Canadian Imperial Bank of Commerce CM-T has agreed to pay $153-million to settle a years-long class-action lawsuit in which the lender’s employees alleged it broke federal law by allowing them to work unpaid overtime.
The settlement will compensate about 30,000 CIBC employees who worked as tellers or front-line staff between 1993 and 2009. It will also pay for legal services and the distribution of the settlement funds. The class action was launched more than 15 years ago. At the time, employees sought $500-million in damages.
CIBC said Thursday that the settlement will help it avoid further legal costs and bring the dispute to an end.
“We believe CIBC has a clear, accessible and effective overtime policy and practices,” CIBC spokesperson Tom Wallis said in an e-mailed statement. “We are proud of the work environment we have created together with our team members, where we recognize and reward their achievements, support their wellbeing, and practice inclusivity. Where overtime is required or permitted of eligible team members, it is paid.”
In February, an Ontario court denied an appeal by CIBC and upheld a 2020 decision that found the bank liable for former overtime policies that failed to record hours of work by thousands of front-line employees. The Ontario Court of Appeal determined that those policies illegally placed responsibility on staff to have overtime pay approved by managers.
CIBC employees said in affidavits that while overtime was expected at the bank, asking for compensation was discouraged and the required preapproval was difficult to obtain.
In the appeal, the bank challenged issues of law relating to liability, damages and limitation periods.
“It is good news for the class to have this case finally resolved,” Dara Fresco, a former CIBC teller who first brought the case forward in 2007, said in a news release on Thursday. “This settlement is a fair compromise that will bring meaningful compensation to thousands of my fellow class members.”
When the court denied CIBC’s appeal, it awarded costs to the class action’s plaintiffs but left the calculation of the amount of damages to an additional hearing. The settlement means further negotiation will no longer be necessary. The Ontario Superior Court must approve the settlement before the money is distributed.
“We believe that this settlement will put more money into more class members’ hands, a lot sooner, than would happen if the case continued to be fought,” said a joint statement from the plaintiffs’ law firms, Goldblatt Partners LLP, Roy O’Connor LLP and Sotos LLP.
The settlement is the second legal blow to CIBC this week. The bank said Wednesday that it is appealing a U.S. court decision that could force it to pay about $1.16-billion, after it was found liable for losses incurred by a New York hedge fund in debt deals related to the 2008 U.S. housing crisis.
In 2016, Bank of Nova Scotia settled a similar overtime lawsuit for $20.6-million, ending a decade-long legal dispute with about 1,600 employees who said they were required to work unpaid overtime.