Employers need to be aware that they are required to maintain a log of all hours worked for every employee who is protected by the BC Employment Standards Act. Failure to do so may result in liability to the employer. This requirement applies regardless of whether the employee is paid an hourly wage or a salary (and applies even to employees who are not entitled to overtime pay). Section 28 of the Act states:
(1)(d) For each employee, an employer must keep records of the following information...the hours worked by the employee on each day, regardless of whether the employee is paid on an hourly or other basis...
(2)(c) Payroll records must...be retained by the employer for 4 years after the date on which the payroll records were created.
One employer recently learned this lesson the hard way when the Employment Standards Director conducted an audit of the company. The Director requested that the employer provide six months of payroll records. When the employer provided its payroll records, the employer had no maintained a record of hours worked by each employee. As a result, the Director fined the employer $500 for failing to produce full records upon the Director's request. The Employment Standards Tribunal dismissed an appeal from the employer asking to have the fine overturned.
In certain circumstances, the consequences for failing to maintain records of hours worked can be far more severe than a $500 fine, including:
- For an employer with repeated violations of this requirement; and
- Where an employer is facing an unpaid overtime claim.
1. Repeated violations
Where an employer repeatedly violates the same provisions of the Act, then subsequent penalties can increase to $2,500 for a second violation and $10,000 for additional violations. Under the current regulations, the penalties increase if the violation takes place at the same workplace as (and within three years of) the most recent violation.
2. Overtime claims
Claims for unpaid overtime can be a source of significant liability for an employer. Under section 35 of the Act, most (but not all) employees are entitled to receive overtime pay for any time worked in excess of 8 hours in a day or 40 hours in a week. This requirement applies if the employer "directly or indirectly" allows or requires the employee to work overtime.
Keeping an accurate record of hours worked is a useful step to prevent overtime claims. Overtime claims are commonly brought against employers who argue that they should not be required to pay it because they were not aware the employee was working overtime without authorization.
Employers who say that they were unaware that their employee was working overtime will immediately run into problems if they have not kept track of their employees' hours. The fact that these employers are ignorant (whether intentionally or unintentionally) of the fact that their employee worked overtime will not generally excuse them from paying overtime. Depending on the employee's rate of pay and the amount of overtime worked, an employer's liability for unpaid overtime can greatly exceed any penalties that may be handed out by the Employment Standards Director.
However, employers who say that they were unaware that their employee was working overtime will have a stronger case if they have kept an accurate record of hours worked in order to prevent employees from working unauthorized overtime. An employer that proactively monitors hours of work and takes steps to ensure that its employees are not working unpaid overtime will be in a stronger position to defend a claim for unpaid overtime (and is less likely to face a claim in the first place).
BC Employment Standards Tribunal decision
For example, in a 2017 BC Employment Standards Tribunal decision, BC EST #D050/17, the employer maintained time sheets for its employees. The employer also had a policy which prevented employees from working overtime pay without approval. When an employee claimed that he had worked overtime, the employer successfully argued that this was done in breach of its overtime policy and without its implicit or explicit consent or knowledge. As a result, the employee was not entitled to any overtime pay that the employee may have worked without the employer's consent or knowledge.
Any employers that do not already have systems in place to keep track of hours worked by its employees are strongly encouraged to do so, in order to prevent potential liabilities and to ensure compliance with the requirements of the Act.
About the Author
Brendan Harvey advises and represents employees and small businesses at all stages before, during, and after the employment relationship. His primary areas of practice include wrongful dismissal, employment standards, and human rights litigation. If you would like to schedule a meeting with Brendan Harvey or any other of our lawyers, give us a call at 604-988-1000.