Since 2007, several Canadian employers have found themselves defending class action claims that seek millions of dollars in unpaid overtime.
This post examines some of the recent decisions and settlements relating to overtime class action claims in Canada and provides guidance for employers to help mitigate the risk of overtime class action claims.
Recent Overtime Class Action Cases in Canada:
On January 30, 2015, the Ontario Superior Court of Justice certified a $100 million class action for unpaid overtime in Baroch v Canada Cartage. The class action was brought on behalf of 7,800 former and current employees who alleged that they were entitled to receive overtime compensation. The Court in that case certified 9 common issues, including the issue of whether or not the employer had a policy or practice of avoiding or disregarding its overtime pay obligations under federal law. In this respect, the Court found that there was some evidence of the “existence and commonality of that issue”, including evidence that: (a) the employer had no written overtime policy; (b) no document existed that employees could consult to learn how their overtime entitlement would be established; and (c) the employer never issued any written directives to managers, supervisors or the payroll department about how to apply the various overtime rules and thresholds.
In October 2016, a $75 million class action was filed for unpaid wages (including overtime) against Goodlife Fitness Centres Inc. in Ontario. This action was eventually expanded across Canada. A certification hearing has been scheduled to be heard this April before Justice Belobaba of the Ontario Superior Court of Justice.
On November 17, 2016, the Ontario Superior Court of Justice certified a $85 million class action against Livingston International Inc. for unpaid overtime in Bozsik v Livingston International. The Court was asked to consider whether there were “sufficient common issues that would justify certification.” In certifying the class action, the Court found that there was a basis to conclude that the employer had “systemic, probably unwritten policies”, that would give rise to the following proper common issues among the class: (a) whether the employer had a duty to prevent employees from working, or a duty not to permit or not to encourage employees to work unpaid overtime; (b) whether the employer had a duty to accurately record and maintain a record of all hours worked to ensure employees were appropriately compensated; and, (c) whether the employer had a duty to implement and maintain an effective and reasonable system or procedure to ensure satisfaction of the foregoing duties.
Most recently in October 2017, the Ontario Superior Court of Justice denied certification of a claim for unpaid overtime wages in Freeman Bartholomew v CoCo Paving and Lafarge. In that case, the Plaintiff’s motion for certification was dismissed as it failed to establish an identifiable class and there was insufficient evidence of common issues. In particular, the Court noted that there was a lack of evidence that anyone other than the Plaintiff had been treated in the manner alleged and moreover, the Plaintiff’s allegations would have required an analysis of each individual employee’s terms of employment which, while not necessarily fatal to certification, was so significant on the facts of the case that the Court declined to certify the action.
Recent Class Action Settlements in Canada:
Potential liability for unpaid overtime can be significant, as evidenced by two recent settlements of overtime class actions. In March 2016, Justice Belobaba approved a revised settlement in Fulawka v Bank of Nova Scotia. A summary of the initial settlement was previously discussed here. Under the revised settlement, the employer agreed to pay the approximately 1600 class members an additional $20.6 million plus $2.3 million in legal fees on top of the $18.7 million that had already been paid.
Similarly, in August 2016, Justice Belobaba approved a $12 million settlement with 1,800 former and current misclassified employees in Rosen v BMO Nesbitt Burns Inc.
Lessons For Employers:
The above decisions highlight the potentially significant liability that employers face for misapplying statutory overtime provisions, misapplying overtime policies or systematically underpaying or withholding overtime pay.
To avoid claims and payments for unpaid overtime, employers should consider methods to control overtime costs such as establishing overtime policies, overtime agreements, or averaging agreements, if permitted by applicable legislation. Further, employers are well advised to maintain accurate records of hours worked and to provide supervisors and managers with adequate training respecting overtime obligations.