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Bank suits could open floodgates on pay claims

Cindy Fulawka, who worked for Scotiabank for about 20 years, says she was required to work overtime every day without extra pay.

Tibor Kolley

Cindy Fulawka spent almost 20 years working for the Bank of Nova Scotia, mostly in Saskatchewan, selling mortgages and small-business loans. But the phrase "bankers' hours" meant little to her.

The 49-year-old says she was expected to work at least two hours a day in overtime without pay, sometimes more.

"I seldom left work at 5 o'clock. To leave work at 5 o'clock was a treat," she said, adding that to meet sales goals and finish off paperwork required staying well past quitting time, and usually skipping lunch.

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"In order to excel at your job, and get a decent pay increase, you've got to do what you've got to do."

Listening to the radio back in 2007, Ms. Fulawka heard about a Toronto teller, Dara Fresco, who had launched a $600-million class-action lawsuit against the Canadian Imperial Bank of Commerce, the first such case to target a Canadian bank for unpaid overtime.

Ms. Fulawka, who is now on long-term disability benefits, contacted the same lawyers and launched a class action of her own against Bank of Nova Scotia. Last month, her case cleared a key hurdle, winning "certification" from a judge, or the right to proceed a class action.

In cases that lawyers say could have wide implications for white-collar workers across Canada, at least three of the country's major financial institutions - Bank of Nova Scotia, CIBC and most recently, BMO Nesbitt Burns Inc. - have been targeted with class-action lawsuits alleging they failed to pay hundreds of millions of dollars worth of overtime.

Only Ms. Fulawka's case has been certified so far. But both her case and Ms. Fresco's will be in the courts in coming weeks, as Scotiabank seeks leave to appeal the certification and Ms. Fresco challenges a ruling that struck down her bid to certify her case against CIBC as a class action.

Class-action lawyers say the case outcomes could determine whether this trickle of overtime class actions turns into a flood.

Ms. Fresco, 37, says her attitude to what she called a culture of long hours at CIBC changed after the birth of her son in 2005. When she complained, she says she was told the hours were simply part of her job.

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"When I came back from my maternity leave, of course my priority now was my family," she said in an interview. "Working late just wasn't an option for me, especially unpaid."

But Madam Justice Joan Lax of the Ontario Superior Court decided against certification of Ms. Fresco's suit as a class action, ruling last June that there was no evidence of a "systemic practice of unpaid overtime" at CIBC.

The judge also ruled that the plaintiff must cover the bank's $525,000 in legal costs, a ruling Ms. Fresco's lawyers are challenging and call "excessive." (Ms. Fresco's legal costs are being covered by a lawyers' trust fund for class actions.) Rob McLeod, a spokesman for CIBC, said the ruling shows the bank has "a clear overtime policy that exceeds legislative requirements in Canada."

But the lawyers for the two women see hopeful signs in Ms. Fulawka's case against Scotiabank. Last month, Mr. Justice George Strathy of the Ontario Superior Court ruled the case could go ahead as a class action. Unlike the CIBC case, he saw evidence of "systemic wrongs" in Scotiabank's overtime policy, which forces employees to seek pre-approval before they stay after hours.

The bank is appealing the ruling. "We are proud of our long history as a recognized employer of choice," Scotiabank spokeswoman Ann DeRabbie said. "We are committed to treating employees fairly and with respect."

The lead lawyers for the plaintiffs on both cases, Louis Sokolov of Sack Goldblatt Mitchell LLP and David O'Connor of Roy Elliott O'Connor LLP, say that the two judges took very different approaches, and that the courts will now have to choose which lead to follow. If the approach in the Scotiabank case prevails, they predict more overtime class actions against Canadian employers will follow.

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Mr. O'Connor said some employers have already changed the way they treat their staff. He pointed to KPMG LLP, which agreed to pay up to $10-million in a settlement in a similar class action filed after the CIBC lawsuit: "It's encouraging to us and I hope to employees across the country, that that kind of effect comes from drawing attention to these issues."

Another putative overtime class action, filed last month against BMO Nesbitt Burns by lawyer Henry Juroviesky on behalf of an investment adviser, has yet to be heard in court.

The class-action lawsuits against Canadian banks follow years of similar cases, and multimillion-dollar settlements, in the United States. Major financial institutions, such as JPMorgan Chase & Co., Morgan Stanley and Merrill Lynch & Co. Inc., have been hit with claims for unpaid overtime.

Morton Mitchnick, a former chairman of the Ontario Labour Relations Board and a lawyer with Borden Ladner Gervais LLP, said many Canadian employers could be vulnerable to overtime class actions.

In the United States, he said, many of the cases are "misclassification" lawsuits, as employees thought to fall into categories exempt from overtime laws, such as managers or professionals, argue they deserve overtime pay. Lawyers call the cases where employers acknowledge that the employees in question qualify for overtime, but fail to pay them, "off the clock" cases.

"So many employers and certainly a lot smaller ones don't even think about overtime for salaried people. They don't think about overtime for well-paid professionals," Mr. Mitchnick said.

"I think the biggest factor is just the publicity of what's happening below the border. This is just is just a huge growth industry for plaintiff lawyers below the border."

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