A class action lawsuit involving overtime payments has been certified between an investment adviser and his former employer, BMO Nesbitt Burns.
Yegal Rosen and fellow advisers claim that under Ontario’s Employment Standards Act even commissioned employees are entitled to overtime.
The action involves about 1,500 current and former investment advisers. It’s the first “misclassification” case to be certified in that it involves employees who claim they were wrongly classified as being ineligible for overtime. The allegations must still be proven in court.
“It’s nice to say at the certification stage: ‘Well, we’re certified,’ but then you have the actual evidentiary process and how do you prove your hours?” says William Gale, an employment lawyer with Grossman Grossman and Gale LLP.
“One of the things that arises in this case is the nature of these employees — they’re on the provincially regulated stock broker side of the business as opposed to the federally regulated bank business so that allows them to come in under the Employment Standards Act and the overtime provisions in it,” says Gale. “At the end of the day, conceptually, I don’t know why it wouldn’t apply because wages under the ESA are defined as salary, commissions, and bonuses — any type of pay for services rendered.”
An employee is exempt from the overtime protection provided in the ESA in two situations: if the work is “supervisory or managerial in character” or if the employee falls within the “greater benefit” exemption.
In his decision, Ontario Superior Court Justice Edward Belobaba noted: “Nesbitt will be obliged to pay overtime under the ESA unless it can establish one of the two above-noted exemptions: that is, the ‘managerial’ exemption or the ‘greater benefit’ exemption.”
“This is why a proposed class action for unpaid overtime allegedly owing to investment [advisers], most of whom never even thought about overtime claims because of the opportunity to earn high incomes, may nonetheless be legally tenable,” wrote Belobaba.
For its part, Nesbitt argues the investment advisers should be exempt because they manage their own business and their overall autonomy and potential for high earnings “provides greater benefit than overtime pay.”
Rosen provided affidavits indicating he worked 60 to 80 hours a week between 2002 and 2006 at the Nesbitt Burns branch in Thornhill, Ont., but was never paid overtime. In Ontario most employees are due overtime if they work more than 44 hours a week.
“I hear that a lot as an employment lawyer from employees who come in and then I ask them if they realize how much time that is. That’s about 14 hours a day for six days to get to 80 hours a week. I think people tend to overreach in terms of describing their workweek. They’ll have to prove that,” says Gale.
For employers looking to avoid overtime claims similar to Nesbitt Burns, a good first step would be to implement a clear overtime policy in keeping with the Employment Standards Act, says employment lawyer Parisa Nikfarjam of Rubin Thomlinson LLP.
However, having a policy is not enough if an employer does not bring it to the attention of its employees, and doesn’t apply it consistently.
“Even having a policy and educating employees on it will only go so far,” says Nikfarjam. “Employers looking to avoid overtime claims can no longer be passive, and simply rely on their policy.”
Instead, they need to take an active role by having employees sign off on overtime claims, maintain accurate records of the hours worked by employees, and manage employee workload to minimize the frequency of overtime hours.
Corporate counsel may want to try and establish overtime limits via contracts to ensure employees who are on commission and more inclined to work long hours to limit the hours they work, Gale says.
Where overtime is a frequent reality for a company, Nikfarjam says employers can also consider an averaging agreement, where the employer and employee agree to effectively override overtime by having overtime come into play only when more hours than an ordinary weekly average are worked over two weeks or more.
“This needs to be done carefully, ensuring compliance with any employment standards rules and regulations,” says Nikfarjam.
In March, two lawsuits filed on behalf of thousands of CIBC and Scotiabank employees were cleared to go ahead after the Supreme Court of Canada said it would not hear the banks’ appeals.
As more overtime cases are brought forward by different types of employee groups it is likely there will only be more in the future, Nikfarjam says.
“With the successful certification of overtime class actions, like this case, I think employees and their counsel may now view class actions as fertile ground for seeking remedy for unpaid overtime hours,” she says.
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Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce were “off the clock” cases, where the plaintiffs said they were eligible for overtime but it was not recognized and paid by the employer. Dara Fresco filed the case on behalf of bank tellers and other customer service employees, while Cindy Fulawka filed on behalf of personal or senior bankers, advisers, and small business account managers.
Brown v. Canadian Imperial Bank of Commerce was another misclassification case where the plaintiffs said they were wrongly classified as being ineligible for overtime. It involved analysts and investment advisers working for CIBC World Markets, also provincially regulated. Justice George Strathy refused to certify the action in Brown because he was satisfied there was a sufficient similarity in job functions — it included branch managers who held managerial positions.
Jennifer Brown is the editor of Canadian Lawyer InHouse magazine. She can be reached at firstname.lastname@example.org.
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