Overtime class-action claims: Is second wave rolling in? (Guest commentary)

Smaller employers may be the next to be hit with lawsuits

If you thought last year’s court decision refusing to certify an overtime class action against CIBC meant the death of such lawsuits in Canada, think again.

These lawsuits — where one or several employees act as a “representative plaintiff” to start a large claim against their employer on behalf of other similarly situated employees — are still showing up as workers claim overtime was never paid for. Several recent legal developments in this area, both in Canada and in the United States, should give Canadian employers renewed cause for concern.

First, CIBC may not yet be out of the woods. The primary claim against CIBC was for unpaid overtime on behalf of current and former, front-line retail bank branch workers. The proceeding could not be certified as a class action because of “lack of commonality of an issue that would significantly advance the case,” according to an Ontario Superior Court of Justice judge.

It appears, however, those who initiated the claim aren’t taking “no” for an answer. They have launched an appeal. It was scheduled to be heard at the end of March.

Second, despite the CIBC decision, the Ontario Superior Court unexpectedly certified a class action against the Bank of Nova Scotia in February. The case, alleging $300 million in unpaid overtime, involves about 5,300 sales staff across the country, some having worked for the bank since 2000.

Third, further class actions of this nature appear to be on the way. Another class action was launched in February against the investment arm of the Bank of Montreal, BMO Nesbitt Burns. Similar to the earlier lawsuits, this action alleges BMO didn’t pay employees for overtime worked from 2002 to 2010. The suit also claims the employer fostered a culture where employees were expected to work up to 80 hours per week and not claim overtime.

And it’s not just the big employers that are at risk. The experience in the U.S., which is ahead of the curve on this, suggests small- to medium-sized companies could be the next target for enterprising employee counsel.

While larger organizations have shown improved compliance with overtime laws, employee attorneys are taking on small- to medium-sized employers.

As one commentator put it, overtime complaints are “moving down the food chain from big corporations to mid-size and small employers.”

What should employers do? All of this is a reminder to keep overtime practices and procedures up to date. Ensure they comply with local employment standards laws. Most importantly, employers should remember that someone who earns a salary, like those paid an hourly rate, could be entitled to overtime pay. Generally, most non-managerial employees are entitled to premium pay for overtime work unless a specific legal exception applies.

Failure to keep proper records of overtime work can also be fatal. This could not only mean an employer is found in violation of Canadian employment standards laws, it’s also not in a position to properly defend itself against overtime claims.

Sara Parchello is an associate in the labour, employment and human rights group at Fasken Martineau in Toronto. She can be reached at (416) 865-4442 or [email protected]. Reprinted with permission from Northern Exposure, a blog written by attorneys at Fasken Martineau for U.S. companies operating in Canada: http://employmentlawpost.com/northernexposure.

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