Articles:

1. Class Action on Unpaid Overtime: Employer Liable for “Permitting” Employees to Work Overtime
2. Increased Paid Sick Leave and Additional Bereavement Leave Coming to the Canada Labour Code
3. Get Vaxxed or Get Axed? An Update on Successful Employer Policies

Class Action on Unpaid Overtime: Employer Liable for “Permitting” Employees to Work Overtime

Cameron Fynney

In a decision issued on February 9, 2022, in Fresco v Canadian Imperial Bank of Commerce (CIBC), the Ontario Court of Appeal dismissed the bank’s appeal of an earlier decision that found that CIBC’s overtime policies were in breach of the Canada Labour Code (the Code). 

Appeal of 2020 Decision

In March 2020 the Ontario Superior Court ruled in favour of employees in an unpaid overtime class action brought against CIBC.  The class included some 31,000 customer service employees who had worked for CIBC over a 16 year period. The Court determined that CIBC had a statutory and contractual duty to compensate its employees for all hours worked (even if CIBC had not expressly required employees to work those hours), and that CIBC breached its duties under the Code.  CIBC appealed that decision.

CIBC’s Overtime Policies

CIBC had two overtime policies that applied to the plaintiffs. The first policy stated that employees would receive additional compensation if they worked more than eight hours per day or 37.5 hours per week, but they needed management approval prior to working the additional hours. The second policy contained similar provisions, but allowed for management approval after the fact in extenuating circumstances.

The employees argued that they were entitled to be compensated for hours they had actually worked, even where management had not expressly approved those hours in advance. The Court ultimately ruled in favour of the employees.

Canada Labour Code and Overtime

The Code states that “when an employee is required or permitted to work overtime”, they must be paid at least 1.5 times their regular rate of wages. For most federally regulated employees, the overtime threshold is any time worked in excess of eight hours per day or 40 hours per week.

The Court of Appeal held that “permitted”, as the term is used in the Code, must be interpreted generously in favour of the employee (as the Code Is minimum standards legislation) and therefore meant “failed to prevent.”  On this interpretation, overtime is payable not only where the employer requires overtime, but also when the employer fails to prevent the employee from working more than eight hours per day or 40 hours per week.

The Court found that in many instances, CIBC failed to prevent its employees from working overtime, thereby “permitting” the employees to work those additional hours. As a result, CIBC was found liable for unpaid overtime to a class of over 31,000 employees over a period of 16 years.  The full quantum of damages will be determined by the Court following a hearing in September, but the plaintiffs have sought $500 million in damages.   

Growing Trend of Class Actions

This case illustrates what has been a growing trend of employee-led class actions.  Instead of pursuing individual remedies from the courts, employees are more frequently joining with other current and former employees to bring class actions – especially for cases alleging systemic breaches of the employment standards legislation and/or cases alleging employees were misclassified as independent contractors.  These cases are much more complex and expensive for employers to defend and can involve liability in the millions.

Best Practices for Employers

The Court has sent a clear message that employers cannot avoid overtime obligations by asserting they were unaware employees worked additional hours.   Employers should consider the following to avoid an unintentional breach of the applicable employment standards legislation regarding overtime:

• Overtime policies or employment contracts should set clear expectations that employees are not expected or permitted to work extra hours unless it is requested and authorized in advance by the employer;
• Ensure overtime policies cover hours worked from home and that unauthorized time is not permitted;
• Ensure workplace policies require employees to record all time worked even if it is outside of normal business hours; and
• Closely monitor employee’s time to ensure they are not working any additional time beyond regular hours to limit potential claims to unpaid wages.

With many employees continuing to work from home post-COVID-19, employers will continue to have challenges in ensuring employees are not working excess or unauthorized hours.  An additional consideration for employers in Ontario is recent legislation that requires employers to have policies on disconnecting from work.

Impact on Provincially Regulated Employers

It is important to note that this decision was decided based on the specific language of the Canada Labour Code that states overtime is payable where it is “required or permitted” by the employer and as such, it only directly applies to federally-regulated employers.  The requirements regarding overtime vary from province to province depending on the specific wording in the applicable employment standards legislation.  Employers who are provincially regulated should consider the particular legislative requirements in the province(s) in which they operate to understand if current policies and practices on overtime require revision. 

