Legal experts are lauding a settlement reached in an overtime class-action lawsuit concerning unpaid overtime that was launched against Toronto-based Bank of Nova Scotia. The settlement is viewed as being fair and an example of how other financial services institutions should handle similar complaints. This case also should serve as a reminder to such firms that they should review their overtime pay policies to head off potential difficulties.
Ontario Superior Court Justice Edward Belobaba wrote that he agrees “with both the representative plaintiff and class counsel that the settlement is an excellent and creative resolution to this litigation” in his reasons for approving the settlement between the bank and an estimated 15,000 employees who were included in the class action. The settlement is viewed positively across the board, in large part because of its simple claims method.
As part of this method, current and former Scotiabank employees – including personal-banking officers, senior personal-banking officers, financial advisors and account managers for small businesses – can claim unpaid overtime going back 13 years, depending on the province in which they live.
To make a claim, employees can submit their claims to the bank; documentation is not required but should be presented if available. The bank then will evaluate each claim and will reduce or reject it only if there is documentary or sworn evidence stating why. If an employee rejects a claim settlement, an independent arbitrator, paid for by the bank, will decide the appropriate amount. Claimants have until Oct. 15 to make their submissions.
“I’ve been asked several times whether this settlement is fair to everyone, and I’ve said consistently that it is,” says David O’Connor, partner of Toronto-based Roy O’Connor LLP, who represented the plaintiffs. “It is, in fact, the bank agreeing to pay for hours that [employees] should have been paid for – and it has agreed to do that with a very streamlined process. In some ways, I salute Scotiabank for doing that.”
Scotiabank views the settlement as part of its ongoing commitment to pay employees or provide time in lieu when they work overtime. According to an emailed statement from the bank: “We value each employee and know that their contributions are an integral part of our ongoing success.”
The total amount of the claims will not be known until the process is complete; however, the plaintiffs’ lawyers estimate it to be $95 million. While the bank did not cite a specific amount, the bank has stated that it does “not consider the settlement to be financially material.” The judge also ordered the bank to pay the plaintiffs’ lawyers a fee of $10.5 million.
Ranjan Agarwal, partner with Bennett Jones LLP in Toronto, also views the settlement positively, but questions why the bank waited so long: “A lot of money was spent defending this class action, and I’m not sure Scotiabank is any further ahead than it was the day after the class action was issued.” A similar process could have been put into place earlier, he adds, saving the bank litigation costs and unwanted negative publicity.
One thing other financial services institutions can take from this settlement is the importance of reviewing their overtime pay policies. The best way to prevent similar types of class actions from taking place is to conduct an audit as soon as a claim is made, Agarwal says: “If I had big clients that were subject to overtime, I might be shopping this plan around as a model of what you might do preemptively.”
Agarwal also believes that such pre-emptive audits have prevented a deluge of similar class actions against the big banks.
Jonathan Ptak, partner with Koskie Minsky LLP in Toronto, who is representing investment advisors in a class-action lawsuit concerning unpaid overtime against Toronto-based BMO Nesbitt Burns Inc., also sees a need for firms to review their overtime pay policies: “There should be a recognition by the various entities in the banking industry that these claims are going to be brought with some regularity and will be prosecuted vigorously. And so, they should take this as an opportunity to reflect on their policies and to make sure they are in accord with the [relevant laws].”
The Scotiabank case was first launched in 2007, with Roy O’Connor, Sack Goldblatt Mitchell LLP and Sotos LLP acting on behalf of the plaintiffs and with Cindy Fulawka – an employee of the bank for almost 20 years, working mostly as a personal banker in Saskatchewan and Ontario – as the lead plaintiff.
Since that class action was launched, Scotiabank has made changes to its overtime policies, changes that are likely to boost morale among the rank and file, says Luciana Brasil, partner with Vancouver-based Branch MacMaster LLP: “[Scotiabank] saw what the plaintiffs were alleging, took it to heart and made changes to their practice going forward. That speaks very positively of Scotiabank as an employer.”
This class action was one of three overtime cases against financial services institutions before the courts. The other two are Fresco v. Canadian Imperial Bank of Commerce, an off-the-clock overtime class action involving bank branch employees, such as tellers; and Rosen v. BMO Nesbitt Burns, a worker misclassification case – meaning: there is a question of overtime pay eligibility – involving investment advisors.
The Scotiabank settlement does not set a legal precedent for either of the ongoing class actions, although there are enough similarities among the cases that all sides probably are paying attention.IE
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