The 1842 poem, “The Pied Piper of Hamelin”, by Robert Browning tells a cautionary tale of a rat-infested German city which agreed to pay a stranger to rid Hamelin of its vermin. The Pied Piper did so as bargained but, when he sought payment, the town reneged on the deal to compensate him for his services.
The price for this treachery? The Pied Piper blew his pipe once more, luring all of Hamelin’s children to follow him, running and skipping, out of the town, never to be seen again. Thus was born the saying, “They that dance must pay the piper”.
The Canadian Imperial Bank of Commerce (CIBC) recently learned this lesson, to the tune of a $153,000,000 settlement with a class of former employees claiming they had been deprived of overtime pay. In CIBC’s case, they decided to “pay the piper” rather than risk a worse outcome.
The Back Story
In 2007, a class comprising over 30,000 CIBC employees (customer service representatives, assistant branch managers, financial service representatives, branch ambassadors) claimed that, commencing in 1993, CIBC failed to pay overtime as required by the Canada Labour Code. (Banks, it is worth noting, are governed by federal employment laws.)
CIBC’s employees had claimed that, while working overtime hours was expected by the bank, pre-approval for overtime work was difficult to obtain and seeking overtime pay was discouraged.
The claim originally sought damages of $500,000,000 for accrued but unpaid overtime pay. CIBC denied liability, asserting the case should not proceed as a class action and seeking to have the claims dismissed on their merits.
The Courts’ Decision
The class action lawsuit continued for 15 years, reaching a crescendo in 2022 when the Ontario Court of Appeal dismissed CIBC’s attempt to avoid payment. The court, in effect, determined that CIBC’s overtime policies and hours of work recording practices were unlawful and amounted to systemic impediments to compensable claims for overtime pay.
In 2022, in upholding a lower court’s finding of liability on CIBC’s part, the Ontario Court of Appeal found, among other things, that the Canada Labour Code…
“… does impose a positive duty on employers to actively prevent employees from working overtime hours. This duty does not conflict with the employer’s right to manage its workforce. This duty does not subject an employer to indeterminate liability because the employer will not be found to have permitted overtime work unless the employer has actual or constructive knowledge that its employees are working beyond the hours permitted under the Code. The risk of silence in the face of actual or constructive knowledge falls on the employer.”
And...
“In considering whether the Bank’s system-wide overtime policies and related practices contravened the requirements of the Code and the regulations under it, the motion judge did not err in finding that (a) the Bank’s 1993 and 2006 Overtime Policies; and (b) the Bank’s record-keeping practices for tracking and compensating overtime hours were “institutional impediments” to the overtime claims of class members.”
The Settlement
Perhaps spurred on by the knowledge that Ontario’s courts weren’t buying into its version of the facts or the law, CIBC has entered into a settlement with its employees. It will pay $150,000,000 (which includes legal costs and the costs of distributing the settlement funds) to bring this matter to an end.
A spokesperson for CIBC, its Senior Director of Public Affairs, was quoted as saying…
“We believe CIBC has a clear, accessible and effective overtime policy and practices. 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.”
One might be forgiven for wondering if that fellow doesn’t quite grasp what just happened. In my experience, businesses rarely hand out $150,000,000 to employees when their policies are working just fine and everyone is happy. Giving him the benefit of the doubt, perhaps he was speaking in the present tense.
Having seen the writing on the wall, CIBC agreed to settle and “pay the piper” and, in doing so, has perhaps avoided a much more costly outcome at the hands of the courts. The town of Hamelin, on the other hand, learned its lesson a little too late.
“The Mayor sent East, West, North, and South,
To offer the Piper, by word of mouth,
Wherever it was men's lot to find him,
Silver and gold to his heart's content,
If he'd only return the way he went,
And bring the children behind him.”
Robert Browning, The Pied Piper of Hamelin
______________
This item is provided for general information purposes only and is not intended to be relied upon as legal advice. Informed legal advice should always be obtained about your specific circumstances.