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CIBC, Scotiabank overtime class action suits can proceed: court

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Ontario’s highest court has revived a five-year battle waged by teller Dara Fresco against Canadian Imperial Bank of Commerce over whether her employer illegally denied her and her co-workers across the country $600 million in overtime pay.

In three key rulings issued Tuesday, the Ontario Court of Appeal laid down new ground rules for class-action lawsuits against employers over unpaid overtime. While the U.S. has seen a wave of such claims, legal observers say that despite these latest rulings they do not expect a deluge of new cases here.

The appeal court overturned lower court rulings that denied Fresco’s case the certification required for it to proceed as a class action on behalf of 30,000 CIBC employees. The appeal court rejected a previous decision that there was no evidence of a “systemic policy or practice of unpaid overtime at CIBC.”

Despite being the representative plaintiff at the centre of the high-stakes fight, Fresco is still employed by the bank.

The court made the move as it upheld the certification of a similar class-action lawsuit filed by Cindy Fulawka, a personal banker who worked for Bank of Nova Scotia in Saskatchewan for 20 years. Her lawsuit alleges that more than 5,000 Scotiabank employees were denied overtime pay, and demands $350 million. She filed her case, with the same lawyers, after hearing about Fresco’s case.

But the three-judge panel overturned the certification of a case filed by Canadian National Railway Co. employee Michael McCracken over unpaid overtime. This case differed from the lawsuits against the banks, as it alleged that McCracken and other CN “front-line supervisors” had been “misclassified” as managers and denied overtime.

The appeal court ruled this could only be determined individually, by assessing each employees’ duties, denying the lawsuit class-action status. A CN spokesman declined to comment on the case.

In the cases against the banks, the plaintiffs alleged the banks expected employees to work late but that their overtime policies, such as requirements to secure approval before working extra hours that made it difficult for employees to get paid. They also alleged the banks had poor record-keeping systems for overtime.

The allegations have not been proven. The rulings Tuesday allow the two cases to go ahead to trial as class actions. The banks in both cases have denied the allegations. It was unclear whether the banks would seek leave to appeal the decisions to the Supreme Court of Canada.

In an e-mail, Scotiabank spokesman Andrew Chornenky said the bank was disappointed with the decision and was considering its next move.

“We are reviewing this decision and are keeping all options on the table,” he said. “Scotiabank is committed to treating its employees fairly, equitably and with respect and all our human resources policies, including overtime policies, reflect these principles.”

A CIBC spokesman could not be reached for comment.”

In all three cases, a team of lawyers led by Louis Sokolov of Sack Goldblatt Mitchell LLP and David O’Connor of Roy Elliott O’Connor LLP, represented the plaintiffs.

“These decisions take into account the practical reality of workplaces and the fact that employees may be quite reluctant to make individual claims against their employers,” O’Connor said, calling Tuesday “a very good day for employees and access to justice.”

Sokolov said the rulings open the door for other groups of employees to seek back pay. But he did not expect a rash of new cases, noting that only a few have been filed since these two.

He said many banks and other large employers, prompted by these class actions, reviewed their policies to ensure employees entitled to overtime are now getting paid.

“Employers took a good hard look in the mirror, and looked at their processes,” he said.

Ranjan Agarwal, a litigator with Bennett Jones LLP in Toronto who defends employers, agreed that he does not expect too many employers across Canada to be hit with similar claims. He also pointed out that if the rulings are appealed it could be two years before a final result, likely freezing further litigation.

He also said these cases all involved federally regulated non-union employees, and that under provincial rules it is often easier for workers who feel they have been wronged to challenge their employer.

“I think bank employees are sort of a special class of professional employees,” Agarwal said. “It’s a white collar job, so they may have been less willing to rock the boat about not being paid overtime.”

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