Employers should seek class-action alternatives (Legal view)

Courts likely to interpret class proceedings rules liberally
By Jonathan Dye
|Canadian HR Reporter|Last Updated: 07/12/2007

The CIBC class-action lawsuit could usher in a new era for employers. While Quebec has had class proceedings legislation since 1978, and other provinces enacted similar legislation roughly a decade or more later, employment law has not been an area in which class proceedings have taken hold.

But if the CIBC overtime claim is certified, this long-standing potential may become a reality. Class actions expose companies to exponentially increased litigation costs, higher potential liability (regardless of whether the matter proceeds to trial or settles) and the increased likelihood of adverse publicity. Given their wide scope, such claims may often venture into the court of public opinion. The adverse publicity can result in increased financial loss beyond the settlement or judgment amount through decreased sales, consumer boycotts, reduced consumer confidence and investor withdrawal.

Class actions are filed when there is a large number of potential plaintiffs (employees or former employees) with relatively small claims against a common defendant (the employer). The costs of litigation often outweigh any award an individual employee might receive, so class actions allow employees to cobble their claims together and have them decided together, reducing the cost and risk to each member of the class. Usually, one employee — known as the “representative plaintiff” — litigates the case on behalf of the others.