3 Common Employment Law Challenges

By: Ryan Anderson

Dealing with employees can have its challenges but keeping onside with employment law is critical.
Here are three key challenges faced by retail and hospitality employers:
1. Tips: what can we do with employee tips?
2. Overtime: we don’t pay overtime, that’s fine, right?
3. Monitoring staff: if I don’t “snoop” on employees, how will I catch the bad apples?
Read on for best practices to avoid trouble when dealing with these challenges.

What can you do with tips?

When it comes to managing tips, there are plenty of myths out there that frequently cause trouble for employers. One common myth is that employers are permitted to deduct money from tips for broken or stolen items, which were the “responsibility” of a particular employee. This is incorrect: such losses are considered “business expenses” and are therefore a cost to be borne by the employer. Another myth is that owners and management are allowed to receive tips out of the tip pool. Again, this is not true. Unless the owners or management are regularly performing substantially the same work as employees, they are not entitled to share in the tips collected by their employees.
To avoid disputes when managing tips, it is helpful to have a clear and consistently applied tip policy. The policy should plainly set out who will receive tips, and how tips are to be re-disbursed (if at all). Furthermore, employees should be able to easily access the policy. Finally, any such policy must contemplate Canada Revenue Agency rules regarding tips. Guessing about such matters or relying on an unwritten “understanding” is a recipe for trouble that should be avoided.

Can’t we just agree to our own approach to overtime?

The mismanagement of overtime obligations is a problem in many industries, but it is especially common in the hospitality service sector. The biggest misconception is that employers and employees are free to “work it out for themselves” and come to an agreement on when, or if, overtime will be paid.
The fact is that the BC Employment Standards Act (ESA) requires employers to accurately track and record all hours worked, including overtime hours, and to pay non-managerial employees overtime wages if they require or allow employees to work more than eight hours in a day, or 40 hours in a week. Overtime must be paid at the rate of time-and-a-half for hours worked in excess of eight in a day or 40 in a week, and double-time for hours worked in excess of 12 in a day.
Despite this, some employers—particularly in the service sector—require employees to arrive at work fifteen minutes before their scheduled shift, usually without pay, for set up or other purposes, or to stay after their shift to “cash out”, again often without pay. This is not permissible under the ESA, as this extra time is considered “work” for which wages, including overtime pay, is owed to employees.
It is also a popular misconception that employees can agree to receive a higher base rate of pay, in lieu of overtime, or just “bank” overtime hours at the rate of one hour of paid time off for each hour of overtime worked. Neither approach is permissible. Banking of overtime hours is allowed, only with an employee’s agreement (in writing) and each hour of overtime must be banked as 1.5 hours of time.
Incorrectly tracking overtime can have costly consequences for employers. Unpaid overtime claims can go back 12 months and will add up quickly, especially if a claim involves several employees. The key take-away is that employers and employees cannot agree to overtime arrangements that are inconsistent with the ESA. The best practice is to establish an overtime policy that simply and clearly sets out the overtime rules, in accordance with the ESA.

Can I “snoop” to catch the unscrupulous?

A common question raised by employers concerns the extent to which they are allowed to “snoop” on (i.e. monitor) their employees, either by investigating social media accounts, checking work devices, or even conducting surveillance. The legality of any such “snooping” is complex and defies a one-size-fits-all answer, but there are some universal cautions to consider.
There is legislation in BC that protects employee privacy. The Personal Information Protection Act (PIPA) set out the rules for collecting, using, and disclosing employee personal information in BC’s private sector. PIPA violation complaints are filed with the Office of the Privacy Commissioner and can be costly to defend. In addition, the Privacy Act makes it a “tort, actionable without proof of damage, for a person, willfully and without claim of right, to violate the privacy of another.” This means that an individual can sue in court for breach of privacy (separate from pursuing a complaint under PIPA).
Discriminatory treatment is also prohibited by the BC Human Rights Code. Even if an employer is lawfully “snooping” on an employee, certain forms of monitoring might uncover information associated with a protected ground under the Code (e.g. race, disability, family status, sex, and more) and lead to an inference that the employer has made unlawfully discriminatory employment decisions based on those grounds.
So, what is the takeaway? Most importantly, take care to not inadvertently gather “fruit from the forbidden tree”—snooping techniques that unlawfully infringe on privacy rights might generate information that you are not able to use. An employer considering any form of surveillance or investigation that may uncover private information should proceed cautiously, and usually with legal advice, so that the results will be useful and not end up creating a new problem and associated liabilities.

There’s more?

These are three common challenges for employers in this sector, but there are many others. Identifying and addressing challenges like these involves separate legal and business considerations. In almost every case, there is a best practice approach that will steer an employer away from trouble and towards better results. When in doubt, obtaining a little bit of expert advice at the outset is almost always the most economical and successful strategy.