Employers should pay heed to court ruling on overtime

By Tony Poland, LegalMatters Staff • A recent appeal court ruling in a protracted class-action lawsuit on overtime and record-keeping practices should prompt employers to reassess their workplace policies, says Toronto employment lawyer Ellen Low.

In February, the Ontario Court of Appeal (OCA) upheld a lower court ruling that the Canadian Imperial Bank of Commerce (CIBC) breached Canada Labour Code (CLC) overtime policies. The case, which was launched in 2007, involved more than 31,000 customer service employees.

In Fresco v. Canadian Imperial Bank of Commerce, the OCA upheld a motion judge’s ruling that found the CIBC liable for allowing employees to work uncompensated overtime hours and for failing to record those hours.

“This case hit my radar when I first started practising in employment law,” says Low, principal of Ellen Low & Co. “It is a significant decision for federally regulated employees and frankly, anybody who is provincially regulated as well. I believe there will be some practical carryover between federal and provincial sectors when considering overtime thresholds and an employer’s obligation to actually prevent people from working excess hours.

‘Overtime is such an important issue’

“What is fascinating is that this decision doesn’t seem to be getting much attention,” she tells LegalMattersCanada.ca. “Overtime is such an important issue and it comes up regularly. It is unusual to have a class-action overtime decision. It is interesting not only because of the sheer volume of people who worked in the bank at some point but also because of the way in which the Canada Labour Code has been interpreted.”

The class action was filed on behalf of front-line employees who worked at the bank from 1993 to 2009. The main thrust of the plaintiff’s argument was that CIBC’s record-keeping and overtime policies contravened the CLC and, as a result, thousands of workers did not receive the compensation they had earned.

Low, who is not involved in the case but comments generally, says the central issue in the case was the interpretation of s.174 of the Canada Labour Code, which states employees are “entitled to be paid for the overtime at a rate of wages not less than one and one-half times their regular rate of wages; or be granted not less than one and one-half hours of time off with pay for each hour of overtime worked.”

“Most of the time interpretations are relatively narrow when it comes to the legislation,” she says. “But what is really fascinating is in this decision is that the Ontario Court of Appeal effectively upheld an expanded interpretation.”

Low points to a key section of the OCA ruling which states, “The motion judge accordingly restated the standard under s. 174 as: ‘When an employee is required or allowed to work or is not prevented from working in excess of the standard hours of work, the employee shall be paid for the overtime at a rate of wages not less than one and one-half times his regular rate of wages.’ We accept the motion judge’s interpretation of s. 174, which is well-supported by the case law.”

‘Employer needs to take more proactive steps’

“That, to me, implies the employer needs to take more proactive steps to actually prevent the employee from working excess hours rather than just tacitly permitting or even allowing them to do so,” she says. 

Low says the ruling could help balance the scales when it comes to overtime hours.

“There can be a problem when an employer puts significant pressure and timelines on employees to get things done within a certain timeframe. By its very nature, this necessitates overtime work. But then the employer refuses to pay or disincentivizes or threatens the employee from even logging those hours,” she explains. “You’re doing all this extra overtime work and not getting paid.

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“There has been a historical imbalance of bargaining power when there is pressure on the employee to get that work done then the employer is, at least tacitly, if not expressively, advising that it has to be done while telling those employees that they cannot log those hours,” Low adds.

It will be interesting to see what impact the judgment has moving forward, she says.

Impact of judgment remains to be seen

“For example, will it have an effect on the remote work environment? Does it have any bearing on the right to disconnect and other issues when working from home?” Low asks. “When people are working remotely, they have the ability to log in to do their job anytime. To me, being able to log in would indicate you are allowed to work after hours in your own home. 

“Does this mean the employer will need to take more proactive steps to prevent the employee from working in access hours? Does the employer need to cut off such things as email to stop someone from working extra hours?”

She says only about six percent of workers are federally regulated but she expects this ruling “will no doubt lead to more scrutiny about overtime and more questions about entitlement.”

Low says she strongly advises employers to take steps to appropriately log hours and payments of overtime to avoid future litigation.

“It is very likely this decision will be getting more attention and more questions with respect to overtime threshold and entitlements,” she says. “Employers should be reviewing policies to determine whether they are significantly proactive in dealing with overtime and the prevention of overtime. 

“I anticipate employers would require a minimum policy statement informing employees of the overtime rules. Then I would query whether there are other steps that the employer has to take to actually prevent the employee from working excess hours,” Low adds. “If employers have concerns about their obligations, they should seek competent legal advice.”