A majority of Ontario’s Divisional Court has upheld a decision denying the certification of a proposed class action brought on behalf of approximately 31,000 tellers and Customer Service Representatives employed by CIBC.1

The proposed class claimed that CIBC systematically violated contractual and statutory overtime rules by requiring employees to seek advance approval for overtime, and by generally creating a culture that encouraged employees to under-report overtime worked. The plaintiffs argued that the bank’s pervasive policy of routinely requiring unpaid overtime raised common issues suitable to be heard in a class action. The plaintiffs also argued that CIBC’s policy permitting employees to take time off in lieu of overtime pay, and the employer’s lack of a uniform system for recording overtime hours across its various branches, violated the Canada Labour Code (the “Code”).  

In the first instance, the motions judge refused to certify the class action. Our bulletin dated June 19, 2009, Ontario Court Dismisses CIBC Class Action, describes this decision.  

On appeal, the majority of the Divisional Court agreed. The majority found that CIBC’s overtime policy complied with the Code, and that absent evidence of a systemic violation, the proposed class did not share common issues. Further, even if there were such evidence, each employee would still be required to adduce evidence specific to his or her overtime entitlement. The majority also found that the bank’s overtime policy itself was not unlawful. Requiring preapproval of overtime did not violate the Code, the Court held, because, “[a]n employer has the fundamental right to control its business, including employee schedules, hours of work, and overtime hours providing it complies with the Code.” While an employer must take active measures to regulate hours worked, or else risk being found to have permitted overtime work through oversight or omission, CIBC’s overtime policy met this onus. Furthermore, CIBC’s policy allowing employees to take time in lieu of overtime pay was found to be permitted by section 168 of the Code, which protects contractual provisions that are more favourable to the employee than the statutory minimums. Significantly, the majority also determined that the Code does not impose a requirement of uniformity for records kept by the employer, but simply requires that records be maintained.

In a forceful dissent, Justice Sachs found that it was not “plain and obvious” that the issues were fully settled in the jurisprudence. In particular, she found that it is not clear that the onus is on the employee to ask permission to work overtime. Rather, she suggested, the employer knows or ought to know that an employee is working overtime, and an employer who fails to take reasonable steps to prevent the employee from doing so may be responsible for systemically denied overtime pay. Further, without a meaningful opportunity for employees to take time off in lieu of overtime wages, Justice Sachs stated, it could be said that the overtime policy violates the Code. As a result, the dissenting judge would have allowed the claim to proceed as a class action.  

The facts of the CIBC case, and Justice Sachs’ dissent, closely mirror the facts and analysis in a case involving overtime claimed by employees of the Bank of Nova Scotia.2 In that decision, which is summarized in our bulletin dated April 5, 2010, Differing Decisions Lead to Class Confusion, the Court certified the overtime class action. The Bank of Nova Scotia has been granted leave to appeal based on the direct conflict with the CIBC decision, the importance of the issues to other employers, and the existence of “good reason to doubt the correctness of the decision.”  

Meanwhile, the Ontario Superior Court of Justice has certified a third overtime class action. The plaintiffs in McCracken v. Canadian National Railway Company3 are first-line supervisors who allege that they were misclassified as managers and therefore unlawfully denied overtime pay. Although a number of different front-line supervisor positions were at issue, the Court found that the question of whether duties performed by each employee properly excluded them from overtime entitlement met the test for commonality. That was because even though each worker may perform slightly different duties and have slightly different levels of responsibility, a common examination could be made of the various different roles played by front-line supervisors, and how those roles relate to the test for managerial status under the Code. Having performed that analysis, a test could be developed and applied to each member of the class to determine their status. The Court therefore found that there was enough commonality to justify a class action.  

Employers will have to wait for higher courts to reconcile these conflicting decisions before any meaningful conclusions can be drawn about the future of overtime class action lawsuits in Canada. In the meantime, employers are well advised to ensure compliance with contractual statutory overtime rules, including keeping careful records of overtime worked, to avoid being the target of the next effort to certify an overtime class action.