Three of Canada's Big Four Accounting Firms to Pay Overtime Retroactively
Before I continue - there's been enough misreporting on various other sites that I have to make this very clear:
Chartered Accountants in Canada do NOT get paid overtime at CA firms and are NOT going to be paid overtime.
More on that in a moment, but basically CAs are exempt under most labour laws - and that's the way the system works.
With that in mind, don't forget that not everyone at CA firms is a CA, or even a CA student.
Much has been written about KPMG not having paid overtime to people who, it turns out, were supposed to receive it after all.
KPMG's story was especially bad because, from what I've read, they had people who you might commonly refer to as a "technician" or "administrative support staff" doing work that is normally done by "client serving" staff, as reported by the Star and other media outlets.
As reported in the Globe, KPMG will pay out the overtime it figures it owes in an attempt to avoid getting hit with punitive damages in a class
action lawsuit which the lawyers still seem intent on fighting. This is because, anyone who took a course in business law will tell you, courts are generally gentler on you if you did something wrong if you try and make amends before the court forces you to do it.
Despite this move, though, the lawyers seem intent on fighting the case - it looks like KPMG's case isn't settled. But this is old news - we'll get back to KPMG's legal situation in a moment. What's new?
Well since the KPMG case surface, the other firms in the Big 4 thought
to themselves, "uh oh, have we misunderstood who's doing what, and
who's exempt? Is there a potential problem we need to fix?"
The court cases implied that they should rethink their definition of who is and is not exempt from overtime.
As a result, in the past two months two big announcements have slid into major Canadian newspapers from another two big firms.
Ernst & Young to pay overtime to non-accountants
As reported by Accman in late March, Ernst & Young reviewed who it was paying and realized the smart course of action was to voluntarily step up and pay people who weren't getting overtime.
E&Y's situation looks less extreme than that at KPMG, because its "support" staff were already eligible for either overtime or extra time off. But it realized that the IT groups had people who weren't considered accounting "profesionals" under provincial law - just smart and clever people not doing accounting designations.
So who does gets paid overtime?
Basically, staff or seniors who are not CA students, as well as those studying for the CGA or CMA. Members of the CA/CGA/CMA group are all automatically excluded from getting overtime by provincial law for reasons we'll get to in a moment.
How do I file an E&Y overtime claim?
Go to this site and fill in the appropriate form - sadly, Firefox is not supported, so either use your IE tab plug-in, or just load this link in Internet Explorer. Note - the deadline is May 15, 2008.
The site makes it clear that the money will be paid out to both current and former staff, so hurry up and hit the link even if you've left the firm.
PricewaterhouseCoopers to follow E&Y's lead - will also pay overtime
As mentioned by the Calgary Herald, PWC has come to the same conclusion. Take a growing IT group - everything runs on computers these days - which doesn't necessarily need CA students to get the job done - brilliant people who are comfortable computers can pick up business terminology quickly too - and you find yourself with a group of people who slipped under the HR radar.
Oops, they may not be exempt, but they've been treated the same way as everyone else.
How do I file a PWC overtime claim?
Go to this site and fill in the appropriate form. Note - the deadline is June 16, 2008.
Do I have to calculate how many hours they owe me for?
Fortunately, no. Since these are, after all, accounting firms, they have detailed records on file - basically, all your timesheets.
If you diligently reported all your time - spent on both client and non-client work - the system should automatically calculate how much you're owed.
Is there a catch?
Well if you were "eating" time - not recording work you did, you shot yourself in the foot. I don't know if you have a way of proving you worked more hours than your timesheets showed, but you better start looking through your files to see if there's anything which proves how hard you've been working if you didn't record it at the time. Can you even remember how many hours you did or didn't report?
Hopefully most people don't have this problem - in which case, the only catch is that the firm wants to be safe. That means they'll ask you to sign a release form when they send you the money, where you agree that "it's all good". That'll be the point in time when you'd better check the math to make sure it adds up.
Keep in mind, if you're in Ontario, that you only get overtime for hours over 44 per week. Thanks Mike Harris, we all hate you for that one. The rest of Canada, if I've been told correctly, gets overtime after 40 hours.
And of course, the same rules I described in the previous section apply across the country - if you're a CA - like me - or a CA student - like me one week ago - you are not paid any overtime in pretty much any Canadian province.
