Law Times

Law Times • apriL 12, 2010 FOCUS PAGE 11 Employers warned about 'gang wagon' of cases Businesses should be proactive in heading off employee claims, lawyer says BY ROBERT TODD Law Times be facing more litigation over overtime policies, a lawyer is warning. "When one [action] is brought A in, the rest of the plaintiff s' bar goes sniffi ng, and rightfully so," says Heenan Blaikie LLP employ- ment law partner Jonathan Dye. "Th at's the way they've always de- veloped these things." Dye notes that while unpaid overtime class actions such as Fresco v. Canadian Imperial Bank of Commerce and Fulawka v. Bank of Nova Scotia are getting plenty of attention, it's too early to declare a "massive rash" of such litigation. But he suggests many more cases could come about if employers aren't careful. "Like all class actions areas, there's a gang- wagon approach to things." Harrison Pensa LLP man- aging partner and class action lawyer David Williams notes there's good reason for employ- ers to take these cases seriously and consider their internal pol- icies accordingly. "No employers want this kind of lawsuit because you're not being sued by strangers that say there's some breach committed somewhere out in the fi eld somewhere," he says. "Th ese are your employees that work for you on a daily basis." Louis Sokolov, a Sack Gold- blatt Mitchell LLP lawyer, has been part of several unpaid over- time claims, including the CIBC and Scotiabank cases — both launched in 2007 by his fi rm and Roy Elliott O'Connor LLP — and a 2008 action against the Canadian National Railway Co. Sokolov divides unpaid over- time class actions into two streams. Th e fi rst involves so-called "off - the-clock" cases, where the issue "gang-wagon approach" to class actions could mean businesses will is whether workers have received compensation for overtime work hours. Th e second variety, known as misclassifi cation cases, gener- ally involve the issue of whether employers have wrongly catego- rized certain workers as manag- ers, which precludes them from collecting overtime pay. In off -the-clock cases, such as the CIBC and Scotiabank lawsuits, Sokolov says ques- tions have arisen as to whether the employer's compensation policies and time-tracking sys- tems should be factors when deciding common issues lead- ing to certifi cation. Th e banks have argued that these cases are inherently individual and not suitable to class actions. Th e courts have taken diff er- ent approaches to this question, Sokolov notes. In the CIBC case (an appeal of which is currently on reserve), Superior Court Jus- tice Joan Lax ruled against certi- fi cation, saying the claims were individual in nature. In the Sco- tiabank case, Superior Court Jus- tice George Strathy determined the claims were systemic and chose to certify the class action. In the second category of cases, the main question is whether the courts can consider the classifi cation of employees on a class-wide basis or wheth- er they must account for each individual's circumstances, says Sokolov. Th e certifi cation mo- tion for the CN lawsuit is set to take place in July, after which more information on how the courts may deal with this type of unpaid overtime class action will likely come forth. Meanwhile, Dye says em- ployers should be taking ac- tions to make sure they're not caught up in the trend. Th e fi rst and most obvious step is to make sure they're compliant with relevant legislation, such as the Canada Labour Code. "Th ere may very well be It's back Canadian Lawyer's 2010 LEGAL FEES SURVEY Fill out our short survey for a chance to win a Motorola H790 Bluetooth Headset. 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THOMSON, ROGERS Barristers and Solicitors 416-868-3100 Toll free 1-888-223-0448 www.thomsonrogers.com YOUR ADVANTAGE, in and out of the courtroom some employers out there who either intentionally or unintentionally are simply not complying with whatev- er the statutory requirements happen to be," says Dye. "It's no rocket science there." Employers should also be taking note of the type of businesses facing the exist- ing unpaid overtime class actions. He suggests it's not surprising that banks are un- der attack as they're among the largest private-sector employers in the country. Th ey're also federally regu- lated, national entities. "Th ey're the easy pickings," says Dye. "If you can fi nd the class within them, you've got your biggest potential under one piece of legislation that goes across the country." Dye attempts to ease em- Keeping records of hours worked is key to defending class actions, says Jonathan Dye. ployers' concerns by suggest- ing that those who have been compliant with the legislation and keeping adequate records are unlikely to face a certi- fi ed class action. Companies that haven't been keeping a close enough eye on employee overtime — or that don't know if they've been following prop- er procedures — should think about commissioning an audit, he says. "It's an easy fi x if you bother to do it. A lot of companies — particularly the smaller ones, I would guess — maybe aren't going through the exercise of making sure their records are as accurate as they can be." But as Dye notes, wilful blindness isn't an acceptable policy. "Th e thing that they have to know and keep in mind is that it's all up to them. Th ey have all of the responsibility for record keeping." Dye points out that when someone goes to court with claims of unpaid overtime, the Employment Standards Act forces the employer to off er records indicating the overtime hours the worker has contributed as well as proof it has paid the em- ployee for it. If it hasn't re- corded the hours worked, the employer has no evidence to contradict the employee's ac- cusations. "Or at least you don't have the documentary evidence that you are required to have by stat- ute, which puts you in a massive defi cit in terms of being able to defend a claim," he says, adding that in many cases, the "tie goes to the employee." LT Trust [ Every time you refer a client to our firm, you're putting your reputation on the line. It's all about trust well placed. Untitled-3 1www.lawtimesnews.com 4/6/10 10:00:06 AM

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