On June 26, 2012, the Ontario Court of Appeal released its anticipated decisions in three overtime class actions – Fulawka v. Bank of Nova Scotia (Fulawka), Fresco v. Canadian Imperial Bank of Commerce (Fresco) and McCracken v. Canadian National Railway Company (McCracken).
The Court permitted the “off-the-clock” overtime class actions to continue against the defendant banks in Fresco and Fulawka. However, it refused to grant certification in McCracken, which involved a claim regarding the misclassification of employees as exempt from overtime requirements.
In Fresco and Fulawka, the Court was tasked with reconciling the divergent decisions of lower courts in seemingly similar cases involving claims for unpaid overtime by front-line bank employees. In deciding that both claims should be certified as class actions, the Court substantially adopted the certification analysis of the motion court in Fulawka, which had granted certification, and rejected the lower court decisions in Fresco, which had come to the opposite conclusion. Specifically, the Court held that in both cases there were common issues relating to whether the defendants’ policies and practices could prevent class members from receiving overtime pay, the determination of which would advance the claims of all class members.
According to the Court, the differences in individual class member’s positions and experiences relied on by the lower courts in Fresco to deny certification, as well as its focus on whether the overtime policy in question was consistent with statutory requirements, were not barriers to defining common issues relating to the application and impact of the policies and practices on class members. The Court ultimately held that these alleged “systemic defects” could and should be considered on a class-wide basis in both cases, even though both liability and damage assessments would largely remain to be determined on an individual basis.
In contrast, in McCracken, the Court found that there was no basis to support a finding that the determination of whether or not an individual was a manager and therefore exempt from overtime requirements could be determined on a common basis. Given that the proposed class members had different job responsibilities and functions, worked in different areas and had different reporting structures, any determination with respect to eligibility for overtime would have to be made on an individual basis. The Court also held that the common issue formulated by the lower court with respect to the determination of the minimum requirements of being a managerial employee would not advance the claims of the proposed class members in any significant way. As the plaintiff could not demonstrate that any significant part of the proposed class’ claims could be determined on a common basis, certification was denied.
While these cases may be subject to leave to appeal applications to the Supreme Court of Canada, employers should be aware that the Ontario Court of Appeal has now given the green light to off-the-clock overtime class actions, even where significant individual issues regarding liability and damages will need to be determined after the common issues trial. In contrast, and contrary to first impressions, misclassification overtime claims may be more difficult for employees to pursue by way of class action.