Consider the following situation: an employer knows that their employee is working overtime. However, that employee did not request permission in advance to work overtime. When the employee subsequently seeks compensation for the overtime worked, is the employer in this situation responsible for paying the employee?
The case below addresses this issue.
Fresco v. CIBC
In Fresco v. Canadian Imperial Bank of Commerce, the Ontario Court of Appeal (“ONCA”) held that an employer cannot ignore or be willfully blind to an employee working overtime and then refuse to compensate that employee on the basis that the overtime worked was not authorized or pre-approved.
In Fresco, Dara Fresco brought a class action on behalf of 31,000 customer service employees who had worked for CIBC between 1993 and 2009. The class action alleged that CIBC’s overtime policies violated the Canada Labour Code (the “Code”) by allowing employees to work overtime hours which were not compensated.
CIBC argued that its policies were aimed at stopping unnecessary overtime to control costs and prevent overwork.
CIBC’s first overtime policy was implemented in 1993 and provided for additional compensation where an employee worked more than 8 hours per day or 37.5 hours per week. CIBC’s policy required employees to obtain management’s approval before working overtime.
In 2006, CIBC implemented its second overtime policy which read “overtime, for which prior management approval was not obtained, employees will not be compensated unless there are extenuating circumstances and approval is obtained as soon as possible afterwards.”
The ONCA held that CIBC’s overtime policies violated the Code because they posed “institutional impediments” to employees’ overtime claims. More specifically, the ONCA held:
- there is no onus on an employee to seek permission from an employer to work overtime;
- an employer cannot avoid liability for overtime compensation if an employer knows or ought to know that an employee is working overtime but fails to take reasonable steps to prevent that employee from working overtime; and,
- CIBC’s requirement to obtain management’s approval as a precondition for working overtime was unlawful. The pre-approval requirement resulted in the employees not being compensated for overtime that would otherwise be compensable under the Code.
Key takeaways for employers
Determining whether an employer knows or “ought to know” whether its employee is working overtime is a fact specific inquiry. To avoid this predicament, employers should be very familiar with its employee’s work week, the tasks assigned, the amount of time it should take that employee to complete the tasks, and the urgency of the tasks. If an employer fails to take these steps, the employer risks having to compensate the employee for overtime even if the employee never sought permission from the employer to work overtime in advance.