Appeal court supports ruling that CIBC violated overtime obligations in class-action lawsuit

The court affirmed Justice Belobaba's judgement

Appeal court supports ruling that CIBC violated overtime obligations in class-action lawsuit
Louis Century and Steven Barrett are co-counsel for the plaintiffs.

The Ontario Court of Appeal has upheld a motion judge’s ruling that the Canadian Imperial Bank of Commerce (CIBC) breached Canada Labour Code overtime policies in a lengthy class action involving over 31,000 members.

The case confirms the law regarding an employer’s duty to pay overtime to workers and ensure all hours are recorded. It is the only unpaid overtime class action in the country litigated to the merits, co-counsel for the plaintiff, Louis Century says.

Century says the decision is a resounding vindication because CIBC went to great lengths to undermine Superior Court Justice Edward Belobaba’s decision. “Unlike other similar class actions where the bank defendants settled, CIBC chose to fight the case, and we now have a decision on liability on the merits, finding that the bank violated overtime law and a unanimous decision of the Court of Appeal firming that decision.”

Steven Barrett, another co-counsel for the plaintiff, says that ensuring that the class members get compensated for the unpaid overtime is the next step. He says Justice Belobaba’s decision opens the possibility of the plaintiffs quantifying unpaid wages through an expert methodology rather than coming forward individually.

“There’s a hearing on that issue scheduled for the end of September, but we’re hopeful that the bank will be willing to sit down and work out the payment for the CIBC employees unlawfully deprived of overtime pay rather than continuing to fight this case tooth and nail as they’ve done since 2007.”

Counsel for CIBC did not respond to Law Times’ request for comment.

Justice Belobaba granted summary judgement on liability and certified aggregate damages. He also decided that the class-wide limitations order was more appropriately handled at an individual hearing.

CIBC appealed Justice Belobaba’s decision in its entirety. The bank’s liability appeal argued that Justice Belobaba misinterpreted s. 174 of the Canada Labour Code and, in considering overtime policies and related practices, contravened the requirements and regulations of the code.

CIBC claimed its policies were developed in compliance with the Canada Labour Code to pay for required overtime and never intended to allow uncompensated work. They argued that Justice Belobaba ignored evidence in the labour code used to form the overtime policies in the employment contracts.

The appeal court agreed with Justice Belobaba’s analysis that while most arbitral decisions agree that s. 174 of the labour code imposes a positive duty on employers to prevent employees from actively working overtime hours, it does not conflict with employers’ right to manage the workforce.

“The risk of silence in the face of actual or constructive knowledge falls on the employer. The motion judge did not impose a duty on employers to compensate employees for overtime hours of which it was not aware because an employer cannot permit what it does not know.”

CIBC also argued that Justice Belobaba erred in deciding that the bank’s 1993 and 2006 overtime policies and record-keeping practices for tracking and compensating hours were institutional impediments to class members’ overtime claims, but the appeal court disagreed.

“When considering whether an employer’s policy or practice serves as an institutional impediment, the operative question is how employees were harmed by it. If the policy creates a systemic hurdle to appropriate compensation, then it operates as an institutional impediment.”

The appeal court upheld Justice Belobaba’s decision to certify aggregate damages, saying it was not yet clear whether statistical sampling was necessary to fill evidentiary gaps. “If it is used, the bank could challenge the result based on this ruling on the sampling methodology,” the court wrote.

In 2007, Dara Fresco started a class action against CIBC on behalf of 31,000 customer service employees who worked for the bank between 1993 and 2009. She claimed that two of the bank’s policies permitted employees to work overtime hours without appropriate compensation, contrary to the Canada Labour Code.

The bank argued that its policies aimed to stop unnecessary overtime from controlling costs and preventing overwork. However, Fresco opposed, saying that the bank got the economic value of overtime work without compensating employees.

Goldblatt Partners LLP, Roy O’Connor LLP and Sotos LLP represent the class, and a hearing is scheduled for Sept. 28 to determine the damages for unpaid hours.

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