Responding to a class-action lawsuit filed by former employees in September 2007, KPMG has decided to implement a formal way to redress employees for unpaid overtime.
The $20-million lawsuit said supervisors at the audit, tax and advisory services company regularly required employees to work 90-hour weeks while only billing clients for 60 hours.
But Toronto-based KPMG said it has developed an Overtime Redress Plan to provide compensation to all eligible employees as soon as possible.
“KPMG intends to ensure that all its eligible current and former employees are fully and fairly compensated, according to the relevant provincial laws, for all overtime since Jan. 1, 2000, that has been... earned but unpaid,” said a release.
The plan will be administered by an independent third party, Crawford Class Action Services (Canada), which will notify current and former employees about the plan through letters and ads in Canadian national newspapers.
“At the time we learned of the allegations in the class action we promised a thorough review of our work practices,” said Bill MacKinnon, chief executive officer of KPMG.
The plan “directly and fairly addresses any past concerns about unpaid overtime. We estimate the total amount of the payout from the plan will be less than $10 million. We very much regret that we did not pay overtime when it was earned by current and former employees,” added MacKinnon.
“While this was an error of omission, not commission, it should not have happened. The principles of the plan will be reflected in all KPMG’s overtime remuneration in the future.”
KPMG said the new plan is the preferred method of dealing with the overtime claims though implementing the plan does not constitute an admission of liability.
But Douglas Elliott, a partner at Roy Elliott Kim O’Connor who filed similar suits against the Canadian Imperial Bank of Commerce and Bank of Nova Scotia last year, said in a Globe and Mail article the courts are skeptical of such schemes.
“The court needs to ask itself whether the defendant is truly trying to resolve the problem or whether they are simply trying to create a smokescreen that will avoid a class action being pursued,” he said.