Industries and jobs with exemptions or special rules | ontario.ca
British Columbia: Exclusions from Hours of Work & Overtime Requirements – Regulation Part 7, Section 34 – Province of British Columbia
Alberta: Employment standards rules – Hours of work and rest | Alberta.ca
Quebec: Labour standards in Québec