In A Flash

Employees Win Overtime Class Action Against Major Bank

After 12 years of litigation, the Ontario Superior Court of Justice has ruled in favour of the employees in the unpaid overtime class action case brought against the Canadian Imperial Bank of Commerce (“CIBC”).

Under the Canada Labour Code (the “Code”), as with other employment standards legislation, employees are entitled to be paid overtime for the hours they work in excess of the standard hours of work (8 hours a day, 40 hours a week).  There is also a corresponding administrative requirement on the employer to accurately record all hours worked by employees.

Commenced in 2007, the class action alleged that CIBC’s overtime policies and record-keeping systems contravened the Code. More specifically, the plaintiffs claimed that certain restrictions and deficiencies in CIBC’s system for recording employee hours were unlawful and resulted in some class members not being paid for all hours worked.

The class action was advanced on behalf of some 31,000 customer service employees who had worked for CIBC during a 16 year period. 

In its decision released March 30, 2020, the Court determined that CIBC had both a statutory and contractual duty to compensate its employees for all hours worked, and that CIBC breached its duties under the Code, as the Code provides that overtime hours must be compensated whenever they are required or permitted. The Court considered the meaning of “required or permitted” and determined that permitted under the Code, in this context, included “not prevented”.  As a result, the employer had an obligation to prevent or not permit class members from working overtime hours for which they were not properly compensated or for which CIBC would not pay. 

During the 16 year period under review, CIBC had two overtime policies, both of which required pre-approval for overtime hours, which overtime would only be granted on an exceptional basis.  The earlier policy explicitly directed that employees must obtain pre-approval, and the CIBC’s Personnel Manual confirmed that payment may only be made for “authorized overtime”, which was interpreted to mean that employees would not be compensated without the employer granting pre-approval.  A later version of the policy contemplated the possibility of gaining approval after the fact, but only under extenuating circumstances and only if the approval was obtained as soon as possible after the overtime work was performed.

Both of these policies, and specifically the pre-approval requirement, were found to be more restrictive than what was statutorily mandated under the Code and were therefore found to be in contravention of the Code.

The Court noted that an overtime policy can indicate that pre-approval is the preferred corporate norm provided that the policy also clearly states that neither pre-approval nor post-approval are preconditions for the payment whenever overtime is worked.

The second issue before the Court was whether CIBC had a duty to accurately record and maintain a record of all hours worked by class members. The Court found that CIBC had a statutory duty, incorporated as an implied term in the employment contract, to accurately record and maintain a record of all hours worked to ensure appropriate compensation. Since CIBC did not have a system in place to consistently ensure the actual hours worked for employees was recorded, the bank was operating in violation of the Code.   

The remedies, including damages, will be addressed in the second part of the Court’s decision that has yet to be determined.  

This case highlights the importance of employers consistently and accurately managing employee time, which issue has become even more important in light of the current pandemic situation, which has resulted in a sudden and significant increase in remote working arrangements.

This class action is also just one example of what appears to be a wave of employee-led class actions to come before courts in Ontario and elsewhere over the last few years.  Other class actions recently initiated by employees have raised various issues including the potential misclassification of employees as independent contractors and breaches of contract.  The results of these upcoming class actions may be impactful upon the way that employers manage their employees.

For assistance in evaluating the implications of this decision on your own business practices, please do not hesitate to contact a Mathews Dinsdale lawyer.

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