As BC’s high technology industry continues to thrive, it is critical for businesses in the sector to fully understand their obligations and opportunities under the Employment Standards Act (“ESA”). While BC’s high technology companies can benefit from certain exemptions that offer operational flexibility, such advantages come with legal risks that businesses must carefully manage.

In this blog, we’ll dive into these exemptions and offer practical advice to help high technology companies balance innovation with compliance.

Overview of BC’s High Technology Industry and Employment

BC’s high technology sector has become a key economic driver, outgrowing the overall BC economy nearly every year since 2010.[1] BC’s high technology sector has approximately 12,000 businesses, employs nearly 180,000 people, and has generated $55.5 billion in revenue in 2022 alone.[2] BC’s high technology sector is comprised of diverse areas like software development, artificial intelligence, clean tech, and animation and visual effects (“VFX”). The industry attracts skilled professionals who often work long, unconventional hours to meet the demands of fast-paced projects.

Recognizing the unique nature of the industry, the BC government designed certain exemptions within the ESA to give high technology employers greater flexibility in managing their workforce. However, these exemptions require careful legal navigation to avoid misclassifications and costly disputes.

Key ESA Exemptions for High Technology Companies

Hours of Work and Overtime Pay

Under the standard provisions of the ESA, BC employees are entitled to overtime pay after working 8 hours a day or 40 hours a week. However, high technology professionals are exempt from these requirements. This means that high technology professionals can work longer hours without triggering overtime pay.

• What Does This Mean for Employers? While this flexibility can help high technology companies meet tight project deadlines, it’s important to correctly classify which employees qualify for this exemption. Not all roles within a technology company will meet the criteria, which can result in misclassifications and costly disputes.

Statutory Holiday Pay

Employees in BC are also entitled to statutory holidays or additional pay if an employee works. However, high technology professionals are also exempt from statutory holiday provisions. This means that high technology professionals are not required to get the day off with pay or additional pay if the holiday is worked.

• What Does This Mean for Employers? This can provide further flexibility, allowing businesses to maintain operations through holidays to maintain service delivery or complete projects on time.

Vacation and Other Basic Entitlements

While high technology workers may be exempt from overtime and statutory holiday requirements, they are still entitled to basic protections like limitations on hours worked and vacation pay.

• What Does This Mean for Employers? Employers should ensure that their high technology employees are not working excessive hours or hours detrimental to the employee’s health or safety[SF1] . Additionally, their employment agreements should clearly outline how vacation entitlements are accrued and managed, particularly for hourly employees who may not accrue vacation in the same way as other employees.

A Cautionary Tale: The VFX Animators Case

The case involving VFX animators highlights the importance of accurately classifying employees under employment standards exemptions. In 2016, Unifor Local 2000 filed a complaint with the Employment Standards Branch on behalf of non-unionized animators employed by Cinesite Vancouver Inc. (the “Employer”), previously known as Nitrogen Studios Canada Inc. The Union alleged that the Employer failed to pay employees according to the ESA. In response, the Employer argued that the animators were classified as high technology professionals and, therefore, exempt from overtime pay requirements.

A delegate of the Director of Employment Standards (the “Delegate”) ultimately determined that the animators did not meet the criteria for high technology professionals, as initially classified by the Employer. Specifically, the Delegate concluded that the animators were not primarily engaged in a covered activity under the Employment Standards Regulations (“ESR”). Instead, the animators were deemed end-users of technological products, rather than developers—a crucial distinction for exemption eligibility. According to the Delegate, games software is a self-contained, final product, whereas CGI animation constitutes only a component of a completed visual work.

As a result, the Delegate ruled that the animators did not qualify as high technology professionals within the meaning of the ESR. Consequently, the Employer received a fine and was ordered to retroactively pay overtime wages owed to the animators.

• What Does This Mean for the Employer? This case highlights the importance of reviewing employee classifications regularly. Failing to do so could result in significant financial implications. Employers should work with legal professionals to ensure they correctly classify employees and apply the exemptions appropriately.

Balancing Flexibility with Compliance: Best Practices for High Technology Employers

1. Ensure Proper Employee Classification: Not every role within a high technology company qualifies for ESA exemptions. Misclassifying an employee can expose your business to costly legal disputes. It is important to correctly identify which employees are high technology professionals.
2. Maintain Clear Employment Agreements: Employment agreements for high technology professionals should contain clauses unique to that designation. Furthermore, these agreements should clearly outline representations and warranties, compensation, vacation accrual, and other benefits.
3. Consult Legal Experts Regularly: With cases like the VFX animators highlighting the risks of misclassification, it is important to consult with legal professionals to ensure classifications are done properly and are up to date. Employment standards can change, and a legal review ensures that your business stays compliant while leveraging the flexibility that these exemptions offer.

Conclusion: Maximizing Flexibility While Staying Compliant

The ESA exemptions for high technology companies in BC offer valuable flexibility, but they also carry significant compliance risks. By taking a proactive approach—ensuring proper employee classification, maintaining clear employment agreements, and consulting legal experts—your business can strike the right balance between operational flexibility and legal compliance.

As BC’s high technology industry continues to evolve, staying informed and vigilant about employment law is an important component of your business’ success. For further guidance on managing your workforce under the ESA, contact the MT+Co. Workplace Law Group to ensure your business is well-positioned to thrive in this dynamic sector.

[1] BC Stats, High Technology Sector 2022 Data Highlights, online: < https://www2.gov.bc.ca/assets/gov/data/statistics/business-industry-trade/industry/high_tech_2022_highlights.pdf>

[2] BC Stats, High Technology Sector 2022 Data Highlights, online: < https://www2.gov.bc.ca/assets/gov/data/statistics/business-industry-trade/industry/high_tech_2022_highlights.pdf>

 [SF1]This is a specific protection under section 39 of the ESA.