Are Overtime Class Actions History?

In 2007 a group of current and former CIBC employees launched a class action lawsuit claiming over $500 million in damages for unpaid overtime.  Two years later, that class action has been rejected by an Ontario court, perhaps signaling the end of such claims.

Dara Fresco was the named plaintiff on behalf of over 31,000 current and former front line service workers in over 1,000 retail branches of the Canadian Imperial Bank of Commerce.  The action claimed CIBC breached its statutory and contractual obligation to pay the appropriate overtime rates.

In brief, the claim alleged that CIBC’s overtime policy purported to excuse it from paying overtime and did not allow for payment of overtime to employees who were routinely required to work extra hours. 

The claim alleged that, although employees (including Fresco) were regularly required to work overtime hours, they were directed to prepare time records describing their hours of work as no more than their regularly daily hours.  Fresco, alone, claimed to be owed in excess of $47,000 in unpaid overtime.

Class action lawsuits allow many plaintiffs to band together to pursue their claims in court.  Typically, each individual claim is small in scale, sometimes small enough that it wouldn’t be worth pursuing on its own.

Combined with hundreds, or even thousands, of similar claims the potential damages definitely start to attract some attention.  A group of Wal-Mart employees in the U.S., for instance, won an award of $78 million for unpaid overtime pay.

The attraction of the class action is that the plaintiffs share the burden of the cost of the litigation.  There may also be a psychological motivator behind class actions as well - an individual who wouldn’t initiate a claim on her own (especially against her present employer) might feel more comfortable doing so as part of a larger group.

A class proceeding must, however, obtain the certification of the appropriate court and it was this hurdle which proved the undoing of Fresco’s band of claimants.  The Ontario Superior Court of Justice issued its ruling in which it determined that “a class proceeding is not the preferable procedure for resolving the claims of class members for unpaid overtime”.

The key problem confronting the class of plaintiffs was the lack of “commonality” between their claims.  Claims will not share commonality if their resolution is dependent upon individual findings of fact which have to be made in relation to each individual plaintiff. 

In this instance, the Court found there was “no asserted common issue capable of being determined on a class wide basis” which would justify certification.  The court determined “this is not a case where questions of systemic wrongdoing can be resolved without examining the individual claims, thereby defeating the purpose of a class action.”

This ruling doesn’t necessarily put an end to class action lawsuits for unpaid overtime, but it seemingly drives another nail into the coffin.

In provinces such as B.C., the prospect of the class action to enforce statutory claims (such as those for unpaid overtime) has already been foreclosed. 

B.C.’s Court of Appeal recently upheld the traditional view that statutory claims must normally be adjudicated by the administrative body created for that purpose.  The Court of Appeal rejected the notion that employment rights conferred by statute are implied by law into the employment contract such that they can be enforced in court. 

The general rule, in B.C., is there is no cause of action in court for the enforcement of statutory rights.  If a statute provides its own enforcement mechanism (as B.C.’s Employment Standards Act does), there is simply no need for a cause of action which can be pursued in court.

Between the Fresco decision in Ontario casting doubt on the commonality of such claims and those in provinces such as B.C. barring such statutory claims from court, the class action lawsuit for unpaid overtime seems to be on its last legs.  There are, however, some other similar class actions already in progress so perhaps it’s still too early to perform the last rites on group attempts to enforce statutory pay rights in court.