We encourage you to contact a Mathews Dinsdale lawyer to discuss how you can ensure your organization can avoid potential liability for unpaid overtime (or other unpaid wages) in the jurisdiction in which you operate. 

Increased Paid Sick Leave and Additional Bereavement Leave Coming to the Canada Labour Code

Anastasia Fairfield

On December 17, 2021, the Federal government passed Bill C-3, An Act to amend the Criminal Code and the Canada Labour Code. Bill C-3 applies to federally-regulated employers, and amends the Canada Labour Code (the “Code”) by introducing ten days of paid sick leave and additional bereavement leave for employees who experience the death or stillbirth of a child. These amendments are not yet law, but are expected to come into force in the near future. This article explains the amendments and what federally-regulated employers governed by the Code (e.g. airlines, banks, postal services, telecommunications, and certain activities of First Nation band councils) need to know in order to prepare for those changes.

Paid Sick Leave

Currently, the Code entitles employees to five unpaid days of personal leave per calendar year for a list of prescribed reasons, one of which is “treating [an employee’s] illness or injury”. Employees with at least three consecutive months of employment are entitled to the first three days of any such leave to be with pay.

The Code also entitles every employee to an unpaid medical leave of absence (“Medical Leave”) for up to seventeen weeks as a result of:

1. personal illness or injury;
2. organ or tissue donation; or
3. medical appointments during working hours.

Employees are also entitled to up to sixteen weeks of unpaid leave as a result of quarantine.

Bill C-3 introduces a ten-day paid leave entitlement within the existing Medical Leave framework, and removes the ability to take personal leave for reasons related to illness or injury. Specifically, the Bill introduces new language which provides the following entitlements to employees, per calendar year:  

• After completing thirty days of continuous employment with the employer, the employee will earn three days of paid sick leave;
• After sixty days of continuous employment with the employer, the employee will earn one day of paid sick leave at the beginning of each month up to a total of 10 days (factoring in the three days “automatically” earned after 30 days);

In each subsequent year, employees who have used all of their sick days will continue to earn one sick day at the beginning of each month up to the total of ten days. If an employee has not used all of their sick days by the end of the calendar year, they may carry those days over to the following year. However, if any days are carried over, the employee’s entitlement for that year will be reduced accordingly, with the effect of preserving the cap on an employee’s entitlement to the maximum of ten days per year.

The amendments also confirm that, while the leave may be taken in one or more periods, employers may require that each period of leave not be less than one day. Employers may also require an employee who has taken at least five consecutive paid sick days to provide a medical certificate confirming that the employee was incapable of working during that period. However, the employer must make any such request in writing and no later than fifteen days after the employee returns to work. If the employee is on an unpaid leave, employers are entitled to require a certificate after three days.

Additional Bereavement Leave Entitlements

Bill C-3 also introduces two new exceptions to the standard bereavement leave entitlement under the Code. Ordinarily, an employee is entitled to ten days’ bereavement leave in the event of the death of an immediate family member or a person in respect of whom the employee is on Compassionate Care Leave or Leave Related to Critical Illness. For employees with at least three consecutive months of service, the first three days of the leave are paid.

The amendments carve out two exceptions to the ten-day limit length of this entitlement where an employee or their spouse or common-law partner experience the death of a child or a stillbirth. In such cases, the employee will be entitled to a leave of absence of up to eight weeks that may be taken during the period that begins on the day the death or stillbirth occurs and ends twelve weeks after the latest of the days on which any funeral, burial or memorial service occurs.

As is the case with the existing bereavement leave entitlement, every employee will be entitled to this leave, regardless of the length of time they have been employed.

Next Steps While these changes have yet to take effect, they follow many other significant changes that have been introduced to the Canada Labour Code in the past few years. Employers are encouraged to continue to review their policies on an ongoing basis to ensure that they remain in compliance with these and other changes to the Code, and to contact a Mathews Dinsdale lawyer as needed for any assistance that may be required.

Get Vaxxed or Get Axed? An Update on Successful Employer Policies

Tristan Hunter

In recent months, we have continued to see arbitration decisions addressing unions’ challenges mandatory vaccination policies. Employers must consider how these decisions impact their existing or contemplated vaccination policies in order to ensure that they are compliant with the evolving jurisprudence.

