On June 26, 2012, the Ontario Court of Appeal ruled that 2 major lawsuits against CIBC and Scotiabank, alleging that employees were denied hundreds of millions of dollars worth of overtime pay, may proceed as class actions.
In June 2007, Dara Fresco, a CIBC head teller, filed a lawsuit against CIBC alleging that her paid working hours did not take into account the numerous time-consuming tasks she had to complete outside her typical working hours. The lawsuit was denied class action certification in 2009 after a judge ruled that there was no proof of a “systemic policy or practice of unpaid overtime” at CIBC.
Fresco’s highly publicized case motivated a Scotiabank personal banker, Cindy Fulawka, to launch a similar lawsuit in December 2007 on behalf of 10,000 Scotiabank employees. It was certified as a class action in 2010, which led to confusion over the contradictory denial of certification in Fresco’s case. The recent ruling overturned the denied certification in Fresco’s case.
The plaintiffs in both cases allege that the banks expected employees to work late but that their overtime policies, such as requirements to secure approval before working extra hours, made it difficult for employees to get overtime pay for the extra work. The employees also allege that the banks had poor record-keeping systems for overtime. However, the allegations have not yet been proven.
A third lawsuit against Canadian National Railway Co., in which it was alleged that some of the company’s employees were misclassified as managers to avoid paying them overtime, has been denied class action certification. The appeal court ruled that this particular lawsuit failed to show enough common issues between members of the lawsuit to proceed as a class-action, and that the managerial exclusion requires a case-by-case analysis with individual plaintiffs.
The courts’ decisions in these 3 cases have provided clearer guidelines for class action lawsuits against Canadian employers for unpaid overtime.
Significance for Employers:
The ruling reinforces that employers should thoroughly review their overtime practices and policies to ensure compliance with the law.
Many employers mistakenly believe that certain employees fall under specific exemptions to overtime pay. However, employees have recourse when they work excessive hours without proper overtime pay, and it could be quite costly for employers to retroactively compensate employees for unpaid overtime.
5 Tips for Employers:
- Salaried employees are entitled to overtime unless they fall into one of the excluded categories of employees established in employment standards legislation.
- Employers may still be liable for overtime pay even when overtime hours are not pre-approved and their policies state that pre-approval is required.
- The exclusion of managers from overtime entitlement in employment standards legislation may not always apply just because they have a managerial title.
- Employers have a positive obligation to maintain proper records of all hours worked by their employees, and where inadequate records exist, employees claiming overtime entitlement may be given the benefit of the doubt.
- Consult with counsel to ensure that your overtime policies are enforceable, and that employment standards exemptions are properly applied to individual employees.
This blog is provided as information and a summary of workplace legal issues.
This information is not intended as legal advice.