This presentation was presented at FMC's A Report on Overtime Class Actions Webinar on September 27, 2012 by Anneli LeGault and Blair McCreadie. This presentation reviews the following topics: Risk of Overtime Class Actions Overview of Recent Trilogy of Judgments from Ontario Court of Appeal Canada Labour Code requirements Employment Standards Act, 2000 requirements Approaches to Manage your Overtime Liability

1. RECENT OVERTIME CLASS ACTIONS AND BEST
PRACTICES TO MANAGE YOUR RISK
Webinar presented by:
Anneli LeGault Blair McCreadie
anneli.legault@fmc‐law.com blair.mccreadie@fmc‐law.com
September 27, 2012

2. Overview of Presentation
•Risk of Overtime Class Actions
•Overview of Recent Trilogy of Judgments from
Ontario Court of Appeal
– Fulawka v. Bank of Nova Scotia; Fresco v. CIBC;
McCracken v. CN Railway Company
•Canada Labour Code requirements
•Employment Standards Act, 2000 requirements
•Approaches to Manage your Overtime Liability
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3. Class Actions
• Class actions allow a large group of individuals with common
claims to initiate a single lawsuit against the defendant,
instead of hundreds or thousands of similar claims
• Designed to provide increased access to justice and greater
efficiency in the courts
• Quebec (1978), Ontario (1992)
• All other provinces (except PEI) have now passed class
proceedings legislation
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4. Class Action Process
• The action must be certified as a class proceeding by the
courts – e.g. CIBC and BNS overtime actions
• Plaintiffs must prove commonality – i.e. claims raise common
issues
• Plaintiffs must also prove that the class action is the “preferred
procedure”
• There must be a representative plaintiff
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5. Class Actions in Employment
• Retirees – e.g. reduction of retiree health benefits
• Wrongful dismissal ‐ common issues may include binding effect of
employer’s termination policy; entitlement to damages for loss of benefits;
requires individual damage assessments
• Difficult to certify a constructive dismissal as a class action – e.g. Allstate
Insurance – 100 sales agents resigned over a new compensation model –
individual findings required for each employee including review of each
employment agreement – not certified
• Employment Standards claims – have not always been certified – partly
because ESA has quick and cost‐effective complaints resolution procedure
and class proceeding may not always be the preferred procedure
• Discrimination claims to date have not generally been certified in Canada
and the human rights legislation process has applied
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6. Ont. C.A. – Trilogy of Judgments
• CIBC ‐ June 2007 ‐ $600M class action lawsuit filed on behalf
of 31,000 customer service employees working in over 1,000
retail branches
• Bank of Nova Scotia – December 2007 ‐ $350M class action
lawsuit filed on behalf of 5,000 front‐line staff (personal
banking officer, senior personal banking officer, financial
advisor and account manager small business)
• CN Railway – March 2008 ‐ $300M class action lawsuit filed on
behalf of 1,500 current and former front‐line supervisors who
allege that they were misclassified to avoid triggering overtime
pay
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7. Ont. C.A. – Trilogy of Judgments
• Lower courts had certified overtime class actions against the
Bank of Nova Scotia and CN Railway, but had refused to certify
the overtime class action against CIBC
• Ontario Court of Appeal was only dealing with the “first level”
issue of whether or not overtime claims should proceed by
way of class action
• No decision has been made as to whether any of these three
organizations are liable to the claimant employees for unpaid
overtime
• All three decisions relate to federally‐regulated entities under
the Canada Labour Code
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8. Ont. C.A. – Trilogy of Judgments
• Decisions in all three cases released on June 26, 2012
• Ont. C.A. certified the overtime class actions against CIBC and
Bank of Nova Scotia by finding sufficient commonality among
the members of proposed class
• But, overtime class action dismissed against CN Railway
because each claim could only be resolved by considering
individual circumstances of class members
• Two distinct theories of overtime liability: CIBC/Bank of Nova
Scotia vs. CN Railway
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9. Ont. C.A. – Trilogy of Judgments
CIBC and Bank of Nova Scotia Overtime Class Actions
• Claim for liability based on alleged breach of
contractual and statutory obligations to pay class
members for overtime work that they are routinely
required or permitted to perform
• Overtime policies required pre‐approval from
manager in order to be compensated for overtime
work, which allegedly created barriers to claiming
overtime
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10. Ont. C.A. – Trilogy of Judgments
CIBC and Bank of Nova Scotia Overtime Class Actions
• Also alleged that employer failed:
– to implement proper record keeping systems for overtime
hours worked
– to put in place a system to monitor and prevent
employees from working overtime hours for which
employer did not intend to compensate them
• The common issues relating to the overtime policy
established the requisite degree of commonality
among members of the proposed class
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11. Ont. C.A. – Trilogy of Judgments
From the CIBC decision:
…. The terms and conditions in CIBC’s overtime policies governing
overtime compensation, and the accompanying standard forms that
class members submit when requesting such compensation, apply to
all class members regardless of their own particular job
responsibilities or job titles. To the extent that the policies and
record‐keeping systems of CIBC are alleged to fall short of CIBC’s
duties to class members, or to constitute a breach of class members’
contracts of employment, these elements of liability can be
determined on a class‐wide basis and do not depend on individual
findings of fact.
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12. Ont. C.A. – Trilogy of Judgments
Dismissal of Class Action as against CN Railway
• Claim based on alleged misclassification of front‐line
supervisors as managerial employees
• To proceed as class action, Court found that Plaintiff
had to establish sufficiently similar job functions and
duties of class members
• In fact, Ont. C.A. found wide disparity in job functions
among proposed class members, depending on their
job title, work location, size of workplace, and
reporting relationship
12

