As I noted in my post two days ago, the Ontario Superior Court refused to certify an unpaid overtime class action lawsuit against CIBC by its employees. Fresco v. Canadian Imperial Bank of Commerce, 2009 CanLII 31177 (ON S.C.).

The claim for unpaid overtime alleged that CIBC's Overtime Policy (the "Policy") contravened the Canada Labour Code ("CLC') in two key ways:

1. it required that employees receive approval in advance from a manager in order to be compensated for overtime hours worked, unless there were extenuating circumstances and approval was obtained as soon as possible afterwards; and
2. it provided paid time off at the rate of 1.5 in lieu of monetary compensation, at the option of the employee.

Canada Labour Code overtime provisions

Subject to certain exceptions, the CLC requires employers to pay overtime at a rate of wages not less than 1.5 times the employees regular rate when the employee is "required or permitted to work in excess of the standard hours of work" (sec. 174). The CLC further provides that the standard hours of work are 8 in a day and 40 in a week (169).

CIBC's pre-approval requirements

The plaintiff alleged that the Policy was unlawful in that it required that employees receive approval in advance from a manager in order to be compensated for overtime hours worked, unless there were extenuating circumstances.

In finding that the pre-approval requirements in the Policy were not unlawful on their face, the court noted:

• Section 174 of the CLC permits employees to exceed the maximum hour thresholds in section 169, only where the employer has "required or permitted" the work. As such, the very language of the CLC contemplates the employer's right to pre-approve overtime (para. 29).
• A pre-approval requirement is in fact a way to ensure that an employer complies with section 171 of the CLC, which states that the total hours worked by an employee in any week shall not exceed 48 hours (para. 29).
• The fact that unapproved overtime was permitted, in breach of the Policy, and was subsequently not paid, in breach of the CLC, does not make the Policy or its pre-approval requirement illegal (para. 32).

In relation to the overtime provisions in the CLC generally, the court noted:

• Employers are required to pay for non-pre-approved overtime where, as a factual matter, the manager required or permitted overtime to be worked (para. 30).
• Where an employer's overtime policy contains a provision that requires prior authorization, the employee is not entitled to work overtime hours at the employee's own initiative and then claim entitlement to overtime pay (para. 31).

Time off in lieu provisions

The plaintiff alleged that because section 174 of the CLC provides that overtime work "is to be paid" it is not plain and obvious that time in lieu is permitted under the CLC.

In finding that the "time in lieu" provisions in the Policy were lawful, the court stated:

• Although many provincial employment standard statutes explicitly allow employers and employees to agree to time off in lieu, the CLC does not explicitly address this alternative (para. 34).
• Pursuant to section 168 of the CLC, the overtime provisions in the CLC can be superseded by arrangements that provide better rights or benefits to the employee. That is, where an employment contract is more beneficial to an employee than the rights under Part III of the CLC, the contract will govern.
• There is a compelling argument to be made that time in lieu on its own, at the rate of time and a half, is at least as favourable a benefit as wages at the statutory rate (para. 39).
• Regardless, the Policy offers a more favourable benefit because it offers employees a choice between wages at time and a half, and time off in lieu at time and a half.
• As noted in previous case law, time in lieu provisions are lawful if:
  
  • the employee chooses and consents to having overtime work compensated by way of time in lieu;
  • the time in lieu is provided at the rate of time and a half; and
  • the policy contains a "winding up" provision that allows an employee to "cash out" his or her banked overtime at reasonably regular intervals.