Distribution payroll: three overtime clocks, one warehouse, and reps on the road

Ontario's overtime thresholds, role by role

Ontario does not give a distribution business one overtime rule; it gives it several, set by regulation, and applying the warehouse clock to everyone is how importers quietly build ESA liabilities:

The mixed roles are where it bites: a driver who also picks orders in slow weeks, a rep who covers a delivery route. We map each person to the rule that fits the work actually performed, in writing, before a Ministry of Labour claim does the mapping for us.

Warehouse payroll when containers bunch up

Import volume never arrives evenly, and payroll should absorb the lumps without unpaid overtime or panic hiring. Ontario allows averaging agreements — written, employee-signed, periods up to four weeks, no ministry approval required — so a container-heavy week can offset a slow one for overtime purposes. Hours should come from a time clock feeding payroll directly, through tools like QuickBooks Time, because warehouse disputes are always about hours and the employer without records loses by default. Peak-season temps now come through agencies Ontario licenses: verify the licence in the public registry before signing, because clients of unlicensed agencies face penalties, and you remain jointly liable for certain unpaid wages of assignment workers either way. And when a container misses its slot and you send the crew home early, Ontario's three-hour rule still pays anyone who regularly works longer days for three hours — schedule around the terminal, not against the ESA. One quiet budget line: vacation pay rides on all wages, overtime included, so the peak costs more than the rate card suggests.

Commission reps: withholding that matches the cheque

Commission employees get CPP, EI and tax withheld like anyone else — but the tax piece can be tuned to reality. A rep who claims sales expenses files a TD1X so withholding reflects expected commissions net of expenses, then deducts those expenses at tax time under the salesperson rules with a T2200 signed by you. Draws against commission need their own earning codes: a recoverable draw is wages when advanced, not a loan on a sticky note. Commissions are also wages for vacation-pay purposes, so the 4% or 6% accrues on them, not just on any base salary. The classification line runs through sales too — a rep with your price list, your territory and your CRM is an employee, while a genuine manufacturers' agency with other principals and its own book of business is a supplier on invoice. And a rep who lives in the United States is neither a T4 nor a T4A question: they pull you into state payroll registration and nexus territory, which we handle alongside customs in our cross-border work for importers.

WSIB and the cost of a warehouse hour

Warehousing is covered employment, and the WSIB premium belongs in the labour cost per hour next to employer CPP and EI, vacation accrual, and EHT once Ontario payroll clears the $1 million exemption. That burdened rate — not the wage — is what a picked order actually costs, and it is the number your landed-cost model should carry. Keep the classification honest as the business evolves: a distributor that adds light assembly or kitting can drift out of the rate class it registered under, and insurable earnings get reconciled annually, so growth between filings surfaces as a retroactive bill when nobody watches it.

Labour cost, split the way margin is measured

A distributor's payroll should read like its P&L: receiving and warehousing labour separated from delivery and from selling cost, so gross margin by product line carries its true labour burden — the same structure our importer bookkeeping reports on monthly. The mechanical thresholds move as headcount grows: CRA accelerates your remitting schedule once average monthly withholdings cross $25,000, and seasonal staffing means a steady flow of ROEs through ROE Web. None of it is difficult; all of it is unforgiving when it runs on memory instead of a system.

Source: Ontario — Your guide to the Employment Standards Act.