While many employees and unions have accepted mandatory vaccination policies as a practical and reasonable method of controlling the spread of COVID-19 in the workplace moving forward, challenges to employer policies continue to be brought forward. Recent decisions provide further guidance as to the best practices and considerations employers should consider when revising or drafting a mandatory vaccination policy for their workplace.

Guidance from Arbitrators

The jurisprudence demonstrates that while there is no “one size fits all” approach to drafting an enforceable vaccination policy, must such policies have been upheld at arbitration. The following are brief summaries of 2022 arbitration decisions addressing vaccination policies.

In Bunge Hamilton Canada and UFCW, the arbitrator upheld the employer’s mandatory vaccination policy. The arbitrator found that the employer’s requirement for employees to disclose vaccination status was reasonable, finding that any violation of privacy rights was “considerably” outweighed by the minimal intrusion on such rights and the public benefit of a vaccination policy. The policy indicated that employees could be terminated for non-compliance, but did not mandate termination and allowed for such decisions to be made on a case-by-case basis.

In MLSE and Teamsters, Local 847, the arbitrator effectively held that a mandatory vaccination policy was reasonable when an individual filed a grievance after being placed on unpaid leave after refusing to disclose their vaccination status. The arbitrator stated that employers could not enforce vaccination policies without requiring employees to disclose their vaccination status, and that it was particularly important for employers to have mandatory vaccination policies in workplaces where employees work in close proximity to one another.

In City of Richmond and IAPF, Local 1286 and CUPE, Locals 718 and 394, Arbitrator Noonan found that the potential harm of having unvaccinated employees in the workplace was greater than the potential harm of those same employees being denied work due to their failure to comply with the employer’s vaccination policy. The arbitrator declined to issue a stay of the employer’s policy as a result.

In PNR Railworks and LIUNA, Local 183, in a preliminary decision, the arbitrator determined that employees had not been “disciplined” when the employer refused to schedule them due to their being unvaccinated. Instead, the arbitrator found that the unvaccinated workers had not fulfilled a condition of employment and therefore could not be scheduled due to their own actions.

In Hydro One and PWU, the arbitrator held that it was reasonable for Hydro One to suspend without pay workers who refused to comply with employer’s requirement that employees either receive the vaccine or undergo regular testing (a “vaccinate or test” policy).

In Elexicon Energy and PWU, the arbitrator found that the employer’s mandatory vaccination policy was reasonable except to the extent that it applied to employees working exclusively from home or exclusively outdoors.

In Chartwell Housing Reit and HOPE Union, Local 2220, the arbitrator found that the employer’s vaccination policy was unreasonable to the extent that it mandated termination as an automatic reasons for non-compliance with the policy. However, the arbitrator concluded by noting that:

“…it is important to state that this decision should not be taken by those employees who choose not to get fully vaccinated as indicating that the Employer would never be able to terminate their employment for non-compliance with the policy in question, or indeed any reasonable policy. It is only the automatic application of this policy as it respects discharge that has been found to be unreasonable… No employer has to leave a non-compliant employee on a leave of absence indefinitely. At some point, and subject to the Employer warning employees of the possibility of termination, and having considered other factors, it will likely have just cause to terminate the employment of such an employee.”

Best Practices

COVID-19 mandatory vaccination policies should, among other things:

• Set out specific timelines for compliance with the policy, with reasonable advance notice (i.e. when the policy’s  vaccination requirements take effect);
• Allow for valid human right exemptions to the vaccination requirements, and confirm the accommodation efforts to be undertaken by the employer where necessary;
• Clearly set out the consequences for non-compliance with the policy (which, depending on the nature of the workplace, may include not just placing employees on an unpaid leave of absence but also the possibility of discipline up to and including termination, as long as termination is not an automatic consequence of non-compliance); and
• Confirm the measures that will be taken to protect employee privacy (including information as to employees’ vaccination status).

The state of COVID-19 in Canada (and associated government legislation) continues to rapidly evolve. Employers should continue to review their policies and practices, on an ongoing basis, to ensure they remain in compliance with the law and are consistent with the most up-to-date best practices.

Stay tuned for further developments, and contact a Mathews Dinsdale lawyer for assistance navigating the impacts of these developments on your business.

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance.