Overtime Pay Class Action

Mort Mitchnick for The Lawyers Weekly

May 21, 2010

The Canada Labour Code, which applies to all federally regulated employers, mandates that employees be paid overtime for all work "required or permitted" by an employer beyond an employee's standard hours. At CIBC, the bank's overtime policy provided for this, but also contained a stipulation that overtime be pre-approved before being worked; and that where that was not possible, it be reported and approved at the earliest opportunity thereafter. Dara Fresco's allegation was that the pressure on employees to perform was such that they were required to work overtime regularly, and that the requirement in the policy for "pre-approval" violated the statute.

Justice Lax of the Ontario Superior Court of Justice disagreed, finding that the Code gave employers not only the right but the obligation to control the amount of overtime that employees worked. She stated: "an employee cannot foist services on an employer and expect to be paid wages for them." The "pre-approval" requirement was the mechanism for providing that employer control.

Beyond that, Justice Lax found that the evidence before her showed a striking lack of "commonality" in the reasons why the employees worked overtime. That demonstrated to the judge that entitlement to compensation would have to be determined on the basis of an individual examination of each claim, "which defeats the very purpose of a class action." Nor did she accept the evidence of the plaintiff's experts that damages could be assessed on a statistical or "aggregate" basis. While one of the experts had issued a report purporting to identify "excess hours of chronic overtime" in the federally regulated sector generally, Justice Lax noted that this provided no insight whatsoever as to the situation at CIBC.

Like CIBC, Scotiabank stipulated in its policy that any decision to work overtime must be pre-approved by a supervisor. The policy did not expressly provide that, where such pre-approval was not possible, approval could be obtained immediately afterward. But there was evidence before the court that approval for overtime after the fact was requested and frequently granted.

Justice Strathy of the Ontario Superior Court of Justice chose to give no weight to that evidence, focusing instead on the strict terms of the policy itself. He found, as a result, that the policy arguably gave rise to a "systemic" wrong to the class, failing "to reflect the realities of the workplace because it put the onus on the employee to obtain prior approval for overtime rather than requiring the employer to ensure that employees were paid for overtime that they were permitted or required to work."

Having turned the onus on the employer, Justice Strathy then removed from the employees a requirement to keep their own records of alleged overtime, and instead found that the pleadings raised a further "systemic" breach, supportive of certification, by claiming that the bank "failed to provide a system-wide procedure to record overtime." In both of these respects, he acknowledged, "my conclusions differ from those of Lax J."

That latter finding led Justice Strathy to take a generous view of much of the same "expert evidence" rejected by Justice Lax. The whole class-action exercise is of limited impact if at the end of the day, the plaintiffs are unable to prove their damages. Justice Strathy wrote that if the trial judge finds that the bank failed to provide a proper record-keeping system for the plaintiffs, "an aggregate assessment of damages using statistical means may well be the only way to fairly compensate Class Members."

While striking the portions of the statement of claim asserting a civil cause of action based on the Canada Labour Code, Justice Strathy went on to find that the statute could nonetheless be used to import into the contracts of employment a "duty of good faith," as well as a tort-based "duty of care," on which the class action could rest.

CIBC has already been heard on appeal, with the Divisional Court reserving judgment, and Scotiabank is on its way up now as well. On May 5, 2010, Justice Greer found significant overlap in the facts and the theory of the two claims, and concluded that "there is a conflict of principle in the findings in each case."

Applying the prescribed tests for leave to appeal, Justice Greer found that "the role of the Code in such contractual matters is a matter of general importance in labour law," and that the decision of Justice Strathy "brings into question whether the courts lack jurisdiction to hear claims which are within the exclusive jurisdiction of the specialized tribunals set up to adjudicate such claims." Justice Greer then added that "there is good reason to doubt the correctness of the decision of the Judge."

Mort Mitchnick is a partner in the Labour and Employment Group in the Toronto and Ottawa offices of Borden Ladner Gervais LLP.

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