Supreme Court of Canada will hear claims by Scotiabank and CIBC employees
On March 21, 2013, the Supreme Court of Canada ruled for the first time that employee class actions for pay for “off the clock” overtime work can proceed under the Class Proceedings Act of Ontario.
In Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce, the employees relied on the Canada Labour Code, which requires employers to pay, at minimum, 1.5 times an employee’s normal hourly rate for overtime hours that an employee is “required or permitted” to work.
In Fulawka, the employee alleged that Scotiabank’s policies and practices for compensating overtime work performed by employees — members of the putative class she was representing — constituted both a breach of class members’ contracts of employment and a breach of Scotiabank’s obligation to act in good faith. On behalf of class members, the suit sought general and special damages totaling $350 million, as well as declaratory and injunctive relief. The Ontario Court of Appeal agreed to certify the class action.
In Fresco, the action was started by a CIBC employee “on behalf of some 31,000 customer service employees” of CIBC, alleging that “CIBC breached its contractual and statutory duties to pay class members for overtime work that they are routinely required or permitted to perform in order to complete the common duties of their positions.”
In both cases the employees “allege that the overtime policies of the defendant banks conflict with private law duties owed by the banks to the employees who comprise the proposed classes. The overtime policies required class members to obtain prior approval from a manager in order to be compensated for overtime work that they were required or permitted to perform. Such a pre-approval requirement, the plaintiffs assert, is contrary to the s. 174 of the code, which, they submit, informs the private law duties owed to the class members.”
Section 174 of the Code states:
“When an employee is required or permitted to work in excess of the standard hours of work, the employee shall … be paid for the overtime at a rate of wages not less than one-and-one-half times his regular rate of wages.”
The employees in these cases claimed Scotiabank and CIBC used the “pre-approval requirement in their overtime polices to avoid their obligation under the code to pay for overtime work that was ‘required or permitted’ by the employer.” In addition, they further stated “Scotiabank and CIBC failed to implement proper record-keeping systems for recording the overtime hours worked by class members.”
The Supreme Court Act requires “public importance” to exist for an appeal to be successful, so the Supreme Court’s ruling on these class actions suggests they raise an issue of “national or public importance,” perhaps because the employers are federally regulated under the Canada Labour Code.
As to the merits of these actions, we will have to watch how the cases unfold and, despite the national or public importance of the issue, whether the policies and practices of the banks stand up under judicial scrutiny or falter at what may be considered a great win in light of the current controversy over the banks employee practices.
Impact of decision on employers
Even though the Supreme Court of Canada has not determined the merits of the actions and has merely permitted them to proceed as class actions, employers are now more vulnerable to individual and class action claims for overtime. It is critical for employers to have policies in place indicating in what circumstances, if any, overtime will be paid. Extreme care should be exercised to ensure policies strictly comply with the overtime provisions of the legislation the employers are governed by. Strict adherence to these policies is also required, failing which employee claims for payment for overtime work could succeed.
Impact of decision on employees
Employees should not conclude by this ruling that there is merit to all claims by employees for overtime pay, nor that their claims would necessarily receive certification as a class action. Limitation periods exist that may limit claims to two years from the last overtime worked. If the last overtime worked was two years ago, the otherwise valid claim may be lost. Perhaps these two decisions are a signal of the court's willingness to provide more protection to employees in circumstances of compensation for overtime work.
For more information see:
• Fulawka v. Bank of Nova Scotia, 2013 CarswellOnt 3152 (S.C.C.).
• Fresco v. Canadian Imperial Bank of Commerce, 2013 CarswellOnt 3154 (S.C.C.).
