The Ontario Superior Court of Justice today approved the settlement of the overtime class action brought against The Bank of Nova Scotia in Fulawka v. The Bank of Nova Scotia (“Scotiabank”). The case has received significant attention since it was first launched at the end of 2007, as it is one of the first cases in Canada (along with Fresco v. Canadian Imperial Bank of Commerce (“CIBC”) and McCracken v. Canadian National Railway Company (“CN”)) to address the question of whether employees can seek a remedy on a class-wide basis for unpaid overtime.

The Facts of the Case

The class in the Scotiabank case consisted of front-line sales staff who worked in retail branches. The plaintiff claimed current and former employees were routinely required to work overtime without pay in order to fulfill the demands of their job. In particular, the plaintiff alleged that Scotiabank’s overtime policy was deficient because it required that overtime be pre-approved.

The Settlement

Under the terms of the settlement, current and former employees within the class will be able to submit claims for any unpaid overtime that was required or permitted by the bank, regardless of whether it was pre-approved at the time by their manager. The claims period goes back to 2000.

The settlement is a “claims made” settlement, where only those class members who submit claims for unpaid overtime will receive payments. Scotiabank will first evaluate the claims itself, and any disputed claims will then be resolved by an independent arbitrator. Class members are not required to submit documentary proof in order to submit a claim. Take-up rates for claims made processes can vary widely, from very low to very high. These types of settlements can often make good sense for defendants and limit a defendant’s overall exposure where there is not a significant historic issue to redress, in particular compared to “all-in” settlements, where the defendant agrees to pay a global sum on account of the aggregate, class-wide damages.

Certification of Overtime Claims by the Court of Appeal

There are two general types of unpaid overtime claims: “misclassification” cases and “off-the-clock” cases. “Misclassification” cases, such as CN, involve allegations that the employer improperly classified employees who are eligible for overtime as being ineligible by designating them as managers. “Off-the-clock” cases, such as CIBC and Scotiabank, centre on an allegation that there was a practice of systematic unpaid overtime, and eligibility for overtime pay is not at issue. There was also a misclassification allegation in Scotiabank.

The Scotiabank case was certified at first instance whereas certification was denied in CIBC. The CN case was also certified by the motion judge.

All three cases were appealed, and the Court of Appeal released a trilogy of decisions on June 25, 2012 that lay out the ground rules for when overtime class actions will be certified as class actions.

In CN, the Court of Appeal refused to grant certification, finding that the job functions and duties of the proposed class members were so diverse that the court could not determine, on a common, class-wide basis, whether they had been misclassified as managers.

However, the Court of Appeal certified both the Scotiabank and CIBC actions. In Scotiabank, the Court certified both the misclassification issues as well as the “off-the-clock” issues.

Leave to appeal to the Supreme Court of Canada was denied in both the Scotiabank and CIBC actions in March 2013.