Employers often avoid making significant, compliance-oriented changes for fear that employees will discover their rights have been violated for years before the change. The recent settlement of this overtime class action lawsuit, and the complexity and scope of retroactive liability, highlights the folly in the head in the sand approach.
We have been actively keeping watch on the rising prevalence of class actions in employment law (see a video of the presentation of Landon Young of our firm on this phenomenon here.)
In one of those cases, Bank of Nova Scotia v Fulawka, concerning a claim of unpaid overtime, a settlement was reportedly reached to end the litigation.
Although the structure of agreements in such cases is usually complex and can lead to difficulty in determining the final value of the settlement in terms of actual dollars, counsel for the plaintiffs has made statements suggesting that the eventual payout was roughly $95 million. Legal fees for the plaintiffs, to be paid directly by the defendant, have been assessed at $10.45 million. While the plaintiffs had originally claimed $350 million, $100 million of the claim consisted of punitive damages, which are notoriously difficult to recover in Canada. If plaintiffs’ counsel’s comments are accurate, this represents a significant recovery for the employees.
The cost to the Bank is not limited to the settlement amount, however. The plaintiff class could include up to 15,000 employees, and each of those employees may be entitled to up to 13 years of overtime. The logistics of determining entitlement will be complex and resource intensive. In fact, the settlement even contains provisions for binding arbitration if there is a dispute over an individual employee’s entitlement. The Bank will likely be intimately involved in the distribution of the settlement beyond simply the cutting of a (very large) cheque, a process which will undoubtedly require significant resources and administrative efforts.
Obviously, some of the complexity of this case relates to the sheer size of the employer and its workforce. However, even much smaller employers could face extreme logistical and financial consequences if they find themselves on the wrong end of a class action. As mentioned, class actions have become more common in employment law (see our update on a privacy class action against an employer here.) It is, therefore, critical that employers planning to make changes, or actively ignoring compliance-oriented changes, consult legal advice to determine their potential exposure to class action litigation.
Learn more about employment class actions and compliance strategies at our upcoming 28th Annual Employers’ Conference on November 13!
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HRPA Members: Attendees Receive 6 CPD Credit Hours toward HRPA Recertification
LSUC Members: This program includes six hours of human resources law content which may apply toward substantive CPD hours (visit LSUC for more information)