Non-professional staff in the US and Canada are challenging Big
Four firms for unpaid overtime in several lawsuits totalling more
than $100 million. The class actions have been launched in the US
states of California and Washington and in the Canadian province of
Ontario to recover overtime pay for non-qualified staff who claim
they are working more hours than legally obligated.

All the Big Four firms in California currently have pending class
action suits against them for unpaid overtime, according to a US
lawyer involved in the class actions.

Leon Greenberg is representing staff seeking a class action against
Ernst &Young (E&Y) in California. He said the claim against
E&Y could extend to between 1,000 and 2,000 people who worked
for the firm as non-qualified employees over a period of four to
five years, and damages could rise to $100 million.

Greenberg told IAB “there is an element of exploitation”
when non-qualified staff of large accounting firms do not receive
overtime payments after they had worked more than 40 hours a week,
as is being alleged in the E&Y California case.

An E&Y spokesperson told IAB he was unaware of the
California claim and declined to comment.

Staff entitlement

Greenberg said that non-qualified staff are entitled to overtime
pay in the E&Y case because Californian legislation only
exempts employers from paying overtime to professionals who hold a
relevant professional qualification, such as the certified public
accountant (CPA) qualification, and who spend most of their time
performing professional work involving the use of independent
judgment and discretion.

Greenberg said the E&Y claims relate to non-CPA employees,
including students and recent graduates, who mainly performed
support work. “The function these people perform is really a
clerical one; they are not the ones signing off on the opinions.
Their job is to review the paperwork and go through the numbers and
pass it on to their superiors; they are not involved in a
professional capacity,” he said.

Greenberg is involved in another pending class action suit against
KPMG in Washington state. In both the California and Washington
state cases, class action status is being claimed but has not been
approved by the relevant courts.

KPMG Canada is facing a similar class action lawsuit filed by
former employee Alison Corless in the Superior Court of Ontario in
August last year. She is claiming damages worth C$20 million ($20
million). Corless, then a technician, alleged that KPMG owed
compensation to non-qualified staff who worked more than 48 hours a
week. The statement of claim made by Corless said line employees
were pressured to “eat time”, or not record overtime, to satisfy
their immediate supervisors.

In Ontario, employees are eligible for overtime pay or time-in-lieu
if they work more than 48 hours a week except certified general
accountants (CGA), chartered accountants (CA), management
accountants (CMA) and students obtaining the work experience
required to practise as CGA, CA or CMA.

Redress plan

The Ontario class action has prompted KPMG Canada to investigate
the claims and develop an Overtime Redress Plan, which it announced
in February.

The Big Four firm said it intended to ensure all eligible current
and former employees are fully compensated according to provincial
legislation for all overtime since 1 January 2000. Crawford Class
Action Services will administer the plan and KPMG estimates it will
cost the firm up to C$10 million.

“At the time we learned of the allegations in the class action we
promised a thorough review of our work practices,” said KPMG Canada
chief executive Bill MacKinnon. “The Overtime Redress Plan directly
and fairly addresses any past concerns about unpaid overtime. We
very much regret that we did not pay overtime when it was earned by
current and former employees. While this was an error of omission,
not commission, it should not have happened.”

Several of the firms IAB approached in the US and Canada
either declined to comment about the class action lawsuits or were
not able to be reached. Ernst & Young Canada said it was
currently reviewing the issues surrounding the KPMG Canada case and
would not comment further. A spokesperson from
PricewaterhouseCoopers Canada told IAB the firm has been
reviewing the appropriateness of its overtime policies.