Update on Overtime Class Actions in Canada
Canadian employers have been watching a series of class action claims, with employees claiming hundreds of millions of dollars in unpaid overtime, since 2007. While overtime class action claims are still not possible in British Columbia (for the reasons discussed here), claims can balloon in other provinces when a representative plaintiff claims unpaid overtime for themselves and on behalf of colleagues.
On August 12, 2014, the Ontario Superior Court of Justice approved the settlement of one of these overtime class actions, Fulawka v. The Bank of Nova Scotia. Our colleagues in Calgary have posted about this recent development here.
Cindy Fulawka (Fulawka) was employed at various Bank of Nova Scotia (BNS) branches and held various positions such as Personal Banking Officer and Account Manager. In 2007, Fulawka, acting as a representative plaintiff, claimed $250 million in general damages and a further $100 million in punitive damages on behalf of approximately 15,000 individuals.
On February 19, 2010, the class action was certified by the Ontario Superior Court. BNS appealed the certification to both the Divisional Court and the Court of Appeal of Ontario but was largely unsuccessful. BNS sought leave to appeal to the Supreme Court of Canada but was denied. On August 12, 2014, Justice Belobaba approved the settlement of the action from the bench but has yet to issue a written decision.
BNS has agreed to pay employees for overtime owed to them but the exact settlement value is uncertain. However, Fulawka’s counsel has predicted that class members will receive approximately $95 million.
To assess unpaid overtime, BNS will participate in an informal but binding procedure in which employees can claim overtime without any documentation confirming actual hours worked. If BNS and the employee are unable to agree on the amount owed, an arbitrator will make a final ruling and is empowered to reasonably estimate unpaid overtime.
Lessons for Employers
This case highlights the liability that large employers who operate in other provinces may face if overtime is systematically underpaid or withheld. To avoid exposure for unpaid overtime in any province, employers should take the following steps:
- Make sure your employees are properly classified. For example, ensure that any ‘exempt’ management or other employees who are not paid overtime are truly exempt from overtime under applicable legislation.
- Consider methods to control overtime costs such as averaging agreements, compressed workweeks, or time off in lieu of overtime pay, as permitted by applicable legislation.
- Keep accurate records of hours worked. Without accurate records of hours worked, it is much more difficult and costly to defend overtime claims.
- Enforce policies with respect to overtime and record-keeping. If employees work unauthorized overtime or do not record their hours, respond with appropriate discipline and/or increased supervision.
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