Earlier today, the Ontario Court of Appeal released its highly
anticipated trilogy of judgments in the high-profile overtime class
action cases of Fulawka v. Bank of Nova Scotia, Fresco
v. Canadian Imperial Bank of Commerce and McCracken v.
Canadian National Railway Company. Previously, the lower
courts had certified the overtime class actions against the Bank of
Nova Scotia and CN Railway but had refused to certify the class
action against CIBC.
The three appeals dealt with the first-level
"certification" issue of whether a class action was an
appropriate process for resolving these overtime claims.
Ultimately, the Ontario Court of Appeal decided to allow the class
actions against the Bank of Nova Scotia and CIBC to proceed, while
refusing to certify the class action as against CN Railway. In
reaching these different outcomes, the Court drew a distinction
between the alleged theory of liability for unpaid overtime
advanced against the two banks (breach of a policy) and the theory
advanced against CN Railway (misclassification of a group of
employees as managers) in assessing whether or not there was a
sufficient commonality of interest among the proposed class members
to warrant the overtime claims proceeding as a class action.
In the Bank of Nova Scotia and CIBC decisions, both groups of
employees alleged that the banks had implemented overtime policies
that imposed more restrictive conditions on receiving overtime pay
than those contained in the Canada Labour Code or as
provided for under the express or implied terms of individual
employment contracts. In particular, the claimants alleged
that the overtime policies implemented by the banks created
institutional or systemic impediments to overtime pay
claims. The Court found that the terms of these overtime
policies could support a conclusion before a common issues
trial judge that all uncompensated overtime hours were required or
permitted by the banks.
The Court recognized that, even if individual issues concerning
each employee's overtime entitlement (if any) would still
remain after the common issues trial, there was sufficient
commonality among class members in the CIBC and Bank of Nova Scotia
cases that would allow elements of liability to be determined on a
class-wide basis. In the CIBC decision, for example, the Court
wrote:
"The terms and conditions in CIBC's overtime policies
governing overtime compensation, and the accompanying standard
forms that class members submit when requesting such compensation,
apply to all class members regardless of their own particular job
responsibilities or job titles. To the extent that the
policies and record-keeping systems of CIBC are alleged to fall
short of CIBC's duties to class members, or to constitute a
breach of class members' contracts of employment, these
elements of liability can be determined on a class-wide basis and
do not depend on individual findings of fact."
In contrast, the action against CN Railway alleged that the
company had misclassified a group of First Line Supervisors as
managerial employees, thereby exempting those individuals from
being eligible for overtime pay under the Canada Labour
Code. The Court held that, for the class action to
proceed, the employees had to establish that the job functions and
duties of the various employees were sufficiently similar so that
the "misclassification" issue could be resolved without
considering the individual circumstances of class members.
Instead, the Court concluded that there was a wide range of job
functions among First Line Supervisors at CN Railway, depending on
which job title they held, where they worked, and whether the class
members worked alongside other First Line Supervisors or
higher-level managers. The Court also found that the use of
the term "First Line Supervisors" to describe the class
created a "false impression of commonality" given that
class members had different job responsibilities, a variety of job
titles, and worked in a variety of workplaces with different
reporting structures and different sizes of workforce. In
short, the Court decided that a trial judge could make no
determination about whether or not a First Line Supervisor was in
fact a managerial employee or a non-managerial employee without
resorting to the evidence of individual employees in the proposed
class, as opposed to resolving that issue once for the entire
class. As a result, there was not sufficient commonality among
class members to permit the class action to proceed.
Employers should review their overtime policies in light of the
court's decisions, which show the importance of the language
used in those policies.
A link to each of the decisions in the trilogy is posted
below:
- Fulawka v. Bank of Nova Scotia
http://www.ontariocourts.ca/decisions/2012/2012ONCA0443.pdf - Fresco v. CIBC
http://www.ontariocourts.ca/decisions/2012/2012ONCA0444.pdf - McCracken v. CN Railway
http://www.ontariocourts.ca/decisions/2012/2012ONCA0445.pdf
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