Financial advisors seeking overtime from BMO Nesbitt Burns Inc. have moved a step closer to their goal: a class action for unpaid overtime was certified against the bank-owned dealer in August. And, while the certification is under appeal, the case is being watched closely by both staff who work on commission and their bosses in the financial services industry.

The August decision in Rosen v. BMO Nesbitt Burns is the first certification of what are known as “misclassification” overtime class-action cases. These lawsuits focus on the issue of who is classified as an employee entitled to overtime and who is not.

Whatever the outcome, Rosen may lead to changes in the workplace regarding working hours. Says Jonathon Ptak of Koskie Minsky LLP in Toronto, who is representing the advisors: “[Firms] may require some restructuring of their compensation and management practices.”

In Rosen, advisors are seeking payment for overtime they allege is owed to them under Ontario’s Employment Standards Act (ESA). Under that act, employees paid on commission are entitled to overtime pay unless they fall into one of two exemptions contained in the act: one deals with managers; the other falls under the “greater right or benefit” exemption – which refers to employment agreements that confer benefits on an employee that are greater than the minimums set out in the ESA.

The lead plaintiff for the class is Yegal Rosen, an investment advisor with Nesbitt between June 2002 and April 2006. According to the judgment from the Ontario Superior Court, Rosen estimates that he worked between 60 and 80 hours per week but was not paid overtime because he worked on commission. There are about 1,500 members in the class, consisting of former and current investment advisors (IAs), associate investment advisors and investment advisor trainees who have worked with Nesbitt since 2002.


While the certification is a significant step forward for the plaintiffs, it does not prove their case. The merits of the claim and issues relating to the advisors’ right to claim overtime can only be resolved at trial. But certification does mean the court has found there is a reasonable issue raised by the claim. In practice, many class actions are settled after certification is achieved.

Nesbitt is seeking leave to appeal the certification. According to an email statement fromNesbitt: “We believe that taking steps to set aside the certification decision are important to both our investment professionals and the industry as a whole.”

Overtime class actions like this one generally fall into one of two categories: misclassification or “off the clock.” A misclassification class action is one in which the plaintiff alleges that he or she does not fall within the two ESA exemptions. Off-the-clock actions deal with employees who are entitled to overtime under the ESA, says Luciana Brasil, a specialist in class actions at Branch MacMaster LLP in Vancouver. In off-the-clock cases, overtime may not have been paid due to failure to track employees’ hours or workplace pressure not to make overtime claims.

The certification of Rosen is somewhat surprising, given that an apparently similar attempt by Canadian Imperial Bank of Commerce advisors failed last year. In that case, Brown v. CIBC, the class included some investment advisors who were also branch managers and team leaders who had supervisory duties over other investment advisors, such as associates and sales assistants.

The Ontario Divisional Court concluded in Brown that the questions about whether an advisor had managerial duties could not be assessed as a common issue. “There’s a lot of diversity [within the class],” says Michael Rosenberg of McCarthy Tétrault LLP in Toronto. “And in particular, you had some investment advisors with clear supervisory ability. That’s very different from the responsibility of many of the other class members.”

In Rosen, the plaintiffs took care to exclude class members who might be classed as managers or as having supervisory responsibilities. As Justice Edward Belobaba stated: “In my view, the defined class is readily determinable by stated and objective criteria. The covered time period is precise. The class members (IAs, associate IAs and trainee IAs) are identified by job titles that are used every day by the defendant.”

Tracking hours

Both types of lawsuits are relatively new, according to Brasil. Recently, the number of these claims being made against financial services institutions has been on the rise. Last year, the Ontario Court of Appeal certified two lawsuits in the off-the-clock overtime category: Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce. In March, 2013, the Supreme Court of Canada declined leave to appeal these decisions, effectively giving the cases the green light to proceed to trial.

Brasil describes the Rosen class action certification as a kind of “Darwin” evolution in which plaintiff lawyers are learning from past cases. “What we see in any new area of law that’s being pushed forward is an evolution,” she says. “People start learning through trial and error what works and what doesn’t.”

As the Rosen case proceeds through the litigation process, Brasil believes financial services industry members will want to keep watching: “It’s going to be interesting to see what happens at the trial of the common issues [the two ESA exemptions] in this case.”

If the plaintiffs are successful at trial, Brasil says, this case could affect both how firms track overtime and perhaps even their compensation policies.

© 2013 Investment Executive. All rights reserved.