Scotia Bank was in the news yesterday after it reported almost a billion dollars in profit for the first quarter of 2010! Of course, one way to make a profit is to get your workers to work long hours and 
not pay them for it. Which brings me to the second reason Scotia Bank has been in the news lately. It failed recently in its attempt to block a class action complaint from being certified by the courts. In Fulawka v. Bank of Nova Scotia, an Ontario court certified the class action on behalf Scotia Bank’s personal banking officers, financial advisors, and small business account managers for unpaid overtime under the Canada Labour Code. A different judge of the same court refused to certify a similar action against CIBC last year, so the Scotia Bank decision is a bit of a surprise. I posted the pleadings and the decision in that case last summer.
Both the CIBC (the bank won) and the Scotia Bank (bank lost) are being appealed, and it is very probable that the issue of the certification of a class action for unpaid overtime will end up before the Supreme Court before this is all done. The banks have the money (see profit story above) to draw out this litigation for years and years, and they probably will.
I can’t describe the new Scotia Bank decision any better than Jeffrey Sack and our friends at Lancaster House publishing, so take a look at their excellent summary of the case here.
So far, the parties have only been fighting about whether the employees can bring one representative lawsuit on behalf of all of the employees who claim they were not paid for overtime. The question of whether the employees actually did work overtime for which they were not paid has not yet made it before the court. Of course, any individual employee could bring a personal claim for overtime pay at any time. But virtually no employees make overtime pay claims against their current employers. Why do you think that is? For my employment law students, why is it so important for the employees that they be able to bring their overtime claims forward as a collective, rather than individually?
The judge in Scotia Bank was clearly not impressed with the employer’s argument that overtime needed to receive pre-approval from management, since in his view, the law is clear that overtime pay must be paid whenever someone works overtime. Of interest is his comments about the vulnerability of workers:
While an employer certainly has the right to protect itself against unrequested and unwanted overtime hours, it is arguable that the balance of power in the workplace is such that the protection of the employee against working unpaid hours should be the paramount consideration. It is also arguable that the employer has a responsibility to design, implement and enforce overtime policies and procedures on a system-wide basis to prevent abuses.
In other words, an overtime policy that puts the onus on workers to obtain prior approval for overtime in order to complete work the employer expects them to complete ignores the fact that employees will be concerned that their requests for overtime will be looked upon unfavourably by their managers and could effect their job security. An alternative model would put the onus on employers to not permit workers to work overtime–i.e. to order them to go home to their families–or to pay them for any hours worked.
A theme in these bank overtime cases is that there is a systemic HR policy that at once tells employees they can’t work overtime, but at the same time tells them they shouldn’t leave the workplace until all of their work is done. The claim is that the bank managers know the employees are working overtime, but they pretend that the workers are doing so without authorization or because they are just volunteering to stay a bit late. The Canada Labour Code (section 174) is very clear that overtime is payable whenever an employer is “required or permitted to work” overtime.
What do you HR experts/students think about these cases? Have the banks acted properly in their handling of employee overtime?
UPDATE: Scotiabank Loses Bid to Overturn Certification of Class Action.