An Increase in Class Action Lawsuits Against Employers30-Jun-11
It is clear from talking to our colleagues in the United States that one of the most active areas of employment law there today involves class action lawsuits against employers. You have probably heard about several high-profile class action lawsuits in the U.S. alleging discrimination in employment. A claim against Wal-Mart was recently decided by the U.S. Supreme Court. This class-action trend is moving north as Canadian jurisdictions have relaxed their class action requirements.
An early group of class action cases has involved cases against the chartered banks seeking overtime. Most recently, the Ontario Divisional Court upheld a lower court decision certifying a class action against the Bank of Nova Scotia (Scotiabank) on behalf of more than 5,000 retail branch employees for $300 million in unpaid overtime. The Court ruled that there are sufficient common issues to allow the action to proceed on a class-wide basis rather than requiring that it be litigated on an individual basis. This decision is in sharp contrast with a decision about a year ago by a different panel of the same court in an action against the CIBC. Both decisions are headed to the Ontario Court of Appeal so the legal position should become clearer in a few months.
Certification is the first significant step in a class action. It means that the employees do not have to sue separately, and go through the expense of an individual trial. Instead, one lawsuit can be brought on behalf of a group of people whose cases raise common issues; lawyers are paid fees typically based on a percentage of the amount recovered; and members of the class (apart from the representative plaintiff) do not have to pay the other side's legal costs. McLennan Ross has been involved in many of these cases. There are several other law firms who promote these actions on behalf of plaintiffs because there is profit in taking a percentage of the large amounts that can be recovered. For that reason alone, we can expect to see a lot more of them in the future. They will cost employers a lot of money in years to come.
These bank cases also stand as a warning to employers, especially those under federal jurisdiction like banks where the “management” exclusion is interpreted most narrowly, that very few workers are actually exempt from the entitlement to overtime pay.