Written by Steven Barrett, Peter Engelmann and Louis Century, Goldblatt Partners, Co-Counsel to Dara Fresco and other CIBC Class Members along with David O’Connor and Adam Dewar of Roy O’Connor LLP and Louis Sokolov and Jean-Marc Leclerc of Sotos LLP.
IN 2007, Dara Fresco commenced a class action on behalf of some 31,000 customer service employees against the Canadian Imperial Bank of Commerce (CIBC). The claim alleged that the bank “required or permitted” its employees to work unpaid overtime in contravention of section 174 of the Canada Labour Code. It was one of the first unpaid overtime class actions in Canada. In the dozen or so years that followed, there have been many others. Until this week, not a single one had been determined on its merits, either on summary judgment or at trial.
On Monday, Justice Belobaba released his decision on liability issues in Fresco v CIBC Justice Belobaba found the bank liable for requiring or permitting uncompensated overtime to be worked by class members, and for failing to accurately record all hours worked by class members. He also found, in answer to a third common issue, that all of the uncompensated hours worked by class members were “required or permitted” by the bank, thereby triggering liability.
There will be a further hearing on remedy and damages, including whether aggregate damages should be ordered. The saga is not yet over. But Monday’s decision was a major step forward in vindicating the rights of thousands of customer service employees, and in affirming the viability of class actions as a tool for workplace justice. In this post, we review the decision and highlight seven aspects of note to employment and class action lawyers.
The Court determined what it means to “require or permit” an employee to work overtime
Under the Canada Labour Code (s. 174), an employer is liable to pay overtime where it requires or permits that overtime to be worked. A key issue turned on what it means to “permit” overtime. Consistent with prior caselaw, the realities of the workplace, and the remedial purpose of employment standards protections, Justice Belobaba interpreted “permit” to mean “allow” or “fail to prevent”.
According to Justice Belobaba, the Code imposes liability for overtime whenever it is permitted, even if it is not required or authorized. Moreover, an employer cannot simply look the other way when an employee is working overtime, and then claim the work was not required or permitted. And, significantly, an employer is liable for permitting overtime if it acquiesces by its failure to prevent.Notably, while the decision is based on the Code, Justice Belobaba also commented on similar language in Ontario’s employment standards legislation and regulations.
A strict pre-approval requirement is inconsistent with the obligation to pay for all hours that are “required or permitted”
CIBC had two overtime policies during the class period, which spanned from 1993 to 2009. The first policy, from 1993, required pre-approval of the employee’s supervisor or manager and “[t]here was no provision for any post-approval.”The second policy, from 2006, extended the pre-approval requirement for overtime claims and “added the possibility of post-approval but only under ‘extenuating circumstances’ and only if the post-approval was obtained ‘as soon as possible’ after the overtime work was performed.”Justice Belobaba held that both policies contravened the requirements in section 174 of the Code.He noted that there is nothing wrong with an overtime policy that proposes pre-authorization as the preferred corporate norm, provided that it is not a precondition for payment.
An employer must record all hours actually worked by its employees, not just those for which payment is sought
Section 24(2) of the Canada Labour Standards Regulations requires employers to record and retain “the hours worked each day” by their employees. Justice Belobaba said he had “no difficulty finding on the evidence before me that actual hours of work were not recorded.” He held that the bank “expected and directed” class members to write down their actual hours only on an exceptional basis, when they sought to be paid for overtime hours. But the overtime policy directed employees that they would not be paid absent pre-approval, and the timesheet where employees were to write down their hours “expressly repeats the pre-approval requirement.” Thus, “[h]ours worked that were otherwise permitted (not prevented) were not recorded and not compensated.” In failing to record actual hours worked, CIBC had “inaccurate payroll records which in turn made it impossible for all employees to be compensated in accordance with the Code.”
