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Reference letter can mean more than pay

Sometimes, having a legal claim against your employer does not necessarily mean it is wise to enforce it.
 
Karl had been unemployed for some time when he got a job as a salesman with a company that provided software and hardware to the mining industry. He liked the job and he liked the people. Even though the job did not pay that well, he felt he was obtaining valuable new skills.
 
Four months after he started, the company was sold to an American corporation. He was nervous about the possibility of the Canadian operations being closed down and jobs being moved to the United States. On the other hand, the Canadian operation was very successful and profitable. He consoled himself that it would be irrational for the Americans to try to fix what was not broken.
 
In his six month of employment, Karl was voted most valuable employee of the month by his colleagues. Karl liked what he did during the day and would routinely be the last to leave.
 
A few weeks after being told that he won this award Karl and a number of people from the Canadian operations were terminated. Although the Canadian office was not being closed down, yet, it looked like the Americans had decided to cut any expenses they could. The results for the corporation in the United States were not as good as expected. Karl suspected that the Americans executives did not want to tell their American Board that they had cut jobs in the United States but none in Canada, even though the Canadian operations was making money.
 
After only six months of employment Karl was offered one month’s pay in lieu of notice. To be fair, that’s a very decent offer for a short term employee who was not in a management position.
 
Karl happened to mention all the hours he worked to the employment lawyer that he consulted about his severance offer. It turns out that for six months, 26 weeks, Karl had worked an average of 54 hours a week. The employer’s own computer system would confirm what time he logged out every day. Karl thought nothing of this and only mentioned it as part of his disappointed that all that extra effort had not led to a secure opportunity. Karl believed that since he was on salary he had no entitlement to overtime.
 
The fact is that when it comes to overtime entitlement, being on salary means absolutely nothing. If employers could avoid paying overtime as required by the Employment Standards Act simply by putting people on salary, nobody would be paid an  hourly wage.
 
Although there are a number of exceptions under the Employment Standards Act to the overtime entitlement provisions, none of them applied to Karl. Karl was surprised to learn that he was actually entitled to pay at the rate of time and a half for every hour he worked over 44 in a week. At 54 hours a week, he had 10 hours of overtime. His salary was $40,000.00 a year, $769.00 a week. It is assumed that that $769.00 covers the first 44 hours so he earned $17.47 an hour. 10 hours pay at time and a half at this rate was $262.00 a week. Over 26 weeks, that was $6,812.00. 
 
Now Karl had a dilemma. The offer of severance was good. At most, he was probably entitled to two weeks and he had been offered four. He could pursue the overtime claim and very likely win but he would probably lose at least two weeks of the offer. That means that he would lose about $1,500.00 off the $6,812.00.
 
Karl could get  just over $5,000.00 more than he had been offered. He could collect this money simply by filing a complaint for free with the Ministry of Labour. The problem was that Karl really needed the reference this employer would give him. He knew that they thought well of him and that’s why they were generous with the severance offer. He knew that he could rely on them, if they got a call from a prospective employer, to say good things about him.
 
There is no law requiring an employer to provide a reference or to make any comment whatsoever. Having somebody you can trust behind a closed door in a telephone conversation they will never be held accountable for to say very positive things about you can be invaluable when you are looking for new employment.
 
In a better world, Karl could hope that the reference he would be provided would not be affected by the fact that the employer had received a notice from the Ministry of Labour for unpaid overtime.
 
Employers are, not surprisingly, incensed by such claims. Nobody asked Karl to work the extra hours. The problem is that the Employment Standards Act does not care. If an employer knows that the employee is staying and doing work and lets them do it, even if they were never asked to do it, they are owed a wage. It is the employer’s obligation to make people go home and not work those extra hours and discipline them if they don’t leave when they’re supposed to. I am not saying that this is fair or just but this is the law whether we like it or not. If an employer “suffers the work to be done”, they have to pay for it.
 
But very few people actually realize this and most people would be incensed that Karl would make such a claim. To work for six months and never say a thing about being paid for overtime only to claim it after you leave seems unethical to most.
 
On the other hand, enjoying the fruits of Karl’s extra efforts for six months and rewarding him with a termination because somebody in the United States couldn’t balance the books does not seem particularly ethical either.
 
At the end of the day, whether it is right or wrong, most people in Karl’s position will let the overtime go. Having a good reference to help you get a job that might last you years is worth more than an extra $5,000.00.
 
 
As published in the Hamilton Spectator, November 8, 2010
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com