by Marc Ouellet
The issue of overtime has become a major concern for employers in the wake of class actions on the subject in Canada. The Québec Act Respecting Labour Standards (ALS) provides exemptions from the right to overtime including for employees in managerial positions. In Skiba v. Playground, L.P., the Court of Appeal of Québec recently clarified which employees may be exempt as “managers” in Quebec. While the applicable statutes vary across Canada, the fundamental principles applied are similar. Thus this decision may have persuasive value outside of Quebec.
Facts
Skiba began working for Playground, L.P., as an accountant in 2003. In 2005, he was promoted to “manager – business unit” and in 2006, to “director finance & operations.” Later that year, Playground concluded that he lacked the skills required for the director position and demoted him to financial analyst. His remuneration and benefits stayed the same and his duties were largely unchanged.
As a financial analyst, Skiba was remunerated on an annual basis (not on an hourly basis). He worked evenings and weekends but did not request overtime. In 2008, Playground terminated his employment for economic reasons. He sued claiming, among other things, payment for overtime. Under the ALS, overtime is owed for time worked over 40 hours per week.
Superior court judgment
The Superior Court of Quebec dismissed the action. The court relied on section 55 of the ALS, which provides that an employee who is paid on an annual instead of an hourly basis is not entitled to payment of overtime for work performed in excess of 40 hours per week unless a contractual provision or employer policy indicates otherwise. Skiba appealed.
Court of Appeal of Quebec ruling
The Court of Appeal of Quebec also ruled that Skiba was not entitled to overtime on the grounds that he was exempt under section 54(3) because he held a managerial position.
The Court of Appeal emphasized that the exception applies to both senior and lower level managerial positions. Exempt senior managerial personnel includes employees who play a part in developing the business’s policies and strategic planning. Exempt lower level managers must exercise an interpretive decisional power, determining specific objectives as well as the work procedures and methods that reflect the decisions made by the senior managerial personnel.
In Skiba’s case, the Court of Appeal stated even though the employee had lost the title of “director,” he retained most of his managerial duties and, as such, was exempt.
Because Skiba qualified as managerial personnel and was exempt, the Court of Appeal concluded there was no need to decide whether the Superior Court was correct in law in deciding that an employee who is remunerated on an annual basis is not entitled to overtime.
Lesson for employers
This Court of Appeal of Québec ruling emphasizes the importance of looking at duties rather than titles when determining whether an employee holds a managerial position. An employee with a title that is not associated with a managerial position may exercise managerial functions within the meaning of the ALS.
Consequently, employers should review employees’ actual duties before determining exempt status. In addition, as the applicable statutes vary across Canada, employers should ensure they review and understand the particular legislation in their jurisdiction before determining exempt status.
