The $12.5-million settlement approved in July in a class-action lawsuit regarding overtime that involved Toronto-based BMO Nesbitt Burns Inc. and its investment advisors (IAs) is likely to encourage brokerages to review their policies to ensure they're keeping pace with the changing expectations related to working hours within Canada's workforce.
"All brokerage houses [should] carefully examine their policies to ensure that they're compliant with the Employment Standards Act," says Jonathan Ptak, a partner with Koskie Minsky LLP in Toronto, who represented the Nesbitt advisors.
The specific case of Rosen v. BMO Nesbitt Burns Inc. was a class action in which plaintiffs claimed that they don't fit into one of two exemptions for overtime. One exemption is if the employee's work is "supervisory or managerial in character"; the second is if there is a "greater benefit," such as substantial compensation from commissions.
At the heart of this case was lead plaintiff Yegel Rosen, who worked for Nesbitt, first as a trainee and later as a full-fledged advisor, between June 2002 and April 2006. During that time, Rosen estimates that he worked between 60 hours and 80 hours a week. Rosen stated that Nesbitt's management team encouraged him to work overtime.
The total settlement, including administration costs, is $12.5 million. Of that amount, $4.7 million will go toward legal fees and administration costs. Almost 85% of the $7.8 million balance will be distributed to people in Ontario who worked as trainee advisors at the brokerage firm between Jan. 1, 2002, and June 1, 2016. The remaining 15% will go to all advisors in Ontario who were part of the class and who worked at the brokerage during the same time period.
The class action consisted of 705 trainee advisors and 1,136 advisors, for a total of 1,841 class members.
"We believe [the settlement] is an excellent result following six [and a half] years of litigation," says Ptak.
Nesbitt, for its part, states in an email that it also is happy with the class action's outcome: "We are pleased that the court approved a settlement that minimizes the business impact for our industry and [advisors], whose autonomy and entrepreneurship are key to the success of our businesses and our customers' experience."
Nesbitt did not admit to any liability in the settlement. The brokerage did, however, make changes to its overtime policy in relation to trainee advisors as a result of the class action - a step that the Honourable Justice Edward Belobaba of Ontario's Superior Court, who approved the settlement, noted: "This overtime [pay] settlement is a first in Canada for investment advisors and has already achieved behaviour modification. Nesbitt has implemented an overtime [pay] policy for the six-month period of close supervision of IA trainees."
That focus on trainee advisors, in particular, may show how employment law in Canada is changing, says Ranjan Agarwal, a partner with Bennett Jones LLP in Toronto: "This case more broadly discloses that our framework for employment law in Ontario - and Canada, more broadly - doesn't map onto current workforces. And I don't think that just involves financial services industries, but any professional industry."
In the past, particularly for some professions such as engineers or accountants, the expectation that trainees and junior employees would pull out all the stops to succeed in the business was taken for granted. For example, trainees might work long hours as well as weekends without the expectation of overtime pay because the potential to earn a high income as they built their business and gained seniority was enough of an incentive. However, at the trainee level, at least, Agarwal suggests that this mindset is changing.
"There's a clamouring to treat that category of employees more akin to what the law says, which is as hourly employees who are entitled to overtime," he says. "What this [class-action settlement] tells us is that there are probably going to be a lot of changes happening, not only in the financial services sector but in a lot of industries in which professionals just assumed they weren't entitled to overtime pay."
The fact that employees could be entitled to overtime pay without even being aware of it is one of the points that makes the Nesbitt case an interesting class action, says Michael Rosenberg, a lawyer with McCarthy Tetrault LLP in Toronto.
"It's a funny case, in the sense that this plaintiff class probably wasn't expecting this windfall, but had counsel nevertheless asserting claims based on statutory entitlements," says Rosenberg, who also is an adjunct professor at the University of Toronto's faculty of law.
In other words, only a representative plaintiff and one other class member to assert the claims is needed to start an action - even if all other possible class members aren't particularly interested in going to court.
Yet, whether that means this settlement is potentially the first of many such cases in the financial services sector, Ptak says, is uncertain.
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