Ontario Court of Appeal grants certification to overtime class actions

13 août 2012

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On June 26, 2012 the Ontario Court of Appeal released three decisions regarding whether to certify overtime class actions: BNS v. Bank of Nova Scotia (BNS), CIBC v. Canadian Imperial Bank of Commerce (CIBC) and CNR v. Canadian National Railway Company (CNR).  The Court certified CIBC and BNS, but did not certify CNR.

CIBC and BNS were inherently similar claims, in that they were “off-the-clock” overtime class actions.  The main issue was not whether the employees at issue were eligible for overtime, but whether the policy requirement that overtime would only be paid where employees obtained prior approval, is contrary to the Canada Labour Code.  Certification was granted because, among other things, in reaching a decision a trier of fact can focus on the overtime policies, and not on characteristics of individual class members.

However, the Court refused to grant certification in CNR, primarily on the basis that it was a “misclassification” case.  The main issue was whether the class members were eligible for overtime, despite the fact that CNR had designated their positions as managerial in nature, a category which is overtime exempt.  Certification was denied on the basis that the issue could only be determined with reference to each class member’s individual factors.

Successful Certification: CIBC and BNS

While both the CIBC and BNS actions were based upon similar allegations, the respective lower courts arrived at different conclusions regarding the issue of certification:  BNS was originally certified; CIBC was not.  Both were ultimately appealed and were heard in December 2011.  Given the inherent similarity of the actions and the inconsistency of the lower court decisions, the Court of Appeal stated that both certification motions should “succeed or fail together.”

In determining that both claims should be certified as class actions, the Court adopted and made extensive reference to the analysis of the motion judge in BNS.  Ultimately, the Court held that both cases presented common issues regarding whether the respective employer’s policies and practices prevented a group of employees from receiving overtime pay.

In both cases, the Court rejected the plaintiffs’ claim that damages be assessed on an aggregate basis. Instead, the Court held that damages would be determined individually, should the class members be successful.  This means that in order to prove damages, each individual in the class, whether a current or former employee, will need to testify regarding the quantity of overtime pay owing to him or her.  This finding is significant, as the two cases involve approximately 30,000 employees, with damages claimed in BNS amounting to $350 million, and in CIBC to $500 million. 

Unsuccessful Certification: CNR

In contrast, the Court of Appeal denied the request for certification in CNR.  The Court determined that there was no ability to determine on a class-wide basis whether or not an individual was a manager and therefore exempt from the overtime provisions of the Canada Labour Code. In particular, there were approximately 70 different job positions held by the managers at issue and there was a significant range in regards to the level of authority each possessed.  Further, such authority varied greatly depending on where a manager worked. 

Thus, the Court held that such a determination would have to be made on an individual basis, as it would involve a review of the job responsibilities, reporting functions, and scope of work, each of which would have to be considered on a singular level.  While the certification judge sought to address this issue by reframing the common issue such that it sought to establish, in relation to the Canada Labour Code, what the minimum requirements were to be a managerial employee are at CN (rather than determining whether the employees at issue were in fact managerial), the Court of Appeal determined that this still not address the fact that individual determinations would need to be made.

Our views:

Given the magnitude of the respective decisions, it is reasonable to assume that most, if not all, will be appealed to the Supreme Court of Canada.  While each of the above-noted cases arose out of the Canada Labour Code, which applies only to federally regulated employers and is therefore of relatively limited direct application, we nonetheless encourage employers to revisit their overtime policies to ensure that they: (i) meet the statutory requirements; and (ii) do not create a situation whereby employees are “permitted or suffered” to perform unauthorized work in excess of applicable overtime thresholds. 

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