13. Ont. C.A. – Trilogy of Judgments
Dismissal of Class Action as against CN Railway
• Given disparities, Court found that a judge could not
determine whether a “front line supervisor” was
managerial or non‐managerial without resorting to
evidence of individual employees
• Not sufficient commonality among class members to
permit the class action to proceed
13

14. Overview of CLC Requirements
• Standard hours are defined as 8 hours per day, 40
hours per week
• Overtime pay of 1.5 times “regular rate” owing for all
hours work in excess of standard hours
• Hours of work may also be averaged over a period of
2 or more consecutive weeks
• In such a case, overtime applies after exceeding the
standard hours in the averaging period
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15. Overview of CLC Requirements
• Modified work schedules are also permitted
• These include compressed work weeks and flexible hours of work
• For example, employees may be scheduled to work 10 hours per
day, 4 days a week
• Trade union agreement is required, or in a non‐union work setting,
the modified work schedule (or cancellation of the modified work
schedule) must be approved by at least 70% of the affected
employees
• Employer must post a notice of a new schedule, its modification or
its cancellation for at least 30 days before it comes into effect
• Overtime is paid after the approved daily or weekly hours (e.g. 4
days of 10 hours each, overtime is payable after 10 hours in a day
and 40 hours in a week)
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16. Overview of CLC Requirements
• Records must be kept for at least 36 months of hours worked
each day and all amounts paid for overtime
Exemptions from Overtime Requirements:
• Managers
• Superintendents
• Employees who exercise management functions
• Members of the following professions: architectural, dental,
engineering, legal, medical
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17. Overview of ESA Requirements
• Overtime pay of 1.5 times “regular rate” owing for all
hours worked in excess of 44 in a week
• No daily threshold
• Calculation of “regular rate” = total salary earned
divided by number of non‐overtime hours per work
week
• With consent, employer may provide 1.5 hours of
paid time off in lieu for each overtime hour worked
within 3 months of being earned (or within 12
months with employee consent)
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18. Overview of ESA Requirements
• Hours of work may also be averaged over a period of
two or more consecutive weeks for purpose of
determining entitlement to overtime pay
• Requires written agreement with employee
• Employer must have received approval for overtime
averaging from Director of Employment Standards
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19. Overview of ESA Requirements
• ESA requires employers to record the number of hours worked
by eligible employees in excess of regular work week, and the
number of hours in excess of eight (8) hours each day (or in
excess of the employee’s regular work day)
• Records must be retained for three years after the day or week
to which the information relates
• Proper employer records are critical to mounting a successful
defence to claim for unpaid overtime
• If employer has not kept proper records, ESO may make a
determination based on best available evidence (including
records kept by the employee)
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20. Overview of ESA Requirements
• Don’t forget to check your pay stubs!
• If employer records “regular weekly hours” on pay stub (or in
an employment contract), MOL may order payment for non‐
overtime extra hours worked by employees in excess of those
regular weekly hours
• Some payroll providers will automatically pre‐populate the
hours of work box with “regular hours” of 37.5 or 40 hours per
week
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21. Overview of ESA Requirements
• Note – use of “regular hours” may result in additional liability
for non‐overtime hours worked (up to 44 hours/week)
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22. Overtime Exemptions under ESA
• Because of remedial nature of ESA, exemptions to
overtime eligibility are construed narrowly
– Certain professionals (e.g. “qualified
practitioners” of law, architecture, medicine,
public accounting, professional engineering, etc.)
– Also includes “students in training” for these
professions
– Many industry‐specific exemptions
22

