Finance

Alberta’s Minimum Wage: All You Need to Know

Alberta’s Minimum Wage
Alberta’s Minimum Wage

Alberta is famous for its beautiful capital city of Edmonton, along with the Royal Alberta Museum. However, it became the site of a minimum wage controversy recently as well. The minimum wage at Alberta and the rules and regulations surrounding it have been a topic for intense debate and discussion for years now. However, in this post we will discuss the details about the different aspects of Alberta’s minimum wage and only deal with the possible cons of an increased minimum wage at the end. 

Alberta’s Minimum Wage: The Details

Basic rules of Alberta’s Minimum Wage

  • Employers must pay at least the minimum wage.
  • The current general minimum wage applies to all employees, with the exception of students under the age of 18.
  • A new job creation student wage was implemented June 26, 2019. Restrictions apply.
  • Wages don’t include tips or expense money.
  • There are separate weekly and monthly minimum wages for some salespersons and domestic employees.
  • Employees must be paid at least 3 hours of pay at the minimum wage each time they go to work even if they’re sent home after less than 3 hours, unless the employee is not available to work the 3 hours.  
  • Maximum deductions below minimum wage for provided meals and lodging are $3.35 per consumed meal and $4.41 per day’s lodging.

Minimum wage rates for 2019

The following minimum wage rates are set out in the Employment Standards Regulation:

General minimum wage – $15/hour (same as the minimum wage in 2018)

Minimum wage for students under the age of 18 – $13/hour (down from $15/hour in 2018)

Minimum wage for salespersons (including land agents and certain professionals) – $598/week (same as 2018).

Minimum wage for domestic employees – 2,848/month (same as 2018)

New minimum wage rules

The wage for college kids under the age of 18 is $13/hour as of June 26, 2019. 

This new rate applies to the first 28 hours worked in a week when school is in session. Students must be paid the overall wage of $15/hour for any hours exceeding 28 hours in one week. Overtime rules still apply.

For example, a student who worked 30 hours in a week can be paid as low as $13/hour for the first 28 hours, but must be paid no less than $15/hour for the 2 additional hours worked.

The new job creation student wage of $13/hour will apply to all regular hours worked when school is not in session, such as during spring break, Christmas break or during the summer vacation period. Overtime rules still apply.

Who does the Job Creation Wage apply to?

The job creation student wage applies to any student under the age of 18 who attends school up to grade 12, post-secondary or trade school .

Subject to any limitations that may apply as a result of an individual contract of employment or an applicable collective agreement, if a student is already working and making $15/hour or more, the employer may choose to reduce their wage to as low as $13/hour, but not lower.

In all circumstances an employer must tell the employee that they are going to reduce the employee’s wage before the start of the pay period when this lower wage would take effect.

The job creation student wage only applies to students enrolled in an educational institution and does not apply to youth who are out of school.

Information on the work creation student wage is out there for employers and students.

What are Alberta’s Weekly minimum wage rates?

Employees entitled to the weekly wage rate earn $598 per week.

Eligible employees:

  • direct selling salesperson
  • commission salesperson (other than a route salesperson) selling goods which will be delivered later
  • car, truck, recreational vehicle, or bus salesperson
  • manufactured home salesperson
  • farm machinery salesperson
  • heavy duty construction equipment or construction equipment salesperson
  • residential home salesperson employed by builder
  • land agent
  • architect
  • accountant
  • chiropractor
  • dentist
  • engineer or other geoscientist
  • lawyer
  • optometrist
  • podiatrist
  • psychologist
  • veterinarian
  • agrologist
  • denturist
  • information systems professional

What are Alberta’s domestic employee wage rates?

Minimum wage rates:

Domestic employees residing in their employer’s house: $2,848 per month.

Domestic employees not residing in their employer’s house: $15 per hour.

Eligible employees:

A domestic employee may be a person employed to perform their duties within the employer’s residence, for the care, comfort and convenience of members of that residence. Casual babysitting isn’t considered domestic employment.

