Is McCracken v. Canadian National Railway Co. a Sign of Things to Come in Overtime Class Actions?


Although Canada's experience with "overtime" class actions is relatively recent, there have been some significant developments. One such development has occurred in the "misclassification" class action McCracken v. Canadian National Railway Co. A question that has been lingering in the context of overtime class actions is: Can the provisions of the Canada Labour Code be seen as implied terms of employment contracts, and if so, can they be the foundation of a direct claim in breach of contract? McCracken has now answered this question in the affirmative.

In this recent decision of Justice Perell of the Ontario Superior Court of Justice, certification of the class action against CN Railway Co. was granted despite some initial concerns regarding commonality. The claim, brought by the proposed representative plaintiff Michael Ian McCracken, seeks a total of $300 million in damages. The claim alleges that CN intentionally classified all of its "first-line supervisors" as "managers" in order to deprive them of overtime and holiday wages payable under the Code.

While the decision is instructive in revealing how commonality issues will be confronted in cases of "misclassification," more important is Justice Perell's finding that:

The effect of a conclusion that courts have a jurisdiction to enforce the statutory right [referring to the Code] is that the right is an implied term of the contract of employment by force of statute. In other words, as a matter of law, the statutory provisions become contractual stipulations.

Justice Perell went on to clarify that his conclusion did not merely mean that it was possible that a cause of action for breach of an implied contract existed, but that the representative plaintiff actually had a cause of action for breach of a statutory implied term.

It is not clear if this decision settles the debate of whether a civil claim can be advanced directly under the provisions of the Code. Prior to McCracken, another overtime class action, Fulawka v. The Bank of Nova Scotia, considered the same issue and came to the opposite conclusion. The Fulawka claim is currently only months away...

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