Did you know?  Employers who unwittingly violate hours of work and overtime requirements of employment standards legislation can be building up huge financial liability.

Although hours of work and overtime provisions themselves may seem straightforward, their practical application can be complicated and confusing.  This is particularly true where employee pay is not based on an hourly wage.  Several recent cases have shown that where non-compliance is widespread and affects a number of employees, an organization may find itself embroiled in class action litigation.

The case Fulawka v. Bank of Nova Scotia is an example.[1]  The plaintiff brought a class action lawsuit on behalf of personal bankers, financial advisors and other employees at Bank of Nova Scotia seeking damages and injunctive relief, alleging that the bank’s overtime policy constituted a breach of contract, unjust enrichment, breach of duty of good faith and negligence.  The policy required eligible employees to obtain pre-approval of overtime in order to be paid at the overtime rate.  The plaintiff alleged that as a practical matter, many employees worked overtime hours without receiving the overtime rate in order to fulfill the demands of their jobs.  The class action was certified by the Ontario Superior Court of Justice (“ONSC”) in February, 2010[2], and the decision was upheld by the Ontario Court of Appeal in June, 2012.[3]  Leave to appeal to the Supreme Court of Canada was denied in March, 2013.[4]

On August 13, 2014, the ONSC approved a settlement agreement between the parties to the class action. The settlement allows for the members of the class to receive overtime compensation whether or not the overtime work was “approved” in accordance with the workplace policy.  Significantly, the settlement provides for a claims process that will allow for claims by employees going back as far as 13 years without requiring supporting documentation.[5]

It is estimated by counsel for the plaintiff that the value of the claims could be as high as $95 million dollars.[6]  The representative plaintiff in the case, Cindy Fulawka, received a $15,000 honorarium.[7]  The Bank of Nova Scotia also paid approximately $10.45 million dollars in legal fees to plaintiff’s counsel.[8]

A class action claim for $100 million on behalf of 7,800 current and former employees was certified in late 2014 against a trucking and logistics company in the decision Baroch v. Canada Cartage.[9]  The class action claim alleges that the employer systematically failed to make overtime payments to eligible employees when they exceeded their applicable hours threshold.  The allegation that the employer had a policy or practice of avoiding or disregarding its overtime obligations was supported by evidence that, among other things, the employer had no written overtime policy, the employer had not issued any written directives regarding how to apply the overtime rules and thresholds and the employer did not have a system in place to track the information necessary to properly calculate overtime pay.  Leave to appeal the decision to certify the class action was recently refused and the claim will be proceeding as a class action.[10]

An audit of an employer’s implementation of the applicable hours of work and overtime provisions will assist a proactive employer in identifying any areas of non-compliance and in improving internal policies and procedures. McCarthy Tétrault has developed an innovative HR Compliance & Risk Management Diagnosticthat helps employers achieve compliance with employment regulations, reduce the risk of individual employee claims and multi-employee class actions, and mitigate reputational damage related to workplace issues.