There has been lots of press coverage respecting a number of class actions by employees who claim that they have been improperly denied overtime pay. The reality is that actions by individual employees are unlikely to be commenced as the legal fees relative to the potential recovery make such claims prohibitively expensive except in cases in which the overtime claim is part of a larger wrongful dismissal action. Additionally, it would generally not be a great career move for an employee to advance such a claim against his or her current employer. A class action has the potential to address each of those disincentives for employees.
The most recent decision in a string of such class actions is the case of Brown v. Canadian Imperial Bank of Commerce which was released by Mr. Justice Strathy of the Ontario Superior Court on April 27, 2012.
In this case, the Plaintiff sought to represent a class which included analysts, investment advisors and associate investment advisors at the Bank and its investment arm, CIBC World Markets. The claim was that these CIBC employees did not fall within the “managerial exception” within the applicable statutory provisions governing overtime. As such, this claim was a so-called “eligibility case” where the issue is whether an employee is correctly classified as one who does not qualify for overtime. That is in contrast to two other well-publicized banking overtime class action decisions involving “off the clock” cases in which the claim is that employees routinely worked overtime without pay because of the manner in which the employer’s rules were applied (e.g. the requirement for pre-approval for all paid overtime).
In the result, the Court refused to certify the class proceeding in Brown on the basis that it was not possible to determine that all members of the proposed class, (i.e. analysts, investment advisors and associate advisors) were “managerial” as this required a review of the specific facts related to each employee’s duties and responsibilities. The Court found that there was no “workable methodology” to resolve this issue.
Unfortunately, there is presently no clarity for employers arising in any of these leading class action cases. The two decisions involving “off the clock” claims (Fulawka v Bank of Nova Scotia and Fresco v. CIBC) resulted in the class being certified in one case and not in the other and each have been the subject of appeal to the Ontario Court of Appeal (which has reserved on its decisions). Similarly, in the “eligibility” cases, the class in the leading case of McCracken v. Canadian National Railway was certified while that in Brown was not. McCracken is the subject of an appeal to the Ontario Court of Appeal and legal counsel for the Plaintiff in Brown has stated that this decision will be similarly appealed. We will report as the appeal decisions become available.
So what lessons for employers are to be learned from thisinconclusive judicial history?
First, the issue of overtime has been placed directly before the public as an important issue. Whether or not employees appreciate the legal issues which are involved in the certification of class actions, the fact remains that media reports have created a focus on the issue of overtime. Even if your organization may not be the subject of a class action, you can expect that your employees will have a heightened awareness of their right to be properly paid overtime. This, in turn, may lead to more claims being made (including by current employees, particularly where the affected employees fall within a group or classification).
Second, these cases deal with some areas in which employers often have misunderstandings as to when employees are entitled to overtime. Just because an employee is salaried or is labelled as “supervisory” or “managerial” does not mean they are ineligible for overtime. It will require a review of the employee’s actual duties and responsibilities to ensure that they are performing supervisory or managerial functions on a regular and ongoing basis in order to fall within the overtime exception. Similarly, there is no such thing as “voluntary overtime”. If overtime work is performed with the knowledge of the employer, the fact that it was not “pre-approved” as required by a policy will not absolve an employer from liability.
Employers should review their statutory and contractual obligations respecting overtime and consider whether they have shortcomings in practices or policies which need to be addressed. With high profile case such as these being reported, you can be sure that employees will be doing so!