Thursday, June 07, 2007

CIBC Faces Class-Action on Unpaid Worker Overtime

The Globe and Mail, Tara Perkins & Virginia Galt, 7 June 2007

Canada's big banks defended their overtime practices yesterday after Canadian Imperial Bank of Commerce has been walloped by a potential $600-million class-action lawsuit related to allegations of unpaid overtime worked by tellers.

And the case is shining a spotlight on tellers - or customer service representatives, as they are called in the banks. The rise of bank machines and online banking has meant a dramatic change in the day-to-day operations of the army of tellers who staff this country's branches. It was not so long ago that customers stood in snaking lines to deposit cash and have bank-books stamped.

Today, some branch managers are more likely to be looking for the same skills that apply at a burger chain or clothing outlet. That's because today, the job is all about sales. "There's no doubt that that job and role has changed over time," said Frank Techar, CEO of Bank of Montreal's Canadian banking operations.

It's morphed from an operational role to a "customer conversation" role, he said.

"We want them to have conversations with our customers, we want them to engage in a bit of simple needs-based analysis, and try to do a warm hand-off or a triage to our bankers, who can have a longer conversation with them, and try to develop business," he said. Tellers today are examining their screens to determine whether the customer they're talking to has a mortgage, loan or maybe some mutual funds, at another bank - and how they can bring that business over.

The face of the class-action claim against CIBC is Dara Fresco, 34, a teller at CIBC for nearly 10 years who makes an annual salary of $30,715. She believes she is owed $50,000 in unpaid overtime over the decade.

Her salary appears to be consistent with industry norms. Royal Bank of Canada, this country's biggest bank, has about 10,000 customer service representatives who are paid average annual cash compensation of about $32,000. That can range up to $42,000, depending on the location and employee's skills, and there are other benefits.

At BMO, "I view the role, and I think our employees view the role, as a great entry-level position to the company," Mr. Techar said. He believes "that's really what the big draw is for that role."

Toronto-Dominion Bank is about to hire a few hundred extra tellers, adding to its roster of about 10,000, after announcing yesterday that it is lengthening the hours at the majority of its branches beginning in November.

While the big banks have expanded their operations in recent times, it's the staff in branches that keep their core Canadian operations humming. In a note to clients yesterday about the banks' second-quarter earnings, Credit Suisse analyst Jim Bantis said that "domestic retail banking continues to underpin the earnings growth story."

Tim Hockey, TD's group head of personal banking, said, "The number one reason that customers decide where to bank is still based on the proximity of their branch to either work or home," he said.

"The vast majority of sales in all banks still go on through the branch, face to face."

He said he's confident that the claim against CIBC will not extend to TD.

"We have a very clear policy ... that anybody who works overtime gets paid for overtime," he said. "Not only are we very clear on the policy, we're very clear on our expectation that our managers follow it."

One of the lawyers involved in the legal action, Louis Sokolov of Toronto-based Sack Goldblatt Mitchell LLP, said yesterday that his firm has been inundated with calls from employees who work at other banks, as well as from employees who work for CIBC.

At BMO, Mr. Techar said that "with a large business, where you've got 15- or 20,000 people across the country, it's hard to understand and appreciate what's going on everywhere. But, our policies are pretty clear about it and I'm pretty confident that we're acting that way."

Like all of the banks, Bank of Nova Scotia said it has policies in place that require tellers to be paid for overtime.

It's now checking that they're being followed.

"When something like this comes to light, you always want to make sure that you're following through to take a look to ensure that the policy is being properly applied," spokesman Frank Switzer said.

RBC spokeswoman Beja Rodeck said she could not say unequivocally that the bank has not had issues with overtime. "We've got 1,100 branches across the country. Obviously, managers know the policy and they're obligated to apply it at all times, but are there isolated instances out there? I'm not sure," she said.

The banks emphasized that they have processes in place for employees to complain.

She added the class-action claim "really seems to be an extreme and unnecessary reaction, prompted by similar types of actions in the United States."
Financial Post, Jim Middlemiss, 6 June 2007

A $600-million overtime class-action lawsuit against Canadian Imperial Bank of Commerce could easily spread to other financial institutions, warns a management-side labour lawyer.

"I am sure this bank and other banks are going to be a little bit nervous for the next while," said Jamie Knight, a partner in the labour law firm Filion Wakely Thorup & Angelleti in Toronto.

The case, believed to be the largest class action suit filed in Canada, highlights the danger employers face when their non-management employees work beyond their allotted hours and reflects a growing litigation trend in the U.S., where a number of similar class-action suits have been filed against employers.

"This has been going on in the states for a couple of years -- class actions seeking unpaid overtime for unpaid hours of work," said Stewart Saxe, a management lawyer at the international law firm of Baker & McKenzie "It was just a matter of time till they came here."

Dara Fresco, a CIBC teller who has worked at the bank since 1998, claims that over the years, she has been required to work two to five hours a week of overtime for which she hasn't been paid. A sum that amounts to more than $45,000. She is being held out as the representative plaintiff in the suit filed by Doug Elliott, a lawyer at noted class action law firm Roy Elliott Kim O'Connor LLP, in conjunction with Sack Goldblatt Mitchell LLP, a leading union-side labour law firm.

"I wouldn't be surprised if there were similar problems at other banks, said Mr. Elliott, who still faces the hurdle of getting the litigation certified as a class action. "I've heard rumours but I have no proof."

According to the Canadian bankers Association, Canadian banks had 249,000 employees in 2006, exposing them to potentially hundreds of millions of dollars of damages for overtime claims if this action spreads to other banks.

Under federal labour law, which governs banks, employees who are exempt from management are limited to working eight hours a day or 40 hours a week. If an employee is "required or permitted to work" above that, then they must be paid overtime.

