Last week the Ontario Superior Court dismissed the plaintiffs' certification motion in the much publicized "tellers" proposed overtime class action against CIBC, effectively bringing the class action lawsuit to a grinding halt.

The claim, which was commenced in June 2007, was brought on behalf of tens of thousands of current and former CIBC employees who worked at the bank's Canadian retail branches as front-line customer service employees. The lead plaintiff, Dara Fresco, claimed that CIBC failed to comply with the minimum requirements of the Canada Labour Code by failing to pay statutory overtime pay to her and other proposed class members and by failing to keep proper records of its employees' hours of work. $500 million in damages were sought on behalf of the class.

In this case, there was no dispute as to the CIBC front-line staff's eligibility to receive overtime pay. At issue was the legality of CIBC's overtime policy and practice, and whether or not it had required or permitted overtime work to be performed for which overtime compensation had not been provided. One of the key allegations was that CIBC's policy, and in particular, the requirement that employees seek pre-approval prior to working overtime hours, contravened the Canada Labour Code. CIBC's policy provided that "[o]vertime, for which prior management approval was not obtained, will not be compensated unless there are extenuating circumstances and approval is obtained as soon as possible afterwards..." Significantly, the court found that the very language of the Canada Labour Code contemplates the right of an employer to pre-approve overtime. In order to "require or permit" the work to be performed, the court noted that management must be directly involved in deciding whether the employee works overtime. The court noted that a policy requiring pre-approval is one legitimate way of managing employees' working hours. Therefore, the court found that CIBC's policy was not unlawful on its face.

While employers may take some comfort from the court's recent pronouncement that an overtime policy requiring pre-approval is not illegal per se, it remains the case for banks and other employers subject to federal jurisdiction (and for employers subject to similar provincial legislation as well), that once the work is required or permitted to be performed, an employer cannot escape its liability to pay overtime wages to eligible employees, regardless of what the company's policy says.

That latter point was another of the crucial allegations advanced by the plaintiff – namely, that CIBC routinely required or permitted its front-line staff to work overtime hours without recording their time or paying them for the overtime hours worked. The court found that there was no evidence of systemic wrongdoing. The court found that the evidence showed a variety of individual circumstances that might give rise to unrelated bases for unpaid overtime claims that could only be resolved individually by considering the evidence of the person advancing the claim, the evidence of various other current and former CIBC employees who managed and/or worked with those persons, and various records maintained at various locations by CIBC. The action could not be allowed to proceed as a class action because there was not enough commonality in the actual wrong that was alleged against CIBC, nor was there sufficient evidence to support it. In other words, the issue of an employee's entitlement to unpaid overtime under the policy could only be determined on an individual basis.

While this decision might dampen the enthusiasm of other potential class action claimants who may have been waiting in the wings and hoping for a different result, employers should not take the threat of an overtime class action lightly, merely as a result of the employer's success in this case. Much of the court's reasoning in the CIBC decision is specific to the particular facts of this case. Moreover, the CIBC decision deals only with one type of overtime pay claim - the "off-the-clock" variety, in which the claimants' overtime pay eligibility under the statute was not disputed. Other class action claims may arise on different facts, or where the claim is a so-called "misclassification" action in which the employer is alleged to have erroneously treated all members of the proposed class as ineligible for overtime.

Thus, employers are still cautioned to conduct a thorough review of their overtime pay policies and practices and to carefully assess which employees are exempt and which are eligible for overtime pay in accordance with applicable legislation.