Wednesday, June 13, 2007

CIBC Class Action

The big news in employment law recently is the class action suit against the CIBC for unpaid overtime. The suit, launched on behalf of a class of 10,000 employees by labour law firm Sack Golblatt and Mitchell and class action frim Roy Elliot Kim O'Connor, seeks $600 million in damages based on hours worked in overtime but not paid.

In Canada, employment law is governed by both the federal and provincial legislative regimes. Most employers are governed by provincial legislation; however, those which fall within the federal jurisdiction include the banks. Thus, they are governed by the Canada Labour Code. Section 169 of the Code puts the maximum number of hours in a day at 8 and in a week 40. Section 174 requires that hours worked in excess of the maximum be paid at the rate of one and one half times the regular rate. The employer may apply for extensions on the maximum hours and may be able to average hours of work over a period of time. There are also exclusions of certain classes of employees from these provisions. Provinically, the exclusions are extensive; however, on the federal level it is quite restricted.

Absent a defence on those grounds, the CIBC might be able to point to employment contracts which have included the overtime; however, this seems quite unlikely (I have reviewed many of their contracts and have never seen such a clause). The bigger issue at this point will be whether or not the class gets certified. What this means is that the court must approve the action proceeding as a class rather that as individual lawsuits. In two similar cases against Wal Mart in the United States, one court allowed the class action (Missouri) and one did not (New York). There have also been other similar actions against Wal Mart in other states. In New Jersey the court commented on the rationale for certifying the class: "By equalizing adversaries, we provide access to the courts for small claimants. By denying shelter to an alleged wrongdoing defendant, we deter similar transgressions against an otherwise vulnerable class." This point is critical because it is unlikely that individuals will pursue the Bank for small amounts owing.

Although the market appears to be recovering, the share stock of CIBC dropped by approximagely 2.5% when the suit was announced. This would represent a value in excess of the $600 million being claimed.

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