The lawsuit alleges that after cutting back its workforce by 20% , CIBC instituted a new performance management system that resulted in employees working longer hours.

Mr. Elliott said the unpaid overtime is a problem throughout federally regulated industries, especially in non-unionized sectors. "There's a system of passive enforcement that relies on people complaining." He added that in recent years employers have been "squeezing" employees to "extract more productivity out of them," with the result that many are working beyond the normal hours.

Although the case involves federal labour law, companies that fall under provincial laws could face similar lawsuits. That's because the labour legislation across the country has similar restrictions on the length of a workday.

"Employers have to be careful to ensure that non-management employees work according to their schedule and they don't hang around doing additional stuff because they can't get their work done in the regular hours," Mr. Knight said.

CIBC is reviewing the lawsuit and said in a statement: "We have a clearly defined policy as to how we compensate our frontline retail branch employees that exceeds legislative requirements in Canada."

The management labour lawyers say the suit faces the challenge of getting certified as a class action. Mr. Knight said there is "probably going to be quite a fight." Part of it will hinge on whether employees who come forward in the class actually worked the extra hours they claim. Employers could be forced to find former managers who worked for the bank many years ago to dispute those claims.

"Any management employment lawyer has come across situations from time to time in which employers have not expressly authorized overtime, but have turned a blind eye," Mr. Knight said.
The Globe and Mail, Virginia Galt & Janet McFarland, 6 June 2007

Dara Fresco took a day off from her job as head teller at a Toronto branch of the Canadian Imperial Bank of Commerce yesterday, dropped her toddler at daycare, and launched a $600-million class-action lawsuit against her employer.

Her action has the potential to affect tens of thousands of Canadians who routinely work hours of unpaid overtime and "should be of concern to all employers," according to a lawyer who has tracked the trend of multimillion-dollar settlements in the United States.

"It was only a matter of time before the trend moved into Canada," said employment lawyer Adrian Miedema, a Toronto-based partner with Fraser Milner Casgrain LLP. He made the observation after Ms. Fresco launched her legal action with the assistance of two other Toronto law firms.

Ms. Fresco, 34, has worked as a personal banker and teller at the CIBC for the past 10 years and is paid an annual salary of $30,715. She has recently been recognized by the bank for outstanding customer service, and she says she loves her job.

However, she said at a news conference, she and roughly 10,000 of her colleagues in front-line positions at CIBC branches across the country regularly work overtime for which they do not get paid.

"What is unfair is that my colleagues and I are rarely being paid for the overtime that we are working, and that's just not right," said Ms. Fresco, who calculates that she is owed $50,000 for unpaid overtime over the past decade.

Yesterday, as representative plaintiff, she filed a statement of claim with the Ontario Superior Court of Justice, alleging that the bank actively discourages employees from submitting claims for the overtime they are required to work.

If the court agrees to certify the case as a class action, it will be the largest lawsuit of its kind ever launched in Canada.

The bank, which has 30 days to file a statement of defence, issued a brief written statement yesterday.

"With respect to overtime, we have a clearly defined policy as to how we compensate our front-line retail branch employees that exceeds legislative requirements in Canada," the bank said, adding that it has only just received the lawsuit and will review it in detail before responding further.

"We believe it may establish a very important class-action precedent [in Canada]," said Douglas Elliott, a partner with Roy Elliott Kim O'Connor LLP, who is representing the CIBC employees along with Louis Sokolov of Sack Goldblatt Mitchell LLP.

Statistics Canada reports that more than 1.6 million Canadians worked unpaid overtime in April.

Lawyers representing Ms. Fresco said that while managers are excluded from overtime pay requirements in Canada, most other employees are protected by employment standards laws. CIBC employees are covered by the federal labour code.

Mr. Sokolov said the purpose of the law "is to prevent employers from using subtle, or not so subtle, pressure on their employees to volunteer their time in hopes of advancement ... or fear of reprisal.

"We believe that unpaid overtime is widespread in many industries in this country ... including financial services," Mr. Sokolov said.

Ms. Fresco said she is currently required to work an average of two to five hours a week in unpaid overtime. When she was a personal banker, she sometimes worked up to 15 hours in unpaid overtime a week, she added.

Overtime work is routine throughout the banking sector, former bank employees say, and demands to work unpaid time are exacerbated if individual bank managers try to keep costs low because their own performance bonuses are based on branch profitability.

David Soulis, a retired Royal Bank of Canada branch manager in Port Hawkesbury, N.S., said many factors lead to frequent requirements for overtime work in banking, including possible discrepancies in cash balances that require after-hours recounts, or unscheduled cash counts for security purposes.

He said there are also frequent sales and staff meetings to explain new products or procedures, which must be held outside branch hours so all staff can attend. "That's all extra time that is outside what the customer sees," he said.

He said during his career he saw some managers who were "gluttons" who wanted to reap the largest possible annual bonuses - and branch profits are usually one factor in earning those bonuses.

"I went through 35 years of it, and I know there were times when management said, 'You can't have any overtime. You can get off an hour early some time or whatever.' But that 'some time' thing never happened."

Mr. Miedema notes that several major employers in the United States - including Wal-Mart, Starbucks, Taco Bell and Radio Shack - have been forced to pay massive retroactive overtime to employees.

The CIBC case will likely prompt many other Canadian employees to follow suit.

"People start to pay attention and say, 'Wait a minute. I have been working extra hours. Maybe I should file a claim for overtime,' " said Mr. Miedema, who represents employers in his law practice.

Employers are at risk, he said, if they do not comply with employment standards laws requiring them to pay eligible employees overtime at a rate of time-and-a-half after regular working hours.