Wage Theft and Unpaid Overtime in Canada
Wage theft is a deeply entrenched problem in Canada and unpaid overtime stands out as one of its most egregious forms. Every year, millions of workers in Canada perform hundreds of millions of hours of work for free. Many employers, and even entire industries, have come to depend on this free labour. One of the most effective defenses workers have against this exploitation is joining a union.
Employers are legally required to pay employees for all work performed under contract, but unpaid overtime is everywhere in the Canadian economy. Once workers exceed regular full-time hours, unpaid labour becomes routine – so common it’s treated as normal and expected.
Unpaid overtime is officially illegal, yet it remains widespread. Although the details vary, provincial and federal labour standards generally prohibit employers from (1) not paying their employees for overtime or (2) not paying them the required overtime rates.
Yet, nearly half of all overtime hours worked in Canada are unpaid. Employers rarely face serious consequences for compelling their employees to work for free. Even when action is taken, such as in recent banking industry settlements, legal processes are often very lengthy and expensive, favoring large corporations over workers.
Employees, on the other hand, often face reprisals for refusing unpaid overtime. In many workplaces, there is an unspoken pressure to work unpaid hours to maintain career advancement opportunities. Many workers feel they have no choice but to comply with this ultra-exploitative practice.
How unions turn the tide against overtime theft
Unpaid work. Employers thrive on it and often face little to no repercussions for breaking the law to get it. Entire industries and vital public services depend on it. Can workers do anything to turn the tables? Data from the Labour Force Survey shows that one of the most meaningful defenses against unpaid overtime is union membership or coverage by a collective agreement.
The bar chart below shows the overtime-pay status of employees broken down by sector and union coverage. Nearly all workers either perform only paid or only unpaid overtime. Very few employees report doing both in the same week regardless of the sector or collective agreement coverage.
In the private sector, union members are far more likely to work paid overtime only – about 1.8 times more likely than non-unionized workers. While unpaid overtime is more common in the public sector, union members there are still 2.6 times more likely to receive paid overtime compared to non-union workers.
Despite laws and regulations prohibiting it, unpaid overtime is pervasive across Canada. From January to October of this year, about 2.7 million workers in Canada clocked nearly one billion overtime hours. Of the 985 million overtime hours performed, slightly less than half – 454 million hours – were unpaid. This amounts to 47% of all overtime hours being free labour for employers.
Joining a union is one of the best steps workers can take to protect themselves against unpaid overtime. For example, in the private sector, union members accounted for 18.7% of workers who performed overtime but only 5.7% of unpaid overtime hours. In the public sector, non-union workers made up 22% of those working overtime but accounted for 31% of unpaid overtime hours.
What if all workers were paid (fairly) for overtime?
Union membership dramatically reduces the likelihood of unpaid overtime. This not only prevents the moral injury of unpaid labour, but manifests as a dollar value on workers’ pay checks. To understand the potential benefits of extending these protections to all workers, let’s conduct a simple thought experiment.
What if employers had to pay non-unionized workers for overtime at the same rate as unionized workers? In the private sector, union workers are paid for 88.6% of their overtime hours compared to just 50% for non-union workers. In the public sector, union workers are paid for 50% of their overtime hours compared to 20% for non-union workers.
Private Sector
In the private sector, about 1.5 million non-unionized workers performed 542 million hours of overtime. Their employers paid for just half of those hours, amounting to 281 million hours. Assuming an average overtime wage of $63 per hour (1.5 times the average hourly wage), these workers earned $17.6 billion, or about $11,700 per worker.
If non-union workers were paid for overtime at the same rate as unionized workers, they would have been paid for 480 million hours, earning $30.3 billion, or $20,000 per worker—a wage increase of $13.1 billion or $8,733 per worker.
Conversely, if union workers had no protection against unpaid overtime, their pay would plummet. They would only have been paid for 72.5 million of their 144 million overtime hours, reducing their total pay by $3 billion or $11,320 per worker.
Public Sector
In the public sector, non-union workers performed 13 million paid overtime hours out of a total of 33 million hours. If they were paid at the same rate as union workers, they would have been compensated for 50% of their overtime hours instead of 21%, resulting in a wage increase of $1.6 billion.
For union workers, losing protections would mean being paid for just 48.5 million overtime hours instead of 117 million. Their overtime wages would drop by $4.6 billion, or $7,050 per worker. While the overtime gap is an issue, perhaps the more pressing problem in the public sector is the very high prevalence of unpaid overtime for union members and non-members alike.
Unions: A Shield against unpaid labour
For workers who perform overtime, being in a union often means the difference between earning thousands of dollars and not being paid for that extra time at all. The ultimate goal, however, should not be equalizing paid overtime rates between union and non-union workers, but eliminating the scourge of unpaid overtime entirely. Every hour of work should be paid, period.
Yet, employers have become reliant on this free labour. From January to October of this year alone, workers performed 454 million hours of unpaid labour. Pro-rating this to the entire year, that’s about 544 million hours. At an average overtime wage of $64.15 per hour, this represents $38.5 billion worth of free work.
In the private sector, this unpaid labour directly boosts corporate profits. In the public sector, austerity-driven governments rely on unpaid overtime to cut budgets and underfund public services.
Eliminating unpaid overtime isn’t just about fairness—it’s about ensuring workers receive the wages they’ve earned and putting an end to the systemic super-exploitation that has become normalized in the Canadian economy.