You'll find that both the PWC and E&Y sites include detailed descriptions of who is
and isn't eligible.
addition to accounting students, another important class of people is
also exempt: if you're a manager, you're no longer eligible
because managers "manage", and are by definition also exempt from
getting overtime pay - you're a Big Boy or Girl now, so goes the
government's thinking, so you
decide your own hours.
Read the Ontario Employment Standards Fact Sheet to see the proof - but you're probably asking - why is this the case?
You're a professional
Professionals, as defined by the Province of Ontario and other jurisdictions for that matter, work by thinking. The independence in inherent in generating value by using your brain instead of your other muscles means that you'll find yourself thinking about work even when you're at home
Is this difference a tad artificial considering the fact that you may be working side by side with people who are essentially doing the same thing? Why yes - that's the funny thing about the law, though.
Sometimes it creates arbitrary distinctions not due to logic, but because of what may best be described by economic history.
In a poignant comment Professor Godard at the University of Manitoba says:
“The accounting profession to me has always been close to the feudal
craft model. The senior partners are the master craftsmen, the
journeymen are the accountants who aren’t partners yet and the
apprentices are the accounting students. You work long hours under
fairly crummy conditions. You can’t find too many occupations where
that model still holds,” he says.
At least the lawyers involved didn't use that line, though, because that would make me start smirking. Lawyers, after all, are the other major occupation where that model does still hold, and in a much nastier way, if you've read the writings of Melissa and other young lawyers you'll instantly understand why it's better to be a CA student instead.
My interpretation of the situation is that as labour laws were developed, each group of employers did what they could to enshrine rights for themselves, or to keep employees from getting too many rights themselves. Employees of course fought for their own rights.
In the situation of CA students, you have a group of people who suffer for about 30 months, then pass their exams and apprenticeship and are then, as one of my friends put it, "FREE!"
Contrast this with the TTC bus drivers who just got forced back to work. They will always be doing the same thing for the rest of their lives, for roughly the same pay too. This gives them plenty of time to decide that they should form labour unions, band together, demand higher wages, and then collapse in a bout of nasty in-fightining - maybe.
If you know your tough times will be relatively short and you just want to get through them, you'll devote little energy to fighting the political system to change things - after all, you can always pick a different occupation and the rewards for enduring the apprenticeship phase are generally regarded as worth the cost.
CAs find themselves earning anywhere from $80k to well over $200k in 5 to 10 years, depending on the workload they decide to take on and where they live. Working for roughly half that amount for a short period of time isn't fun, but then, firms are spending tens of thousands of dollars on training too, and the professionals in this field have decided that the 30 month apprenticeship period itself teaches you so much that it's worth suffering a little overtime to learn a lot.
After all, you're not digging ditches - usually - or subject to random explosions, most of the time.
What about KPMG's lawsuit? Why are the lawyers still upset?
Lawyers often earn a percentage of the winnings from a court case. So if they could win punitive damages from KPMG, they win would be more successful. And everyone likes to score a big "win", so if you're the lawyer who forced someone to pay their client $40 million instead of $10 million you'll obviously be proud of their accomplishment - and depending on the local rules - may also enjoy a larger payout from the victory as well.
Speaking with colleagues at all the firms, there a few general reactions I've seen - a mix of positive and negative for sure:
- Well that sucks, because I'm a CA so I get nothing, and will continue to get nothing extra
- I'm from Quebec and I'm not a CA - my province's rules mean that I'm not getting anything anyway. Oh nuts.
- I'm happy for my non-CA friends - good for them!
- Well the firms are just doing what they're supposed to do, no big deal - they should've known about it already and done this sooner.
- The firms are doing what they're supposed to do, but they're
doing it well - addressing the problem as soon as they learned about
instead of wondering if it would go away.
The interesting question now, of course, is to determine how long
before Deloitte joins the other three - since they have a large consulting practice this could be a very expensive proposition for them. Lots of free vacation current employees perhaps?
Krupo sees a waterfall and tries to resist making an allusion to a pot of gold at the end of the rainbow.
If you have questions, feel free to leave me a comment or e-mail me - there's links to do both on this page (hit "join" in the top right corner or here to start leaving comments - we don't do anything with your e-mail here other than contact set you up with it so we avoid getting blog-spammed), but for the best response, contact your current or former employer for their official response - and to establish a paper trail of your conversation, since I'm not a lawyer and what you have here is only general information to point you in the direction of the official statements.