CIBC faces massive overtime lawsuit

http://www.theglobeandmail.com/servlet/story/RTGAM.20070605.wcibcsuit0605/BNStory/Front

VIRGINIA GALT AND JANET MCFARLAND
From Wednesday's Globe and Mail
June 5, 2007 at 10:36 PM EDT

TORONTO - - Dara Fresco took a day off from her job as head teller at a Toronto branch of the Canadian Imperial Bank of Commerce [CM-T]Tuesday, dropped her toddler at daycare, and launched a $600-million class-action lawsuit against her employer.
Her action has the potential to affect tens of thousands of Canadians who routinely work hours of unpaid overtime and "should be of concern to all employers," according to a lawyer who has tracked the trend of multimillion-dollar settlements in the United States.
"It was only a matter of time before the trend moved into Canada," said employment lawyer Adrian Miedema, a Toronto-based partner with Fraser Milner Casgrain LLP. He made the observation after Ms. Fresco launched her legal action with the assistance of two other Toronto law firms.
Ms. Fresco, 34, has worked as a personal banker and teller at the CIBC for the past 10 years and is paid an annual salary of $30,715. She has recently been recognized by the bank for outstanding customer service, and she says she loves her job.
However, she said at a news conference, she and roughly 10,000 of her colleagues in front-line positions at CIBC branches across the country regularly work overtime for which they do not get paid.
"What is unfair is that my colleagues and I are rarely being paid for the overtime that we are working, and that's just not right," said Ms. Fresco, who calculates that she is owed $50,000 for unpaid overtime over the past decade.
Tuesday, as representative plaintiff, she filed a statement of claim with the Ontario Superior Court of Justice, alleging that the bank actively discourages employees from submitting claims for the overtime they are required to work.
If the court agrees to certify the case as a class action, it will be the largest lawsuit of its kind ever launched in Canada.
The bank, which has 30 days to file a statement of defence, issued a brief written statement yesterday.
"With respect to overtime, we have a clearly defined policy as to how we compensate our front-line retail branch employees that exceeds legislative requirements in Canada," the bank said, adding that it has only just received the lawsuit and will review it in detail before responding further.
"We believe it may establish a very important class-action precedent [in Canada]," said Douglas Elliott, a partner with Roy Elliott Kim O'Connor LLP, who is representing the CIBC employees along with Louis Sokolov of Sack Goldblatt Mitchell LLP.
Statistics Canada reports that more than 1.6 million Canadians worked unpaid overtime in April.
The lawyers representing Ms. Fresco said that while managers are excluded from overtime pay requirements in Canada, most other employees are protected by employment standards laws. CIBC employees are covered by the federal labour code.
Mr. Sokolov said the purpose of the law "is to prevent employers from using subtle, or not so subtle, pressure on their employees to volunteer their time in hopes of advancement … or fear of reprisal.
"We believe that unpaid overtime is widespread in many industries in this country … including financial services," Mr. Sokolov said.
Ms. Fresco said she is currently required to work an average of two to five hours a week in unpaid overtime. When she was a personal banker, she sometimes worked up to 15 hours in unpaid overtime a week, she added.
Overtime work is routine throughout the banking sector, former bank employees say, and demands to work unpaid time are exacerbated if individual bank managers try to keep costs low because their own performance bonuses are based on branch profitability.
David Soulis, a retired Royal Bank of Canada branch manager in Settings Port Hawkesbury, N.S., said many factors lead to frequent requirements for overtime work in banking, including possible discrepancies in cash balances that require after-hours recounts, or unscheduled cash counts for security purposes.
He said there are also frequent sales and staff meetings to explain new products or procedures, which must be held outside branch hours so all staff can attend.
"That's all extra time that is outside what the customer sees," he said. "There are a whole lot of other things behind the scenes that take place."
He said during his career he saw some managers who were "gluttons" who wanted to reap the largest possible annual bonuses - and branch profits are usually one factor in earning those bonuses.
"I went through 35 years of it, and I know there were times when management said, 'You can't have any overtime. You can get off an hour early some time or whatever.' But that 'some time' thing never happened."
Mr. Miedema notes that several major employers in the United States - including Wal-Mart, Starbucks, Taco Bell and Radio Shack - have been forced to pay massive retroactive overtime costs to employees.
The CIBC case will likely prompt many other Canadian employees to follow suit.
"People start to pay attention and say, 'Wait a minute. I have been working extra hours. Maybe I should file a claim for overtime,' " said Mr. Miedema, who represents employers in his law practice.
Employers are at risk, he said, if they do not comply with employment standards laws requiring them to pay eligible employees overtime at a rate of time-and-a-half after regular working hours. With a report from John Partridge