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Class Action Not Certified in Unpaid Overtime Case
Published in the June 2009 issue of Litigation Notes - View Article
The Ontario Superior Court of Justice has dismissed a motion to certify a class proceeding brought on behalf of current and former employees of the Canadian Imperial Bank of Commerce, claiming for unpaid overtime
In this decision of June 18, 2009, the Ontario Superior Court responded to another claim in a recent string of class action cases brought based on the alleged liability of employers for unpaid overtime (Corless v. KPMG LLP, 2008 CanLII 39784; Fulawka v. The Bank of Nova Scotia, filed December 10, 2007, McCracken v. Canadian National Railway Company, filed March 19, 2008). In this case, Justice Lax of the Court declined to certify the class action brought by Dara Fresco (“Ms. Fresco”), representing current and former “front-line service workers” at the retail branches of the Canadian Imperial Bank of Commerce (“CIBC”). The Court found that certification could not be granted, mainly on the ground that there was no common issue to be tried.
The representative plaintiff, Ms. Fresco, worked with CIBC for approximately 10 years as a teller, a head teller and a personal banking assistant. She brought the action on behalf of all non-unionized employees working on the “front-line” of customer service, including tellers, assistant branch managers, financial service representatives, financial service associates and branch ambassadors. This class was estimated at approximately 31,000 employees, and at the time of certification, the plaintiffs sought to expand the class even further. The claim was for $500 million in general damages, or in the alternative, disgorgement of all unpaid overtime amounts. The allegations raised by Ms. Fresco were centered on statutory breaches of the Canada Labour Code and its Regulations, and of CIBC’s contractual duties to its employees. In particular, Ms. Fresco focused on the overtime policy of CIBC (“the overtime policy”). This policy required pre-approval of a manager for overtime hours worked, except in extenuating circumstances, in which case approval was to be sought by an employee as soon as possible thereafter. The policy also provided for paid time off at the rate of time and a half, in lieu of compensation, at the option of the employee. Ms. Fresco argued that this policy provided the CIBC an “excuse” for not paying overtime to employees who were “routinely required or permitted to work overtime”. Ms. Fresco also raised a number of other “systemic” factors, including that employees were routinely directed to prepare time records that were limited to their daily hours of work and made no claim for overtime hours.
The court took note of a number of policies and procedures addressing the issue of overtime at CIBC. Generally, CIBC’s policies espoused the objective that overtime would be permitted only in exceptional circumstances. The Court also noted that CIBC provides a number of opportunities for employees to be aware of the overtime policy, via intranet and bulletin board postings. Furthermore, the Court noted that “the branch manager enjoys significant autonomy in managing branch employees, including with respect to staffing and scheduling.” Detailed Guidelines address the circumstances in which managers may authorize overtime, and instruct managers, inter alia to carefully plan their resources and projects and to not permit overtime without prior approval. Conversely, employees are required to obtain authorization and to submit their overtime hours as soon as possible. Employees also have the means to, and are encouraged to, address any concerns regarding overtime first to their manager, or to CIBC’s Human Resources Contact Centre, an Ethics Hotline, the CIBC Employee Obudsman, or ultimately, Human Resources and Social Development Canada (“HRSDC”).
In accordance with the Class Proceedings Act, the court considered the five criteria for certification, as set out at section 5(1): a cause of action, an identifiable class, common issues, preferable procedure and an adequate representative plaintiff. These criteria are interlinked and must all be satisfied before certification will be granted in a class proceeding.
The court found in unequivocal terms that there was an identifiable class, that the class action would be the preferable procedure if the common issues as submitted by the plaintiff were accepted and that Ms. Fresco was an adequate representative plaintiff. The court made some notable findings, in particular with respect to the class action being the preferable procedure, from the perspective of access to justice, judicial economy and behaviour modification, all considered in light of the importance of the common issues in the context of the claim as a whole. In this respect, the court found that, neither the requirement to work out individual issues with respect to limitation periods, nor the requirement to provide an individualized assessment of damages militate against the use of class action proceedings. Furthermore, the court found that the avenues that were already available to employees to seek redress within the CIBC system or at HRSDC would not promote greater access to justice, insofar as employees would likely be too intimidated to pursue such routes within CIBC, and at any rate, the HRSDC would not have jurisdiction to adjudicate claims for breach of contract and unjust enrichment.
However, the court found the claim fatally flawed with respect, partially, to the cause of action, and, most importantly, the requirement for a common issue. With respect to the first requirement, the court accepted that there was cause of action on the facts as pleaded, but significantly pared down the claims of the Plaintiffs that could qualify as such. Most significantly, the court refused to accept that the pre-approval requirement and the option to take time off in lieu in the overtime policy were in contravention of the Canada Labour Code. The court found that the Code itself limits number of hours worked, except where overtime is “required or permitted”. Implicit in this statutory language is the right of the employer to be directly involved in deciding whether or not an employee shall work overtime. Furthermore, the court found that “it is a fundamental right of the employer to control its business, including employees’ schedules, hours of work and overtime hours.” As such, an employee cannot unilaterally decide to work overtime and then to demand compensation from the employer. With respect to the option of taking time off in lieu of pay, the Plaintiffs argued that this was unlawful insofar as the Code required monetary compensation for overtime. The court found, however, that such a clause cannot be found to be unlawful, insofar as it actually provided a benefit to the employee – that of having the option of different ways of redeeming overtime. The Code itself provides that its provisions are not meant to affect a contract bestowing a more beneficial term on an employee.
The focus of the court’s analysis was on the element of commonality, which the court characterized as “the core of a class proceeding”. The court found that the Plaintiffs failed to establish any common issues, though various arguments were submitted by them. Having determined that the overtime policy was not illegal, the court found that the policy could not in and of itself constitute the basis for a common claim. Rather, the court explained that the real issue would be a finding that employees were permitted or required to work overtime, but not compensated. This would clearly require an individual determination. The court also rejected the argument that the recordkeeping practices of CIBC with respect to overtime were inadequate, not only because such recordkeeping practices varied across branches, but also because whether these practices actually resulted in overtime going unpaid would have to be determined on a case by case basis.
Likewise, the court found that there was not sufficient evidence of any “systemic” wrongdoing on behalf of CIBC. While the evidence of some employees was put forward by affidavit, this evidence in fact demonstrated that these were individualized claims. Ms. Fresco’s claim for instance, was based on whether breaks that she received for breast-pumping would properly be included as hours worked in the calculation of her entitlement to overtime. Others based their claims on smoking breaks, or their early arrival at the office due to carpooling arrangements. Nor did the court find persuasive the Plaintiffs’ argument that CIBC had a “duty” to ensure that it complied with its obligation to compensate for overtime worked – this issue was not independently actionable in that a class action claimant could not circumvent the requirement for common issues by asking whether there is a “common duty” in a situation where each case requires individual determination.
Given the lack of common issues, the court had no trouble finding that the determination of damages in this case also did not fit the requirements of commonality and that an award of damages on an aggregate basis was not appropriate.
Fresco v. Canadian Imperial Bank of
Commerce, 2009 CanLII 31177