How Earnings Must Be Paid - LawNow Magazine

How Earnings Must Be Paid

Employment Law ColumnIntroduction

In 1981, when I was a student working for the summer in London, England, every two weeks I would walk over to another building and join a queue to collect my pay packet. In the little cardboard pouch, I found a very narrow strip of paper of numbers that explained how my earnings and deductions were calculated. My employer paid the net salary in bills and coins, all in the packet. There were no direct deposits in those days or cheques to take to the bank, much less payday cheque-cashing shops.

I figured that employers paid wages in cash because that was the most liquid form of money. I also figured there must have been a legal obligation on employers to do so because workers, at that time, could not easily access earnings that were not in cash.

This sort of rule is one example of workers’ rights in a universe of “employment standards” under provincial laws (such as the Employment Standards Code in Alberta). I cannot remember the basic cash pouch being a legal requirement in Alberta, although they are permitted. Nevertheless, we have several other rules in effect today around the payment of wages.

The topic of this column is the requirements on Alberta employers when paying earnings to workers. Other provinces and territories in Canada have very similar rules. Workers should review the employment standards legislation in effect where they work to learn the details of how their earnings must be paid.

General Provisions

It is important to remember that the workers’ accrued earnings belong to the workers and not to the employer.Employers must set out pay periods for calculating wages, which cannot be longer than one month. Wages, overtime and holiday pay earned must be paid within 10 days after the end of each pay period.

An employer must pay at least the minimum wage – currently $15 per hour ($13 for workers under 18 who are in school). Workers paid by commission or other incentive must also be paid the minimum wage in each pay period.

Employers must pay workers for a minimum of 3 hours of work. Meal periods are not counted in this. There are a few exceptions to the minimum 3 hour work period, including:

  • school bus drivers;
  • young workers teaching swimming lessons or lifeguarding part-time at municipal recreation facilities;
  • workers on a movie set or other “artistic endeavour”;
  • jobs up to 2 hours on school days.

These employees must be paid minimum wage for at least 2 hours each work period.

When either party terminates the employment with notice, employers must pay the employees’ earnings no later than 3 days after the last day of work. If the termination by either party is for cause, or if the worker quit without giving the required notice, Alberta employers have 10 days to pay the earnings.

Employers must pay earnings in Canadian currency. Payment can be made in cash or by cheque, bill of exchange or order to pay (payable on demand from an authorized financial institution). Alternatively, employers and employees may agree to direct deposits in an authorized financial institution at the employees’ direction.

When reducing an employee’s wages, employers must give the employee notice of the reduction before the start of the pay period in which the reduction is to take effect. If this notice is not given, the reduction is not valid.

Employer May Not Make Some Deductions From Pay

Employers cannot deduct, set off against or claim from the earnings of an employee any sum of money unless the law permits. Deductions allowed by law include:

  • anything deductible under legislation, such as garnishees, judgments or court orders (e.g., child support payments);
  • withholdings for income taxes, Canada Pension Plan and Employment Insurance;
  • union dues set out in a collective agreement binding on the employee; or
  • anything the employee has personally approved, such as the repayment of a loan or wage advance from the employer.

However, a collective agreement or a written approval by an employee can never permit deductions from earnings for:

  • faulty work, including any act or omission by the employee that results in a loss to the employer;
  • damage or breakage caused by the employee;
  • innocent mistakes;
  • cash shortages or other loss of property if, as is very common, someone other than the employee also had access to the cash or property. For example, if more than one person has access to the cash register, an employer cannot hold only one employee responsible for shortages;
  • cash shortages due to a failure to collect all or any part of the price paid by a purchaser. Simply, workers cannot be used as guarantors of the business’ receivables; or
  • any costs associated with providing, using, repairing or cleaning uniforms or other apparel that the employer requires the employee to wear at work.

Employers cannot deduct, set off against or claim from the earnings of an employee any sum of money unless the law permits.If an employer provides board or lodging, or both, to a minimum wage employee, the deductions cannot exceed $3.35 for a single meal and $4.41 per day for lodging. Employers cannot deduct a meal not consumed by an employee from the minimum wage.

Advances on wages and inadvertent over-payments of wages can be recovered by employers from employees’ earnings.

Conclusion

It is important to remember that the workers’ accrued earnings belong to the workers and not to the employer. Employers might be tempted to take advantage of their superior positional and economic power over the workers and help themselves to some of the workers’ earnings. Employment standards legislation prohibits that. Employers who try to do this may be slapped with administrative penalties or subject to prosecution and fines.

The cash pay period pouch may be gone but other detailed rules remain in place to prevent employers from ‘playing with’ or taking workers’ earnings.

Authors:

Peter Bowal
Peter Bowal
Peter Bowal is a Professor of Law at the Haskayne School of Business, University of Calgary in Calgary, Alberta.
 


A Publication of CPLEA