All domestic employees are entitled to:

  • the minimum wage
  • general (statutory) holidays with pay
  • a copy of their statement of earnings and deductions for each pay period
  • a rest period of at least 30 minutes, paid or unpaid, for each consecutive 5 hours of work
  • At least one day of complete rest during each work week
  • vacations and vacation pay
  • notice of termination of employment
  • job-protected leaves

For employees who live in their employer’s home:

  • employers are required to pay the complete monthly wage rate, no matter the amount of hours worked
  • pro-rating of the monthly wage is permitted where the worker agrees to figure for some of a month, like mornings only
  • employers can deduct a maximum deduction of $4.41 per night of lodging, and $3.35 per meal, employers can’t make deductions for meals that weren’t consumed 

For employees who don’t live in their employer’s home:

  • the minimum wage rate applies for all hours worked
  • meal deductions from the wage rate cannot exceed $3.35 per meal consumed

These employment applications are not applicable for domestic employees: 

  • overtime compensation
  • restrictions on maximum hours of work
  • Hours of work
  • Employees asked to work for short periods
  • 3-hour minimum

Employees must be paid for at least 3 hours of pay at the minimum wage each time they’re required to report to work, or come to work for short periods. This 3-hour minimum doesn’t apply if the worker isn’t available to figure the complete 3 hours.

If an employee works for fewer than 3 consecutive hours, the employer must pay wages that are at least equal to 3 hours at the minimum wage.

If an employee’s regular wage is greater than the minimum wage, the employer may pay them for less than 3 hours of work at this higher rate.

Who is eligible for the 2-hour minimum?

The following employees must be paid minimum compensation for at least 2 hours at not less than minimum wage:

  • school bus drivers
  • part-time employees of non-profit recreational or athletic programs 
  • Métis Settlement or community service organization
  • home care employees
  • adolescents (13, 14 and 15 years of age) who work on a school day

Employees working split shifts

If an employee is required to work a split shift and there’s more than a 1-hour break between the 2 segments of the shift, the employee must be paid the minimum compensation described above for every segment of their shift.

Employees attending a compulsory meeting or scheduled training session

If the meeting or training occurs on an employee’s regularly scheduled day off, the employee must be paid at least the minimum wage and overtime if applicable. If the meeting or training is of a shorter duration than 3 hours, the 3-hour minimum rule applies.

Also note:

  • the rate of buy meetings or training can’t be but the wage 
  • the pay received by the worker must equal or exceed the quantity described within the section on minimum compensation for brief periods of labor 
  • if the meeting or training isn’t compulsory but is directly related to the employee’s work, and the employee attends, they must be paid the wages agreed to, and overtime if applicable; the worker must receive a minimum of the minimum compensation as described above

Employees ‘on call’ or ‘on standby’ at home

  • if an employee isn’t required to perform work at home, no payment is required; being ‘on call’ or ‘on standby’ isn’t considered work
  • if an employee is required to work at home, the employee must be paid for hours worked at their regular rate of pay, plus applicable overtime, for the actual time worked
  • if the worker is required to go away from the home and report back to the worksite, the minimum compensation for brief periods of labor as previously described is applicable once the worker reports to work

Incentive-based pay or commission

To calculate whether an employee earning incentive-based pay or commission has received the prescribed minimum wage rates for all hours worked during a pay period, the employer must calculate if the employee’s minimum compensation has been covered.

Minimum compensation entitlement

An employee’s wages are totaled for the pay period set by the employer (maximum 1 month) and then divided by the total number of hours worked in that pay period.

 Also:

  • if the calculated hourly wage rate is a smaller amount than the wage , the worker must be paid a minimum of the wage for all hours worked
  • if the calculated rate is above the wage , the worker must be paid their incentive-based pay or commission

What are the allowable deductions from the minimum wage?

  • Meals and lodging

Employers can, with written authorization from the employee, reduce the employee’s wages below the minimum wage by a maximum of

  1. $4.41 for each day the employer provides the employee with lodging
  2. $3.35 for every meal consumed by the employee; deductions can’t be made for meals not consumed
  • Uniforms

Deductions for uniforms aren’t allowed. This includes any costs related to the acquisition , use, cleaning or repair of a consistent , or the other special article of apparel that an employee is required to wear during their hours of work.