23. Overtime Exemptions under ESA
• Managers and supervisors: work is supervisory or
managerial in character and who may perform non‐
supervisory or non‐managerial work on an irregular or
exceptional basis
• Supervisory or managerial in character?
– Exercises discretion and independent judgment
– Degree of authority, judgment, discretion or decision‐
making power
– Title and position relative to other employees
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24. Overtime Exemptions under ESA
• Supervisory or managerial in character?
– Exercises financial controls or sets budgets
– Degree of access to confidential financial information
– Review job description and the tasks typically performed
by employee, including determining wage rates,
hiring/firing of employees, providing supervision or
direction to other staff
• Non‐supervisory or non‐managerial tasks may only be
performed on an “exceptional” or “irregular” basis
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25. Overtime Exemptions under ESA
• Information technology professionals:
– Employee who is “…primarily engaged in the investigation,
analysis, design, development, implementation, operation
or management of information systems based on
computer and related technologies through the objective
application of specialized knowledge and professional
judgment”
– Primary job duties must relate to information systems or
computer systems
– Must possess specialized knowledge and exercise
professional judgment in IT matters
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26. Approaches to Manage Overtime Liability
• Review and Update your Overtime Policy
– Reduce employee discretion around overtime hours by
requiring authorization and approval of overtime
– Review policy and any related forms to confirm that they
provide a mechanism to approve overtime after the fact
– Ensure that policy is clearly communicated in writing to
affected employees
– Note: while an employer cannot refuse to pay overtime
worked because it was “not authorized”, you can impose
discipline for failing to comply with policy
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27. Approaches to Manage Overtime Liability
• Review and Update your Overtime Policy
– Update your policy to address potential areas of “off the
clock” work, i.e., set clear expectations around checking
and responding to email when off‐duty
– Think about overtime liability when implementing remote
work arrangements, or issuing other devices that may
promote off‐hours work (i.e. iPads, BlackBerrys, other
PDAs)
– Regularly assess and balance employee workload
– Ensure that policy is consistently followed and enforced
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28. Approaches to Manage Overtime Liability
• Set Clear Guidelines for Overtime Approval
– Overtime policy should include clear written guidelines on
how to seek prior authorization for overtime
– Do not state that unauthorized overtime will not be paid
– Review policy and related forms to ensure that they clearly
provide mechanism for an employee to seek approval
after the fact where warranted
– Also include mechanism for individual assessment in other
emergency or unforeseen circumstances
– Ensure that managers and supervisors understand the
approval procedure, and are held accountable for it
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29. Approaches to Manage Overtime Liability
• Review Template Offers and Agreements
– When reviewing overtime policy, also update your
template offer letters and employment agreements
regarding hours of work
– Avoid use of “regular hours of work” language in
employment documents and on pay stubs
– This may create an obligation for the employer to pay
straight time for hours worked in excess of the “regular
hours of work” threshold
– Ensure that threshold for overtime pay is consistent with
statutory obligations
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30. Approaches to Manage Overtime Liability
• Check Exemptions Carefully, and Know the Rules
– There is no general exemption for salaried, white collar or
“professional” employees
– Overtime exemptions vary in each jurisdiction, so carefully
review the regulations that relate to your workforce
– Resist the temptation to be over‐reaching around specific
exemptions (i.e. managers/supervisors, IT professionals)
– Titles and pay are not determinative; you may need to
revise job responsibilities
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31. Approaches to Manage Overtime Liability
• Keep Proper Records of Hours Worked
– Comply with the record‐keeping obligations required
under applicable law
– Employers must have a complete and accurate record of
actual hours worked; if the employer did not keep proper
records then the “records” kept by employee may simply
be accepted
– Give employees an opportunity to sign off on actual hours
worked
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32. Approaches to Manage Overtime Liability
• Train your Managers and Supervisors
– Overtime liability will be triggered where an employer
requires or permits work to be done
– Ensure that managers set clear expectations around
checking and responding to email after hours or working
remotely on evenings/weekends
– Managers should be monitoring the work that employees
are doing, and properly balance workload
– An employee cannot waive or contract out of overtime
entitlements, even if they agree
– Avoid informal arrangements to provide increased
compensation, or bonuses, for additional hours worked
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33. Approaches to Manage Overtime Liability
• Use Paid Time Off in Lieu
– In appropriate circumstances and with employee
agreement, paid time off in lieu can be provided as an
alternative of overtime pay
– Paid time off in lieu can be attractive to employees who
are focused on quality of life or work‐life balance issues
– May be implemented in conjunction with existing
employer programs (i.e. summer hours, office closures
around holidays, etc.)
– Remember – 1.5 hours of paid time off in lieu must be
provided for each overtime hour worked
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34. Approaches to Manage Overtime Liability
• Use Averaging Agreements
– If an employee’s hours generally vary from week to week,
consider use of overtime averaging agreement
– Averaging agreements give employers scheduling
flexibility by revising threshold for overtime (i.e. 80/88
hours in two‐week period, 160/176 hours in four‐week
period, etc.)
– Employee must agree in writing (either as a stand‐alone
agreement, or in original offer of employment)
– Comply with statutory requirements around notice,
required approvals, etc.
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35. Approaches to Manage Overtime Liability
• Be aware of the Rules in Different Provinces
– Be aware of the different jurisdictions. If the employees
are in different provinces, remember that some provinces
have daily overtime thresholds in addition to weekly
overtime thresholds, and some jurisdictions do not permit
the use of time in lieu
– In addition, the excluded positions vary from province to
province
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36. Want Updates?
Check out FMC Law Blogs for HR Professionals…
Occupational Health & Safety:
www.occupationalhealthandsafetylaw.com
Human Resources Law:
www.employmentandlabour.com

37. The preceding presentation contains examples of the kinds
of issues companies dealing with Employment and Labour
matters could face. If you are faced with one of these issues,
please retain professional assistance as each situation is
unique.

38. Questions?
Anneli LeGault Blair McCreadie
(416) 863‐4450 (416) 863‐4532
E‐mail: anneli.legault@fmc‐law.com
blair.mccreadie@fmc‐law.com