By Elian Shoukry
Employment class actions in Canada have seen remarkable developments and challenges in recent years. Canadian courts have seen an increasing number of employment class actions, as such proceedings serve as a powerful vehicle for facilitating employee access to justice, enhancing judicial economy, and encouraging good employer behaviour.
Class actions in the employment context can be categorized into four general types of claims: unpaid overtime, misclassification of employees as independent contractors, systemic discrimination and harassment (Tiller v. Canada and Lewis v WestJet Airlines), and mass constructive dismissal and termination claims (Brigaitis v. IQT Ltd and Wood v. CTS). The latter two categories of cases have had some recent expanded success, nonetheless, most employment class actions deal with the former two categories of claims, which is this article’s focus.
Overtime Class Actions
There are two types of overtime class actions: “off the clock” cases and “misclassification” cases. “Off the clock” overtime cases concern whether employees entitled to overtime pay were deprived of it. In contrast, misclassification cases concern whether a group or class of employees are even entitled to overtime pay.
Some of the earliest employment class actions in Ontario involved unpaid overtime claims. In 2012, the Ontario Court of Appeal decided on a trilogy of overtime employment class action cases regarding federally regulated bank and railway employees. These decisions (Fulawka v. Bank of Nova Scotia, Fresco v. Canadian Imperial Bank of Commerce, and McCracken v. Canadian National Railway Company) have set the table for subsequent class actions and determining commonality in class action proceedings. While the courts have been responsive to certifying “off the clock” overtime class actions, the courts have been less willing to do so in misclassification overtime cases until more recently.
“Off the Clock” Cases
Both Fulawka and Fresco are the leading cases for “off the clock” overtime claims. In both cases, the class alleged that the banks implemented overtime policies and practices for compensation that denied them overtime pay contrary to the Canada Labour Code. The class argued that this was a breach of the employee contract and the employer’s duty to deal with employees in good faith. In Fulawka, the court found that while the bank paid employees for overtime work, overtime pay was subject to pre-approval by the employee’s manager. The bank’s policy only permitted overtime pay when pre-approval was received. In reality, however, it was difficult for employees to predict when overtime hours were needed and, in turn, to seek pre-approval from their manager. The case was certified as the court concluded that the facts showed that the bank’s overtime policies were systematically applied to all class members similarly. Likewise, in Fresco, the court found that the bank’s overtime and hours of work recording practices were systemic or institutional impediments. Accordingly, the action was certified, and recently a settlement was reached.
In McCraken, the plaintiff alleged that CN misclassified first-line supervisors as management to avoid overtime pay. The action further alleged that the supervisors were required to work hundreds of hours on an annual basis for which overtime pay was not provided. The court denied certification as there was no commonality between the class members. The court found that the members of the proposed class took on various positions and job duties. Thus, the court’s inquiry into misclassification could not succeed class wide. Instead, the investigation into misclassification would require an individualized assessment.
The uncertainty of success in misclassification class actions post-McCracken has been diminished, as the courts have recently certified more diverse classes of employees. While the courts have typically certified actions concerning employees with a narrower set of duties, recent developments have provided a more flexible and broader approach. For example, in 2016, the court approved certification in Rosen v. BMO by distinguishing the case from McCracken as class members’ job functions were sufficiently similar, allowing for an investigation into overtime to be completed on a class-wide basis.
Misclassification of Employees as Contractors
The other category of cases involve the alleged misclassification of employees as independent contractors rather than employees. By virtue of this categorization, workers are denied benefits provided under the Employment Standards Act (ESA) to employees. Most notably, the Heller v. Uber case alleges that the proposed class members (Uber drivers) were incorrectly categorized as independent contractors rather than employees and were deprived of the statutory benefits provided under the ESA. As a preliminary issue, before getting to the merits of the class action, the case went all the way to the Supreme Court of Canada to examine the enforceability of arbitration clauses within the employment class action sphere. Once the Supreme Court found that Uber’s arbitration agreement was unconscionable and invalid, the Ontario Superior Court certified Uber v. Heller which continues to be litigated. The eventual decision in Heller will likely have profound implications for misclassification class actions.
In Omarali v. Just Energy, the Ontario Superior Court certified an action brought on behalf of a group of door-to-door sales representatives classified as independent contractors by Just Energy, despite being subject to Just Energy’s control and being required to wear company uniforms. Similarly, class actions have also been commenced on behalf of Canadian Hockey League players in Berg v CHL, alleging that players have been wrongly classified as amateur athletes rather than employees. The court certified the action allowing the class to proceed with the action seeking unpaid minimum wage, holiday pay, vacation pay and overtime pay. As noted by the courts, class actions concerning the misclassification of employees as contractors are increasing. This increase is due to the pressure by employers to reduce labour costs and increase productivity and utilize their labour only when required.
Employment class action proceedings are a powerful vehicle to provide workers benefits they might not have received otherwise. The expanding gig economy has resulted in increasing claims of misclassification of workers as independent contractors and denial of statutory rights such as overtime pay; thereby paving the way for growing jurisprudence of employment class actions.