Employment & Labour Law

Court Expands Employee’s Ability to Seek Unpaid Overtime After Termination

July 28, 2023

photo showing person working on computer with wrist watch representing overtime

Overtime hours are a familiar concept in many job sectors across the province. The rules and restrictions relating to overtime that are set out in Alberta’s Employment Standards Code generally apply unless an employment contract states otherwise. So, how far back can an employee’s overtime hours be calculated and compensated in cases of wrongful dismissal claims? The Alberta Court of King’s Bench recently provided clarity on this issue.

Employee Commences Civil Claim Against Employer Six Months After Termination

In the case of Scheffler v. Mourits Trucking Ltd., the plaintiff/former employee was employed by the defendant/employer as a truck driver. Throughout his employment, he accrued 719 overtime hours which were not paid as time-and-a-half pursuant to Alberta’s Employment Standards Code.

Following his termination, the employee commenced a civil claim against his former employer for payment of his accrued overtime hours. There was no written agreement between the parties concerning overtime hours.

The employer argued that the 6-month delay by the former employee in bringing his claim prevented him from claiming payment for the overtime hours.

Applications Judge Awards Employee Unpaid Overtime

The matter was heard by Applications Judge Schlosser, who granted summary judgment in favour of the employee and awarded him $22,648.50 plus costs. In support of this finding, the Applications Judge accepted that the employee earned an hourly wage of $21 and had accrued 719 overtime hours, calculated under Alberta’s Employment Standards Code.

The Employment Standards Code prescribes overtime hours to be paid at a rate of time and a half. The employee’s overtime hourly rate was found to be $31.50, and when calculated, it was determined that the employee was owed $22,648.50. Finally, the Applications Judge found no evidence of a written agreement between the employer and employee that could have “taken the matter outside of what is otherwise prescribed by the Code.”

Decision Appealed by Employer

The employer appealed the Applications Judge’s decision to the Alberta Court of King’s Bench. Upon review, Justice Little found that the lower court had rejected the employer’s argument that the Employment Standards Code did not apply due to the nature of the employee’s work taking him out of province on occasion.

Further, the Applications Judge disagreed with the employer’s argument that there would be “some kind of set off of a bonus against what would otherwise be overtime,” noting that the employer cannot say that it does not pay overtime, while the bonus compensates overtime hours.

The Court acknowledged that the standard of review on this appeal was correctness and, on that basis, the appeal would be dismissed. However, because an appeal of an Applications Judge is a hearing de novo, additional evidence and arguments were raised.

Employer Argued Employee’s Claim is Limited to Six Months of Overtime

The employer raised four arguments as the basis of the appeal. The Court initially addressed the issue of whether the supplemental affidavit filed on behalf of the employer should be admitted, finding that the information contained within it was “material to the claim” and should, therefore, be admitted. However, the affidavit included statements that the employee was paid for his accrued overtime hours at his regular hourly wage. The Court also confirmed that this case was an appropriate case in which summary judgment could be ordered.

The employer raised a new argument before the Court, claiming that the Employment Standards Code limited the employee’s claim to six months of overtime. Section 90(3) has been understood to mean that employees are limited to a period of six months before the termination occurs.

Previous Decisions Have Limited Employees’ Claims to Six Months

The Court referenced several previous decisions which limited an employee’s claim for overtime payment to six months. Following his evaluation, Justice Little concluded that while the law entitles employees to overtime, he stated it would be “inequitable to constrain an employee’s recovery to the six-month limit under the Code when an employee uses conventional litigation instead of the Code.”

The Court also indicated that the restrictions and remedies in the Employment Standards Code only apply to situations where an employee engages the resources and collection mechanism available under the legislation. Therefore, because the employee did not make a claim under that particular division of the Code, he was entitled to claim more than six months of overtime.

Court Allows Employee to Claim All Overtime Hours

Despite the employer’s argument, the Court found in favour of the employee. The Court held that the former employee was entitled to payment for his accrued overtime hours and noted that the 6-month limitation relied on by the employer did not apply to the employee’s civil claim.

The Employment Standards Code prescribes that paying employees overtime hours is a requirement unless an employment agreement states something else. This case serves as an example to employers to ensure that they have comprehensive employment contracts and agreements with employees with respect to issues such as overtime hours. Employers should review, update or implement policies, as necessary, to ensure that tracking and paying employees’ overtime hours is done properly and promptly. For these reasons, consulting with an experienced employment lawyer is essential to ensure that your business has a sound overtime policy.

Contact the Employment Lawyers at DBB Law in Calgary for Advice on Wrongful Dismissal Claims

The skilled employment and labour law team at DBB Law regularly advise employers and employees on various employment law matters and disputes. We help clients manage and navigate all aspects of their employment relationship. We advise employees who believe they have been wrongfully dismissed and help them understand and pursue their rights and entitlements to compensation. If you have questions about a wrongful termination claim or another employment law dispute, contact us at 403-265-7777 or contact us online.

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