Employees who are paid through commissions, such as insurance advisors or commissioned salespersons, may be under the false impression that they are not entitled to overtime pay. Monkhouse Law recently represented a commissioned employee before the Ontario Labour Relations Board (“OLRB”), and the employee was awarded 8 hours per week of overtime during his claim period, adding up to over $40,000 in overtime pay.
In the recent decision RBC Insurance Agency Ltd v Ali, the OLRB found that the employer should have known that overtime was worked because:
The employee was provided with a computer and VPN access permitting him to work remotely.
While he was not required to work after hours there was nothing preventing him from doing so.
The applicable compensation plan not only failed to prevent working beyond assigned hours, it incentivized that work because the employee earned additional commissions through the sales he made in overtime hours. Employees were permitted to work the hours they chose to achieve their compensation goals.
There were no policy or training documents provided to the employee that prohibited overtime work. No such policy existed.
The employer never asked for an accounting of employee working time outside normal hours, and it had no routine manner to review employee working time.
This case is an important reminder that employees who work in excess of 44 hours in Ontario are generally entitled to overtime pay, even where there is no definitive evidence that the employer actually knew the extra work was being performed, so long as the employer ought to have known the employee was working overtime and failed to take steps to prevent the work
The Advisor’s Work with RBC IA
The employee worked for RBC Insurance Agency (RBC IA) as a Property and Casualty Insurance Advisor (“P&C Advisor”). He was paid a small draw and significant commissions. The employee was incentivized to work long hours in order to earn higher commissions. He was a high earner and was recognized by the company as a top advisor.
The insurance advisor made a claim for unpaid overtime to an Employment Standards Officer, who found that he was entitled to payment for overtime hours worked. RBC IA appealed this finding to the OLRB.
The Law of Overtime in Ontario
Under the Employment Standards Act, employees in Ontario are generally entitled to 1.5 times their normal rate of pay for every hour they work in excess of 44 hours per week. This “normal rate of pay” used to calculate overtime pay, can be inclusive of “total compensation”, including commissions, not only base pay.
The employee is entitled to this pay if the employer has “suffered or permitted” overtime work to be done. In this regard, even if an employer has an overtime policy in place which requires employees to receive pre-approval for overtime hours, this does not necessarily preclude the employee to receive overtime pay if the employer allowed overtime hours to be worked.
Accordingly, if the employer knew or ought to know that overtime has been performed and did
nothing to stop it, then it could still be required to provide overtime pay. For more information about entitlement to overtime pay see Overtime Pay Ontario: Know Your Rights
The OLRB Decision
The insurance advisor in this case performed much of his work on the phone, quoting, completing sales, and communicating with his clients. He provided his phone logs over the claimed period to the OLRB to substantiate his claim for overtime.
The evidence showed that the insurance advisor worked significant hours and that he was a national top performer in the company.
The OLRB found that RBC IA knew or ought to have known the insurance advisor was working overtime. This was based on the fact the insurance advisor was provided with a laptop and VPN to work remotely, no policy preventing him from working overtime, and RBC IA did not take any steps to ensure the insurance advisor did not work overtime. The insurance advisor was entitled to work whatever hours he wished in order to pursue his sales goals, and it therefore could have reasonably been known by RBC IA he worked over 44 hours a week.
Given that the employee received some pay for the overtime hours he worked by virtue of receiving associated commissions, the “regular rate” for commissions was based on the commissions earned for the first 44 hours per week, then multiplying that amount by 1.5 to determine an overtime rate of pay. Using this formula, the insurance advisor was awarded $40,269.70 in unpaid overtime.
Takeaways for Employees
If you have been told by your employer that you are not entitled to overtime pay, or that you can only be compensated for overtime with approval, you may still be entitled to compensation for unpaid overtime. Additionally, no matter your pay structure, whether hourly, salaried, or commissioned, you may be entitled to overtime pay under employment standards legislation.
If you have questions or concerns regarding overtime pay, you should speak with an employment lawyer to ensure you know your rights and what you are entitled to. At Monkhouse Law Employment Lawyers, we help employees deal with their workplace issues.