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Takin’ Care of Business and Working Overtime: Ontario Court of Appeal Releases Key Decisions on Overtime Class Actions

Author(s): Karin Sachar, Laura Fric, Mary Paterson, Adam Hirsh

June 27, 2012

On June 25, 2012, the Ontario Court of Appeal released decisions in the Scotiabank,1 CIBC,2 and CN3 overtime class actions. The Court held that the employees’ claims for overtime pay could be certified as class proceedings against the banks, but not the railroad.

There are two general types of unpaid overtime claims: “misclassification” cases and “off-the-clock” cases. “Misclassification” cases, such as CN, involve allegations that the employer improperly classified employees who are eligible for overtime as being ineligible by designating them as managers. “Off-the-clock” cases, such as CIBC centre on an allegation that there was a practice of systematic unpaid overtime, and eligibility for overtime pay is not at issue. The Scotiabank case is a hybrid.

In this trilogy, the Court refused to certify one misclassification case (CN), but certified the other (Scotiabank), explaining that misclassification cases will only be appropriate for certification in limited circumstances.  The Court also certified both off-the-clock cases.

Misclassification Cases Only Appropriate for Class Actions in Limited Circumstances

In CN, the plaintiff argued that CN employees who were first line supervisors were improperly classified as managers and denied overtime pay, which they would otherwise be entitled to under the Canada Labour Code (the Code). CN argued that there was such a diversity in the roles of first line supervisors that the managerial status of class members could not be determined on a class-wide basis. The certification motion judge agreed that the managerial status of each employee had to be assessed individually, but nonetheless certified the question - “What are the minimum requirements to be a managerial employee at CN?” – as a common issue.

The Court of Appeal rejected this approach, holding that the absence of commonality was fatal to certification. The Court held that misclassification cases should only be certified where the class members perform similar jobs, providing a fundamental element of commonality.4 Furthermore, the job functions and duties of class members must be sufficiently similar that the misclassification element of the claim can be resolved without considering the individual circumstances of class members.5

The Court did certify the misclassification of a subset of employees as a common issue in Scotiabank. The Court found that those class members had sufficiently similar responsibilities that certification was appropriate.

The take-away is that misclassification cases may be certified only where class members have similar job responsibilities, and this is sufficiently demonstrated by the evidence adduced by the plaintiff.

Overtime Policies and Practices – the Systemic Approach to Commonality

In both CIBC and Scotiabank, the plaintiffs alleged that their employers systemically failed to compensate eligible employees for overtime despite the requirements in both theCode and their employment contracts. In particular, the plaintiffs alleged that the banks’ overtime policies were contrary to the provisions of the Code because they required overtime to be pre-approved by management.6

The certification judges reached opposite results in the cases: Justice Lax in CIBC found that CIBC’s overtime policy did not contravene the Code and found that there was insufficient evidence to demonstrate a systemic failure to pay overtime. In contrast, Justice Strathy certified systemic questions, such as whether the bank had a duty to record employees’ hours, as common issues.

The Court of Appeal certified both cases, finding that the proposed common issues raised the requisite degree of commonality for the purposes of certification. In so doing, the Court favoured Justice Strathy’s approach to commonality, which emphasised the systemic nature of the allegations.

In CIBC, the Court found that it was not plain and obvious at this stage that the bank’s overtime policies complied with the Code. That issue will be left for trial.

From these cases, it seems that an overtime class action may be certified if the plaintiff presents evidence that provides some basis in fact to show the existence of systemic practices and policies that have the alleged effect of routinely denying overtime compensation. 

1   Fulawka v. Bank of Nova Scotia, 2012 ONCA 443(Scotiabank).

2   Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 (CIBC).

3   McCracken v. Canadian National Railway Company, 2012 ONCA 445 (CN).

  CN at para 91.

  CN at para 104.

  The provisions of the Code, in turn, inform the banks’ private law obligations to their employees.