Certification of Overtime Class Action
Last Friday, in Fulawka v Bank of Nova Scotia, an Ontario court certified a class action claiming overtime pay to 5,000 sales staff who worked in retail branches of the Bank of Nova Scotia ("Scotiabank") from the year 2000 to the present.
An overtime class action for CIBC bank employees failed last year, making this Scotiabank certification an important development in the overtime class action case law. (Michael Fitzgibbons wrote about the CIBC case last June in his blog, Thoughts from a Management Lawyer, and Jim Middlemiss of the Financial Post wrote about the two cases last Friday and this morning.)
In the Scotiabank case, Justice Strathy held that there was an evidentiary basis of "systemic wrongs" which justified the certification of the class of employees claiming outstanding overtime:
"[4] I have concluded that there is an evidentiary basis in this case of systemic wrongs that give rise to common issues, the resolution of which could advance the claim of every Class Member. The systemic wrongs flow from a policy that failed to reflect the realities of the workplace because it put the onus on the employee to obtain prior approval for overtime rather than requiring the employer to ensure that employees were paid for overtime that they were permitted or required to work. The systemic wrongs included the failure of Scotiabank to establish a system-wide procedure to record overtime, making it all the more difficult for employees to obtain fair compensation for their overtime work. To this extent, my conclusions differ from those of Lax J. in Fresco v Canadian Imperial Bank of Commerce, [2009] OJ No. 2531 ("Fresco"), who declined to certify a claim for overtime by employees of the CIBC. Unlike the case in Fresco, there is evidence in this case that the failure to pay overtime occurred because of the policy, not independent of the policy. There is also evidence that the failure to pay overtime was attributable to systemic conditions, as opposed to purely individual circumstances."
While this decision is not a finding on the final merits of overtime entitlement, the certification of a class action is a tremendous hurdle for the parties to have passed. The certification process is simply a motion before the courts, but a motion involving months of preparation, days of hearing and boxes and boxes of material.
Typically, a successful certification signals to the parties that the case has some legal legs to stand on. This tends to be a motivation for the parties to enter into serious settlement negotiations, a reason why we see far more certification decisions than final actual class action decisions.
While the next steps may be an appeal of the certification (which is the case in the CIBC case), we will have to wait to see what Scotiabank will do.
Either way, employers throughout Canada will want to take a close look at their overtime policies to ensure that there are no "systemic wrongs" in their workplace that may lead to outstanding overtime entitlements. Fighting a class action is an expensive legal proposition for both employers and employees.
