Further overtime developments

November 2, 2012

The defendants in two recently certified overtime class actions, Fulawka v. Bank of Nova Scotia (Fulawka) and Fresco v. Canadian Imperial Bank of Commerce (Fresco), have commenced leave applications before the Supreme Court of Canada. Fulawka and Fresco were two of three unanimous decisions relating to class actions claims for unpaid overtime released by the Ontario Court of Appeal on June 26, 2012, which we previously discussed here.

A British Columbia Labour Arbitrator who was faced with a grievance raising substantially similar claims to those at hand in Fulawka and Fresco has found in favour of the employees.

Specifically, in the Insurance Corporation of British Columbia and COPE Local 378 case, the union claimed that: (i) the employer breached the collective agreement by imposing an unwritten overtime policy with more restrictive conditions for overtime payment than those provided for in the collective agreement; (ii) the employer failed to put in place a system to prevent employees from regularly working unauthorized overtime; (iii) the employer did not compensate these employees for overtime worked, despite its obligation to do so under the collective agreement and employment standards legislation; and (iv) the employer had not kept accurate records of overtime worked as required by the Canada Revenue Agency.

The employer took the position that it had consistently and clearly communicated to the union and its employees that employees were not permitted to work overtime without first obtaining authorization, and that if they chose to work beyond their scheduled hours, they did so unilaterally and would not be compensated. Similar to the Fulawka and Fresco cases, the crux of the claims advanced by the union was that the overtime policy of the employer imposed more restrictive conditions for overtime compensation than those set forth in applicable law (in this case, the collective agreement).

The Arbitrator’s Decision

The Arbitrator found that the employer’s unwritten policy was inconsistent with the collective agreement. This is similar to Fulawka and Fresco, in which the plaintiffs alleged that the employers had used pre-approval requirements in their overtime policies to avoid their obligation to pay for overtime worked. Whereas in the Fulawka and Fresco class actions the court did not decide the cases on their merits, in this case the Arbitrator ruled in favour of the union and declared that the employer was in breach of the collective agreement by permitting or condoning employees to perform unpaid overtime work. The Arbitrator ordered the employer to: (i) cease permitting or condoning employees to perform such unpaid work; (ii) implement measures to prevent employees from working beyond their regularly scheduled hours; and (iii) compensate employees who had worked, but were not paid, overtime in 2010. The Arbitrator further ordered that the employer pay the union for the additional dues based on the additional compensation.

Our Views

This case is a clear indication that the reasoning in the Fulawka and Fresco cases will be applied. Accordingly, we encourage employers to ensure that: (i) their overtime policies are compliant with statutory requirements and with their employment contracts; (ii) they take active measures to unsure employees do not work unauthorized overtime; and (iii) they implement measures to ensure that employees’ hours are being accurately tracked, whether or not those hours are being worked with the employer’s prior authorization.

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