Turning a blind eye to unpaid overtime can be a very costly HR strategy. It’s a classic case of short-term gain, long-term pain.
Scotiabank is feeling that long-term burn after it negotiated a settlement in a class-action lawsuit involving unpaid overtime. The suit was filed in Ontario nearly seven years ago by Cindy Fulawka, a personal banking representative, and was settled in August.
The actual cost of the settlement is up for debate — Adam Dewar, a lawyer at the firm of Roy O’Connor (representing the plaintiff), told the Canadian Press the final bill for Scotiabank could be upwards of $95 million. Scotiabank is disputing that number, said Dewar, but the law firm is receiving $10.45 million for its work.
For its part, the bank said the final bill is "not financially material," according to CP.
In a statement, Scotiabank said it was pleased with the settlement:
"We are confident that the bank’s employee policies have been applied fairly and consistently. We have always made it clear that when employees work overtime, we will pay them for their work or provide time in lieu and today’s decision reinforces that commitment," it said. "We value each employee and know that their contributions are an integral part of our ongoing success."
The settlement covers unpaid overtime worked between Jan. 1, 2000, to Dec. 1, 2013 — though the limitation periods in some provinces may limit how much back pay can be recovered. It covers numerous job titles, including personal banking officers, senior personal banking officers, financial advisors and account manager, small business.
The agreement is also careful to spell out that employees who worked overtime and were not paid for it are eligible to file a claim regardless of whether overtime was approved by a supervisor or not. It also addresses the dicey situation of documentation.
"(Scotiabank) acknowledges that many class members will not have documentation to support their claim," the agreement reads, as posted on Roy O’Connor’s website. "The absence of documentation does not prevent you from making a claim or preclude you from being paid for your overtime work."
The settlement also makes it clear that employees who pursue claims will not be subject to any reprisals. The deadline for filing a claim is Oct. 15, 2014.
Scotiabank is not alone when it comes to class-action lawsuits. The CIBC is currently battling a $600-million claim. Trucking firm Canada Cartage was also slapped with a $100-million claim. And CN Rail was sued, unsuccessfully, a couple of years ago.
The Scotiabank ruling will only serve to embolden employees, and law firms, to pursue even more claims. Unpaid overtime has always been a poor HR practice. It’s bad for morale, it’s bad for engagement, it’s bad for retention and it’s a work-life balance killer.
Turning a blind eye was the easy thing to do but it’s not easy anymore. In the wake (and expense) of this ruling, employers may want to be proactive when it comes to the risks of unpaid overtime.
HR may need to educate management on the price tag such practices carry, and line managers will need to be trained to ensure they don’t — explicitly or implicitly — create a culture where people are expected to stay as long as it takes to get the job done.
If the job isn’t getting done during work hours, then conversations may need to be had about productivity and workload — it’s not fun, but it’s a lot more enjoyable than a lawsuit.