E7

Howard Levitt

Stumble Upon

del.icio.us

Digg

Facebook

Print

Email

Speak Up

Three Canadian employers are at risk of having to pay more than $1 billion in the three largest Canadian employment law class action cases. And there are many more. Every action by employers, however legitimate, that affects a large group of their employees opens the door to class-action proceedings.

Legitimate downsizings, large-scale wage cutbacks or group termination for any cause places employers at risk. Just to name a few, on the Monday following the explosion at a Sunrise Propane facility in Toronto, at least four separate class actions were filed.

In a separate case, my employment law group was approached to start a class action on behalf of 160 Ford employees whose job offers were revoked as result of the company's economic woes.

It's a new phenomenon: Roving groups of lawyers searching for corporate conduct deleteriously affecting large groups of employees quickly move to find one employee willing to start a class action on behalf of all.

Many of these lawyers have little or no expertise in employment law.

Imagine yourself a newly minted, essentially unemployed lawyer starting your own practice. If you commence a class-action proceeding, you can charge a third of the total damages, virtually making your entire career in one claim. The incentive is difficult to resist. What do you think CIBC, which is being sued for $600 million on behalf of 10,000 present and former employees, would have been prepared to settle for even one month after it was launched and little legal work performed?

Which is why, unless the courts dramatically limit the scope or conditions precedent for class actions, the country will see a dramatic increase in them. In the past decade, many U.S. corporations have chosen to pay large settlements rather than face the prospect of ruinous jury awards. So-called white-collar class actions have led to hundreds of millions of dollars in awards, many of which are mostly from settlements.

The common thread in the U.S. class action cases, as it will be in Canada, has been that employees are misclassified as managerial (who are exempt from overtime) when they are not managers, or alleged to be professional (some professions are exempt from overtime).

Although many of these employees are not specifically asked to work overtime, they are assigned so much work the employer implicitly has required longer work hours. When an employer supplies employees with BlackBerrys and employees are e-mailed outside of working hours by their employer, customer or supplier, they are implicitly being asked to perform extra work. Worse, there is an electronic record of those hours.

Subject to limited exemptions, nonmanagerial employees must be paid time and a half after working eight hours in a day in the federal jurisdiction, 44 hours in a week in Ontario and at differing maximums in other provinces. Whether or not someone is classified as a manager does not exempt that employee from being entitled to overtime pay unless he or she actually spends their full time managing employees. Possessing some managerial duties is insufficient and title or classification, entirely irrelevant. Overtime applies to all employees; casual, temporary, part-time, students and even to contract workers.

The biggest area of dispute and opportunity for class action is the permissive environment of many Canadian companies. To avoid paying overtime, employers cannot "permit" employees to work overtime.

I instruct clients to adopt a uniformly circulated, preferably signed, policy, stating employees are not permitted to work overtime without written consent from management. But even this is insufficient to avoid liability. If employers assign projects that realistically require overtime to complete, they clearly have "permitted" overtime and damages will be assessed accordingly.

In a future column, I will provide strategies to avoid overtime class-action claims.

Howard Levitt, counsel to Lang Michener LLP, is an employment lawyer who practises in eight provinces and is author of several texts, including The Law of Dismissal for Human Resources Professionals, recently released. He can be reached at hlevitt@ langmichener.ca.