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Overtime Class Actions: Ontario Court of Appeal Releases Trilogy of Judgments

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Earlier today, the Ontario Court of Appeal released its highly anticipated trilogy of judgments in the high-profile overtime class action cases of Fulawka v. Bank of Nova Scotia, Fresco v. Canadian Imperial Bank of Commerce and McCracken v. Canadian National Railway Company.  Previously, the lower courts had certified the overtime class actions against the Bank of Nova Scotia and CN Railway but had refused to certify the class action against CIBC.

The three appeals dealt with the first-level “certification” issue of whether a class action was an appropriate process for resolving these overtime claims.

Ultimately, the Ontario Court of Appeal decided to allow the class actions against the Bank of Nova Scotia and CIBC to proceed, while refusing to certify the class action as against CN Railway.  In reaching these different outcomes, the Court drew a distinction between the alleged theory of liability for unpaid overtime advanced against the two banks (breach of a policy) and the theory advanced against CN Railway (misclassification of a group of employees as managers) in assessing whether or not there was a sufficient commonality of interest among the proposed class members to warrant the overtime claims proceeding as a class action.

In the Bank of Nova Scotia and CIBC decisions, both groups of employees alleged that the banks had implemented overtime policies that imposed more restrictive conditions on receiving overtime pay than those contained in the Canada Labour Code or as provided for under the express or implied terms of individual employment contracts.  In particular, the claimants alleged that the overtime policies implemented by the banks created institutional or systemic impediments to overtime pay claims.  The Court found that the terms of these overtime policies could support a conclusion before a common issues trial judge that all uncompensated overtime hours were required or permitted by the banks.

The Court recognized that, even if individual issues concerning each employee’s overtime entitlement (if any) would still remain after the common issues trial, there was sufficient commonality among class members in the CIBC and Bank of Nova Scotia cases that would allow elements of liability to be determined on a class-wide basis.  In the CIBC decision, for example, the Court wrote:

“The terms and conditions in CIBC’s overtime policies governing overtime compensation, and the accompanying standard forms that class members submit when requesting such compensation, apply to all class members regardless of their own particular job responsibilities or job titles.  To the extent that the policies and record-keeping systems of CIBC are alleged to fall short of CIBC’s duties to class members, or to constitute a breach of class members’ contracts of employment, these elements of liability can be determined on a class-wide basis and do not depend on individual findings of fact.”

In contrast, the action against CN Railway alleged that the company had misclassified a group of First Line Supervisors as managerial employees, thereby exempting those individuals from being eligible for overtime pay under the Canada Labour Code.  The Court held that, for the class action to proceed, the employees had to establish that the job functions and duties of the various employees were sufficiently similar so that the “misclassification” issue could be resolved without considering the individual circumstances of class members.

Instead, the Court concluded that there was a wide range of job functions among First Line Supervisors at CN Railway, depending on which job title they held, where they worked, and whether the class members worked alongside other First Line Supervisors or higher-level managers.  The Court also found that the use of the term “First Line Supervisors” to describe the class created a “false impression of commonality” given that class members had different job responsibilities, a variety of job titles, and worked in a variety of workplaces with different reporting structures and different sizes of workforce.  In short, the Court decided that a trial judge could make no determination about whether or not a First Line Supervisor was in fact a managerial employee or a non-managerial employee without resorting to the evidence of individual employees in the proposed class, as opposed to resolving that issue once for the entire class.  As a result, there was not sufficient commonality among class members to permit the class action to proceed.

Employers should review their overtime policies in light of the court’s decisions, which show the importance of the language used in those policies.

A link to each of the decisions in the trilogy is posted below:

•  Fulawka v. Bank of Nova Scotiahttp://www.ontariocourts.ca/decisions/2012/2012ONCA0443.pdf

•  Fresco v. CIBChttp://www.ontariocourts.ca/decisions/2012/2012ONCA0444.pdf

•  McCracken v. CN Railwayhttp://www.ontariocourts.ca/decisions/2012/2012ONCA0445.pdf

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