Class Actions May Be Coming To Employers Near You

The class action lawsuit is a relatively new phenomenon in Canada. In the employment context, there are precious few examples of this form of litigation. As a result of some recent court decisions, however, employers near you may soon be the target of class actions.

Class action lawsuits allow many plaintiffs to band together to pursue their claims. Typically, each individual claim is small in scale, sometimes small enough that it wouldn’t be worth pursuing at all on its own.

Combined with hundreds, or even thousands, of similar claims the potential damages definitely start to attract some attention. A group of Wal-Mart employees in the U.S. recently won an award of $78 million for unpaid overtime pay. And a group of C.I.B.C. employees in Canada have reportedly launched a class action claiming some $600 million in unpaid overtime.

The attraction of the class action is that the plaintiffs share the burden of the cost of the litigation. There may also be a psychological motivator behind class actions as well. An individual who wouldn’t initiate a claim on his own might well feel comfortable doing so as part of a larger group.

An area which seems perfectly suited for class actions involves claims arising under the various employment standards statutes. Claims such as unpaid overtime pay, vacation pay, and statutory holiday pay are likely examples.

The limitation clauses found in the various employment standards statutes tend, however, to restrict each claim to a fairly small dollar amount. In B.C., for example, a claim can only reach back for a period of 6 months, meaning that each individual claim isn’t likely to be worth all that much. But, dozens (or hundreds or thousands) of employees’ claims merged into one can certainly amount to a dollar figure worth pursuing.

Until recently, however, the hurdle preventing such collective claims was the courts’ refusal to adjudicate claims arising out of the employment standards statutes. The courts (with some exceptions in certain provinces) have taken the view that a statutory claim must be pursued through the complaint procedure provided in the statute.

That seems to be changing. For some reason, judges are taking a more open-minded view of litigants pursuing statutory claims in court.

That means that the avenue of a class action is suddenly available for these statutory claims. In B.C., for example, the Supreme Court has recently revisited its established policy of refusing to adjudicate statutory claims.

The B.C. case involved a plaintiff named Macaraeg and her employer, E Care Contact Centers Ltd. Macaraeg’s claim was for overtime pay pursuant to the B.C. Employment Standards Act.

The B.C. Supreme Court ruled that it was an implied term of her employment contract that she would be paid overtime in accordance with the Employment Standards Act. The Court’s ruling that the requirements of the Employment Standards Act form implied terms of the employment contract was critical – it allowed the Court to hear and decide upon the claim just as it would any other breach of contract claim.

The impact of the Macaraeg decision is that the Director of Employment Standards seemingly no longer has exclusive jurisdiction over statutory complaints. The impact of this award, unless overturned on appeal, could be dramatic for employers who have made a habit of flouting the requirements of the Act.

It seems likely that the bigger the employer, the more likely it is to face a class action. Watch the headlines in the coming months – an employer near you may well be the target of this collective form of litigation.