By Alix Herber and Ian Campbell
One of the hottest issues in Canadian employment law in the past two years has been overtime class-action claims. As we outlined in our October 7, 2008, entry, 2007 saw three overtime class-action lawsuits
- 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. Further class actions were filed in 2008 â€“ against CN Railway in March 2008 for $250 million,
- and another against CIBC (this time by the investment bankers and analysts) in October 2008 for $360 million.
KMPG settled the class action against it, but employers have been anxiously waiting to hear if the other actions would be certified as class actions.
On June 18, 2009, in a much anticipated decision, the Ontario Superior Court refused to certify the first CIBC action. In that action, the representative employee was seeking compensation for unpaid overtime on behalf of a class that potentially included more than 31,000 current and former frontline bank employees.
In the claim, the employees alleged that:
- CIBC’s overtime policy was unlawful;
- CIBC required employees to do more work than could reasonably be completed within standard working hours;
- employees regularly worked overtime; and
- employees were discouraged from submitting overtime.
In its decision, the court determined that a class proceeding was not the preferable procedure for resolving the claims against CIBC. The court concluded that at their essence overtime claims are individual in nature and, absent evidence of pervasive or systemic abuse, lack the essential element of commonality necessary to justify a class-action proceeding.
CIBC successfully relied on its overtime policy, which the court found was both reasonable and lawful, to defend itself against the employees’ allegations of unpaid overtime. Specifically, the court found nothing improper with the company requesting employees to obtain prior approval from their manager for overtime.
While CIBC, as a federally regulated employer, is subject to the Canada Labour Code, the court’s reasons will likely apply to the other proceedings across the country that involve provincially regulated employers.
Although this decision will undoubtedly give pause to others who have considered or may be considering starting overtime class actions, it doesn’t necessarily determine the outcome in all overtime class-action claims. For example, the court has yet to determine whether a class action is the preferable procedure in a case where the issue is whether particular groups of employees are exempt from overtime pay or not.
One such claim is the claim against CN Railway, where those bringing the suit are alleging that the railway misclassified operational supervisors as management in order to avoid paying them the overtime required under the Canada Labour Code. These so-called “misclassification” cases raise different issues that have yet to be addressed by a Canadian court.
Although the CIBC decision is a win for Canadian employers, it’s not a complete answer to overtime issues. As such, employers still need to take care to actively manage overtime issues and have the proper policies and training in place so that they can avoid and if necessary successfully defend against overtime claims.