Labour & Employment in the News

September 22, 2010

LABOUR & EMPLOYMENT IN THE NEWS

Ontario Courts Leave the Future for Overtime Class Action

Law Claims Uncertain
A majority of Ontario’s Divisional Court has upheld a decision denying the certification of a
proposed class action brought on behalf of approximately 31,000 tellers and Customer Service
Representatives employed by CIBC.1

The proposed class claimed that CIBC systematically violated contractual and statutory overtime
rules by requiring employees to seek advance approval for overtime, and by generally creating a
culture that encouraged employees to under-report overtime worked. The plaintiffs argued that
the bank’s pervasive policy of routinely requiring unpaid overtime raised common issues suitable
to be heard in a class action. The plaintiffs also argued that CIBC’s policy permitting employees to
take time off in lieu of overtime pay, and the employer’s lack of a uniform system for recording
overtime hours across its various branches, violated the Canada Labour Code (the “Code”).

In the first instance, the motions judge refused to certify the class action. Our bulletin dated
June 19, 2009, Ontario Court Dismisses CIBC Class Action, describes this decision.

On appeal, the majority of the Divisional Court agreed. The majority found that CIBC’s overtime
policy complied with the Code, and that absent evidence of a systemic violation, the proposed
class did not share common issues. Further, even if there were such evidence, each employee
would still be required to adduce evidence specific to his or her overtime entitlement. The
majority also found that the bank’s overtime policy itself was not unlawful. Requiring pre-
approval of overtime did not violate the Code, the Court held, because, “[a]n employer has the
fundamental right to control its business, including employee schedules, hours of work, and
overtime hours providing it complies with the Code.” While an employer must take active
measures to regulate hours worked, or else risk being found to have permitted overtime work
through oversight or omission, CIBC’s overtime policy met this onus. Furthermore, CIBC’s policy
allowing employees to take time in lieu of overtime pay was found to be permitted by section 168
of the Code, which protects contractual provisions that are more favourable to the employee than
the statutory minimums. Significantly, the majority also determined that the Code does not
impose a requirement of uniformity for records kept by the employer, but simply requires that
records be maintained.

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LABOUR & EMPLOYMENT IN THE NEWS

In a forceful dissent, Justice Sachs found that it was not “plain and obvious” that the issues were
fully settled in the jurisprudence. In particular, she found that it is not clear that the onus is on
the employee to ask permission to work overtime. Rather, she suggested, the employer knows or
ought to know that an employee is working overtime, and an employer who fails to take
reasonable steps to prevent the employee from doing so may be responsible for systemically
denied overtime pay. Further, without a meaningful opportunity for employees to take time off in
lieu of overtime wages, Justice Sachs stated, it could be said that the overtime policy violates the
Code. As a result, the dissenting judge would have allowed the claim to proceed as a class action.

The facts of the CIBC case, and Justice Sachs’ dissent, closely mirror the facts and analysis in a
case involving overtime claimed by employees of the Bank of Nova Scotia.2 In that decision, which
is summarized in our bulletin dated April 5, 2010, Differing Decisions Lead to Class Confusion,
the Court certified the overtime class action. The Bank of Nova Scotia has been granted leave to
appeal based on the direct conflict with the CIBC decision, the importance of the issues to other
employers, and the existence of “good reason to doubt the correctness of the decision.”

Meanwhile, the Ontario Superior Court of Justice has certified a third overtime class action. The
plaintiffs in McCracken v. Canadian National Railway Company3 are first-line supervisors who
allege that they were misclassified as managers and therefore unlawfully denied overtime pay.
Although a number of different front-line supervisor positions were at issue, the Court found that
the question of whether duties performed by each employee properly excluded them from
overtime entitlement met the test for commonality. That was because even though each worker
may perform slightly different duties and have slightly different levels of responsibility, a
common examination could be made of the various different roles played by front-line
supervisors, and how those roles relate to the test for managerial status under the Code. Having
performed that analysis, a test could be developed and applied to each member of the class to
determine their status. The Court therefore found that there was enough commonality to justify a
class action.

Employers will have to wait for higher courts to reconcile these conflicting decisions before any
meaningful conclusions can be drawn about the future of overtime class action lawsuits in
Canada. In the meantime, employers are well advised to ensure compliance with contractual
statutory overtime rules, including keeping careful records of overtime worked, to avoid being the
target of the next effort to certify an overtime class action.r

1
Fresco v. Canadian Imperial Bank of Commerce, 2010 ONSC 4724.
2
Fulawka v. Bank of Nova Scotia, 2010 ONSC 2645
3
2010 ONSC 4520.

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For further information please contact a member of our Ontario Labour & Employment Group, details found
LABOUR & EMPLOYMENT IN THE NEWS

below.

Toronto
Sara Boulé-Perroni 416 643.6985 sbouleperroni@heenan.ca
Andrew Bratt 416 643.6894 abratt@heenan.ca
Brian W. Burkett 416 360.3529 bburkett@heenan.ca
Lia Chiarotto 416 643.6854 lchiarotto@heenan.ca
John D. R. Craig 416 360.3527 jcraig@heenan.ca
Henry Y. Dinsdale 416 360.3528 hdinsdale@heenan.ca
Jonathan Dye 416 643.6841 jdye@heenan.ca
Cheryl A. Edwards 416 360.2897 cedwards@heenan.ca
Brad Elberg 416 360.2618 belberg@heenan.ca
S. Jodi Gallagher 416 360.3555 jgallagher@heenan.ca
Margaret Gavins 416 360.3557 mgavins@heenan.ca
Douglas G. Gilbert 416 360.3535 dgilbert@heenan.ca
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Kevin Inwood 416 643.6901 kinwood@heenan.ca
George J. Karayannides 416 360.3521 georgek@heenan.ca
Tim Lawson 416 360.3522 tlawson@heenan.ca
Michelle MacGillivray 416 643.6926 mmacgillivray@heenan.ca
Kevin D. MacNeill 416 360.2602 kmacneill@heenan.ca
Bonny Mak 416 360.3539 bmak@heenan.ca
Greg McGinnis 416 643.6957 gmcginnis@heenan.ca
Mark Newton 416 643.6855 mnewton@heenan.ca
Christian Paquette 416 643.6937 cpaquette@heenan.ca
Christopher Pigott 416 643.6986 cpigott@heenan.ca
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Sonia Regenbogen 416 360.3569 sregenbogen@heenan.ca
Bonnie Roberts Jones 416 360.3567 broberts@heenan.ca
Rhonda Shirreff 416 643.6858 rshirreff@heenan.ca
Michael Smyth 416 360.2887 msmyth@heenan.ca
Shane Todd 416 643.6958 stodd@heenan.ca
Claire Vachon 416 643.6803 cvachon@heenan.ca
Jackie VanDerMeulen 416 643.6987 jvandermeulen@heenan.ca
Evan VanDyk 416 643.6921 evandyk@heenan.ca
Jeremy Warning 416 643.6946 jwarning@heenan.ca
Charlotte Willson 416 643.6909 cwillson@heenan.ca

Ottawa
The Honourable Michel Bastarache, C.C. 613 236.1668 mbastarache@heenan.ca
Sébastien Lorquet 613 236.1327 slorquet@heenan.ca
Peter Mantas 613 237.1733 pmantas@heenan.ca
Dan Palayew 613 236.6970 dpalayew@heenan.ca
Judith Parisien 613 236.4673 jparisien@heenan.ca
Julie Thibault 613 236.2161 juthibault@heenan.ca
Ivan G. Whitehall, Q.C. 613 236.1696 iwhitehall@heenan.ca