Which occupations are exempt from Alberta’s minimum wage standards?

The following employees are exempt from wage standards:

  • real estate brokers
  • securities salespersons
  • insurance salespersons paid entirely by commission
  • students during a work experience program approved by the Alberta government
  • students involved in off-campus education programs covered under the Education Act
  • extras in a film or video production
  • counsellors or instructors at a non-profit educational or recreational camp for youngsters , handicapped individuals, or religious groups
  • municipal police service members
  • post-secondary academic staff

A case against hiking Alberta’s Minimum Wage

The new NDP government in Alberta has indicated that it will aggressively increase the province’s minimum wage from $10.20 to $15 per hour over the next three years. This was a pre-election campaign promise and now that it has become a policy, there are quite a few problems with it. Ignoring experience and pursuing policies based on good intentions and ideology will not solve the province’s pressing problems.

Contrary to some pundits’ views, there is a preponderance of evidence, particularly from Canada that minimum wage increases have adversely affected low-skilled and young workers. A recent comprehensive review of international research led by Professor David Neumark, one of the world’s foremost experts on the subject, concluded that the balance of the research has shown that employment among younger, less-skilled workers tends to suffer as a result of minimum wage hikes.  

Canada is often used for minimum wage research because of the variation between provinces. In fact, there are over a dozen Canadian studies examining provincial minimum wage increases. The Canadian evidence finds that, on average, a 10 per cent increase in the minimum wage decreases youth employment by somewhere between three and six per cent.

A simple explanation of that is when minimum wages are hiked by Governments, without any increments in the corresponding productivity, employers tend to lay their lowest skilled employees off and operate with a smaller workforce. Yes, the employees who manage to retain their jobs as a result of higher productivity or skill level enjoy higher wages, the low skilled, younger employees find it difficult to retain jobs or even land new jobs. Young and low-skilled workers are most adversely affected because of their dearth of experience and skills.

The NDP’s plan to hike Alberta’s minimum wage to $15 is clearly linked with moves in the U.S. in several cities, including high-profile examples in Seattle and Los Angeles. Unfortunately, the real-world experience in Seattle confirms the research noted above as many small businesses have downsized employment in an attempt to manage costs.

Second, while the intentions of the government may be noble in terms of trying to help the poor, empirical research in Canada has consistently found that increasing the minimum wage does not reduce the share of Canadians living in poverty. One academic study, for instance, found that minimum-wage hikes actually increased the share of families falling below the relative poverty line, which suggests that low income families are especially hurt by the reduced employment opportunities emanating from minimum wage hikes.

The key reason minimum wage hikes do not generally reduce poverty is because so few of those earning the minimum wage live in poor households. According to Statistics Canada data, 50 percent of minimum wage workers in Alberta in 2014 lived with their parents and the majority of these individuals were aged 15 to 24 and in school. Of the remaining minimum wage workers, 26 per cent had working spouses, which meant that their household income was higher than would be expected by a single minimum wage earner. The reality of who actually earns the minimum wage is distinctly different from the general perception and certainly the narrative offered by the Alberta government.

Indeed, according to Statistics Canada, only 1.5 percent of minimum wage workers were single parents with young children. Surely we can all agree that a program designed to help this group would be beneficial but that doesn’t entail changing the minimum wage for the remaining 98.5 percent of low-skilled workers.

Third, Alberta has a long history of policy leadership in the country, meaning that when Alberta gets things right, it tends to encourage other provinces to follow. Conversely, when Alberta gets it wrong, like aggressively increasing the minimum wage, it also encourages other provinces to follow suit.

Finally, at a time when most Albertans and many investors outside of the province are anxiously assessing the direction of policy, this is yet another sign that the government intends to act dogmatically and ideologically rather than pragmatically. In addition, such policy changes do nothing to clarify what the new government intends to do on the province’s most pressing issues such as deficits and energy.  

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