Ontario considering overtime and hours of work rules for “IT professionals”

The Government of Ontario is looking at dropping a wide range of overtime and hours of work exemptions, including the exemption that now  excludes “information technology professionals” from overtime and hours of work rules under the Employment Standards Act, 2000.  Employers of all sizes and in all industries, especially the tech sector, rely on this exemption and have already costed it out in providing current salaries, bonuses and other compensation arrangements. In this post, we focus on the potential impacts for employers if this exemption is eliminated and what stakeholders can do to participate in the consultation process established by the government. At the end, we provide a more detailed backgrounder on the IT professionals exemption.

How the exemption helps businesses now

The IT professionals exemption currently excludes “information technology professionals” from certain rules under the Employment Standards Act, 2000 (the “ESA”). These rules include daily and weekly maximum hours of work, mandatory daily and weekly rest periods, as well as overtime pay. In addition to dropping this exemption, the government is currently proposing changes to the ESA that would limit employers’ flexibility to set and alter their employees’ schedules, which would likely apply to IT professionals if the exemption were eliminated.

Not everyone involved in technology or computer systems is an “IT professional”. An  IT professional is defined as:

an employee who is primarily engaged in the investigation, analysis, design, development, implementation, operation or management of information systems based on computer and related technologies through the objective application of specialized knowledge and professional judgment. (ESA Regulation 285/01)

The Ministry of Labour has previously issued guidelines to the effect that an employee who is responsible for the development or maintenance of a company’s software would qualify as an IT professional, although there appears to be no reported case law to confirm this interpretation.  Market competition to hire and retain IT professionals means that an IT professional’s base and incentive pay and other elements of their compensation package reflects this exemption.

Potential impact for employers

If the IT professionals exemption were eliminated, employers would need to dramatically redesign the way their IT professionals operate:

• Employers would need to pay IT professionals overtime – Without the IT professionals exemption, irrespective of the employee’s cash or incentive compensation, companies would need to pay IT professionals (including salaried employees) 1.5 times their normal wage for all hours worked in excess of 44 hours per week. While this may make sense for other types of jobs, where the employee works in shifts of pre-defined length, it does not make sense for IT professionals, particularly in the tech sector, where complexity is routine and deadlines are often non-negotiable. In short, IT professionals are expected to do what it takes to “get the job done” quickly and efficiently.
• There would be strict constraints on how long IT professionals can work – Without the IT professionals exemption, a typical IT professional would generally not be permitted to work in excess of 8 hours per day or 48 hours per week. The employer would need a written agreement from the employee (in the case of the daily maximum) as well as approval from the Ministry of Labour (in the case of the weekly maximum) to go above these limits. This would limit an IT professional’s ability to work outside normal hours in order to complete an urgent project or meet a pressing deadline.
• Employers would need to introduce “blackout periods” during evenings and weekends – Without the IT professionals exemption, IT professionals would be required to take 11 consecutive hours off work each day and 24 consecutive hours off work each week, or 48 every two weeks, even if they do not want to. While fixed periods of rest makes sense for other types of jobs, it is poorly suited to the nature of work that IT professionals regularly perform. IT professionals are often called upon to respond to questions or solve problems at various times of day or on weekends, often while working remotely. Requiring, as a blanket rule, 11 consecutive hours of rest each day and 24 consecutive hours of rest each week could halt a company’s momentum by preventing IT professionals from responding to urgent needs and inquiries in real time.
• IT professionals would likely be subject to new rules on scheduling – The Ontario legislature is currently debating new rules on scheduling that would likely apply to IT professionals, unless they are exempted. Although it is not yet clear how these new rules will operate, the proposals could require a company to pay an IT professional 3 hours’ pay if (a) the employee reports to work but works less than 3 hours, (b) the employee is “on-call” but is not required to work, or (c) scheduled work is cancelled less than 48 hours before the work was to begin. Employees would also have the right to refuse to perform work if they are not given 96 hours’ notice.
• Employers would need to track how many hours IT professionals are working (or risk paying for it) – Without the IT professionals exemption, employers would need to keep close tabs on their IT professionals to ensure they are following the hours of work rules. This would result in added administrative costs, wasted management time, and a change in company culture. Employers who fail to keep tabs on their employees would leave themselves vulnerable to hefty penalties from the Ministry of Labour or potentially a class action lawsuit from their employees.

Ultimately, these changes would put Ontario companies at a clear competitive disadvantage relative to jurisdictions with less administrative “red tape”, and make Ontario a less attractive environment for new investment. 

What employers can do

The Ministry of Labour is accepting formal comments from stakeholders until December 1, 2017. Instructions on how to make submissions can be found here. You can request the Ministry of Labour commentary toolkit by clicking here.

Those who do not wish to make formal submissions to the Ministry of Labour might consider lobbying other contacts with the government, or using their network to spread information about these proposals and their potential impacts.  Consideration should also be given to communicating with other Ministries that involve  portfolios that may be impacted by these changes.

If we at Osler can assist you in anyway, perhaps by providing a summary of how the proposed changes would impact your business or by reviewing your submissions before you send them to the government, please do not hesitate to contact us.  

Background information on the IT professionals exemption

The IT professionals exemption was created in 2001 in response to concerns from industry stakeholders that overtime and hours of work rules were poorly suited to IT professionals and that an overly regulated tech sector was making Ontario companies less competitive. Similar exemptions apply to lawyers, professional engineers, accountants, pharmacists, doctors, certain outside salespeople, firefighters, and persons whose work is supervisory or managerial in character.

In 2015, the Minister of Labour initiated the largest review of Ontario’s labour and employment laws in decades. While the stated focus of the review was on issues facing “vulnerable workers in precarious jobs,” many of the changes proposed in the final report went much further. The authors of the report considered whether to modify or eliminate completely the IT professionals exemption. They concluded that the exemption presented “sufficient complications” that it warranted a more careful review before any final decisions are made.

On October 18, 2017, the Ministry of Labour posted a notice to the public indicating that they are reviewing the IT professionals exemption and seeking public comment. They have called upon stakeholders to answer 11 specific questions regarding IT professionals and the nature of the work they do.