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Overtime Pay Case 12 Years in the Making a Big Win for Non-Unionized Employees
Employment Law

Overtime Pay Case 12 Years in the Making a Big Win for Non-Unionized Employees

In June 2007, a representative Plaintiff named Dara Fresco commenced a class action on behalf of some 31,000 customer service employees who had worked for CIBC between 1999 and 2009. The claim was titled Dara Fresco v. Canadian Imperial Bank of Commerce. It was eventually certified by the Court of Appeal for Ontario. Ms. Fresco’s central claim was that CIBC’s overtime policies and record-keeping systems contravened the Canada Labour Code (the “Code”) and, as a result, thousands of front-line bank employees were not compensated for the overtime hours they worked.

Section 174 of the Code provides that when an employee is required or permitted to work overtime, they are entitled to be paid for that work at a rate of not less than one and one-half their regular rate of wages. The Code regulates federal undertakings like banks, though the provincial employment standards legislation, the Employment Standards Act (the “Act”), contains parallel provisions.

On the evidence before him, Justice Belobaba found that a rampant “look the other way” culture respecting unpaid overtime proliferated through the bank’s daily in-branch operations. Justice Belobaba also found that actual hours of work were not recorded (which was a systemic deficiency that contravened the Code) and that the bank breached its overtime obligations as prescribed by federal labour law. Accordingly, the Plaintiff established liability and was successful on the merits of the case. The decision on damages is yet to be released.

CIBC’s practice was to approve overtime hours worked before the hours were required to be worked. However, per affidavit evidence, employees were discouraged from filing timesheets that recorded overtime that was not pre-approved. Employees were also afraid of claiming overtime for fear that this would adversely impact their employment/advancement at the bank. Further, overtime hours worked often arose from unpredictable circumstances. Accordingly, “pre-authorizing” overtime hours proved to be unrealistic and unworkable.

“Unapproved Overtime”

The decision confirms the state of the law as it pertains to overtime pay. Most importantly, employers are not legally permitted to withhold pay for overtime hours worked. If an employee works overtime, they must be paid for that time. Though in CIBC’s case the overtime hours worked had to be approved, such a requirement does not preclude employees from being paid “unapproved” overtime hours. These overtime hours are still rightfully owed to the employee. An employer can only prevent future unapproved overtime by putting deterrence systems in place, such as progressive discipline for employees who work unapproved overtime.

Employer Conduct Deemed to “Permit” Overtime Pay

The case also reaffirms that an employer’s failure to keep track of hours worked by employees “effectively permits” employees to work overtime. An employer is liable for permitting overtime hours if it knew or should have known that overtime hours were being worked and failed to take steps to prevent the work. Further, a failure to pay attention to complaints about unpaid overtime “effectively permits” employees to work overtime under the Code.

Takeaways

Non-managerial employees should keep detailed track of all their hours worked in any given week. If overtime hours are either required or permitted by the employer, the employee should be paid for this work, and that should be the end of it. If a “look the other way” culture pervades at the workplace in question, and the employee feels that invoking his or her right to overtime pay could result in salutary consequences, an employee should keep detailed track of his or her overtime hours. This record could be useful should the employee seek wages owed to them by making a claim with the relevant tribunal. Note that the Ministry of Labour can only award damages for unpaid overtime wages where the claim was filed within two years of the date those wage were initially due.

For employers, choosing to “look the other way” regarding overtime pay can have onerous consequences. The best strategy is to acknowledge and enforce reasonable policies. Employers should maintain a tracking system for the hours worked by their employees. Employers who fail to keep track of hours worked and who fail to investigate unpaid overtime complaints will be deemed to have permitted the overtime hours claimed by employees.

Further, an employer cannot simply withhold an employee’s payment for overtime hours worked without approval. In such cases, the employer should have a clearly written policy stating that unapproved overtime hours worked can result in reprimanding the employee and act on the policy at first signs of infringement.

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