An employer cannot delegate the responsibility of enforcing its overtime policy to branch managers without direction or guidance
Justice Belobaba held that CIBC “delegated the interpretation and enforcement of its overtime policy to its more than 1,000 branch managers and did so without providing any guidance or direction.” He said there was no evidence of any direction to managers, at any time during the class period, to record all hours that were required or permitted. Similarly, managers were never directed or instructed on “how they can go about not permitting or preventing unwanted hours.”He held that a policy prohibiting overtime work, in the absence of a plan for recording and controlling hours worked, is “meaningless.”
The Court found that some class members worked uncompensated overtime, and CIBC had knowledge of the problem
Justice Belobaba held that “there is an abundance of evidence that some of the class members worked uncompensated overtime.” Further, he found “compelling evidence of actual or constructive knowledge” on the part of CIBC. This evidence included the results of the bank’s own internal employee surveys, in which employees complained about working unpaid overtime, despite not even being asked about this topic. Justice Belobaba dismissed the bank’s attempt to exclude the survey results as inadmissible hearsay, given (among other things) that this was “survey data that the bank itself requested and found to be reliable and useful.” Last year, Justice Belobaba similarly dismissed a privilege motion in which the bank sought to exclude certain “theme reports” that summarized the survey results and distilled them into themes. One such theme document, distilling the 2007 survey results, said: “Employees feel overworked and undervalued … Employees feel they put in too many hours and then are not recognized or compensated for it.”
Faced with knowledge of a potential overtime problem, an employer cannot simply “look the other way”
Where an employer has actual or constructive knowledge of uncompensated overtime being worked, it will be liable for “permitting” those hours unless it takes steps to prevent them. As Justice Belobaba found:
 The evidence shows that year after year, hundreds of class members complained that they were working unpaid overtime. The defendant bank had repeated notice that its “delegation” model was not working and did nothing in response. If an employer is told of the existence of numerous complaints about unpaid overtime, does nothing in response, and simply “looks the other way,” the employer is effectively permitting the employees to work overtime. A failure to pay attention to complaints about unpaid overtime “effectively permits” employees to work overtime pursuant to the Code.
Systemic unpaid overtime claims are amenable to summary judgment
Justice Belobaba agreed with the parties that the common issues could be decided in a summary judgment motion and did not require a trial. He said the analysis was largely documentary in nature, there were no credibility issues, and the extensive volume of materials filed by both sides did not preclude summary adjudication.Applying the test articulated by Chief Justice Winkler at certification, Justice Belobaba held that the bank’s policy and related practices were “systemic or institutional impediments” to overtime claims that were otherwise compensable under the Code.While CIBC put forward evidence of individualcompliance by some managers, such anecdotal evidence could not derail the evidence of systemic deficiencies.
While questions of remedy and damages have yet to be determined, Justice Belobaba’s decision on liability is a major victory for Ms. Fresco and the 31,000 front-line customer service employees she represents, and for other employee groups subject to similarly restrictive overtime policies.
Steven Barrett, Peter Engelmann and Louis Century, “CIBC Liable in Unpaid Overtime Class Action” Canadian Law of Work Forum (April 3 2020): http://lawofwork.ca/?p=12219
Fresco v Canadian Imperial Bank of Commerce,2020 ONSC 75.
Ibid at para 16, para 22.
Ibid at para 17.
Ibid at para 19. Employment Standards Act 2000,S.O. 2000, c. 41. When Work Deemed to be Performed, Exemptions and Special Rules,O. Reg. 285/01, s. 1.1(1)(a)(i).
Ibid at para 29.
Ibid at para 34.
Ibid at para 39.
Ibid at para 51.
Ibid at para 54.
Ibid at para 55.
Ibid at para 55.
Ibid at para 81.
Ibid at para 82.
Ibid at para 82.
Ibid at para 82.
Ibid at para 77.
Ibid at para 83.
Ibid at para 66.
Ibid at para 68.
Fresco v CIBC,2019 ONSC 3309.
Fresco v Canadian Imperial Bank of Commerce,2020 ONSC 75 at para 75.
Ibid at para 2.
Ibid at paras 9, 38, 92. The Court of Appeal’s certification reasons are reported as Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444.
Ibid at paras 9, 45, 59.