As we reported earlier this year, 2007 saw three overtime class action lawsuits in Canada — a $651 million class-action lawsuit filed against the Canadian Imperial Bank of Commerce (CIBC), followed quickly by a $20 million class action against KPMG and then a $350 million class action against a second major Canadian Bank, Scotiabank. Another class action, for $250 million, was filed against CN Railway in March 2008.
In September, the Ontario Superior Court approved a settlement of the KPMG case, making it the first of the class-action lawsuits to be settled. To resolve the class action, KPMG agreed to an overtime redress plan.
Under the terms of the overtime redress plan, current and former employees employed between January 1, 2000, and September 30, 2007, who are eligible for overtime pay under the applicable employment standards law will be compensated for such overtime, plus interest.
Current employees offered overtime pay under the overtime redress plan can take overtime pay, time off instead of overtime pay, or a combination of the two. Individuals also may receive up to $500 for the cost of independent legal advice about their own overtime claim.
How are these claims to be administered?
The following administrative processes were approved by the court:
- current and former employees were sent a determination letter setting out their eligibility to overtime pay. Approximately 11,333 determination letters were sent;
- employees must accept or reject the proposal set out in the determination letter (Individuals who accept the proposal must sign a full and final release in KPMG’s favour);
- if an employee fails to accept or reject the proposal, he or she is deemed to have rejected the proposal;
- if an employee rejects the proposal, the individual can submit documentation for further consideration and investigation by a third party;
- once the matter has been investigated, a reconsidered determination letter is sent to the individual and KPMG. The employee and KPMG have 25 days to respond to the reconsidered determination letter;
- if the employee and KPMG accept the proposal in the reconsidered determination letter, the matter is resolved and the employee signs the full and final release in KPMG’s favour;
- if either the employee or KPMG rejects the proposal in the reconsidered determination letter, the claim proceeds to mediation (at KPMG’s expense); and
- if the claim is not resolved at mediation, it proceeds to binding arbitration (also at KPMG’s expense).
What about the law firms representing the current and former employees?
The employees’ lawyers don’t go away empty handed either. The court will calculate and fix their fees and disbursements, which may be as high as $600,000. Of course, KPMG will be responsible for paying them.
Before approving the overtime redress plan, the court certified the claim against KPMG as a class action. In doing so, the court concluded that, for settlement purposes, the criteria for certification were satisfied: the claims of the class raised common issues and the class action was preferable to 11,000 individual claims. It remains to be seen whether the courts will certify the CIBC, Scotiabank, and CN Railway actions.
