Author: Ted Flett, Principal Lawyer, Zubas | Flett Law, Barristers + Solicitors, Toronto, Canada
Later this month, I will join a couple dozen entrepreneurs on a California junket to secure and expand the lucrative American market. Admittedly, it’s a bit of a motley crew. Among us are a green battery manufacturer, an HR recruiter, a liquidator, marketing agencies and more. Divergent as our widgets and services are, what is common among us is that we are queer and Canadian.
Pounding the Pink Pavement
The trade mission is organized by the CGLCC, Canada’s 2SLGBTQ1+ Chamber of Commerce and meant to showcase some of Canada’s queer businesses ready to crack or expand into the USA. The CGLCC is a coalition of queer business owners and allies championing a more inclusive economy.
"A 2021 national landscape study conducted by the Chamber with Deloitte estimates that Canada is home to over 100,000 queer-owned businesses which, in turn, employ over 400,000 Canadians and generate over $22 billion in economic activity."
Darrell Schuurman, CGLCC’s founder and CEO, created the Chamber to address the needs of Canada’s queer economy. “2SLGBTQI+ means big business,” says Schuurman. “However, our members still face barriers so we strategize and advocate towards a fairer playing ground.”
Schuurman relies on the numbers to make his case. A 2021 national landscape study conducted by the Chamber with Deloitte estimates that Canada is home to over 100,000 queer-owned businesses which, in turn, employ over 400,000 Canadians and generate over $22 billion in economic activity. Schuurman says that nearly half of his members have hidden their sexual orientation or gender identity to avoid losing opportunities, and more than a third say they have lost opportunities due to being LGBTQ+.
Loud and proud, the delegation will be pounding the pink pavement in Los Angeles and Palm Springs to identify prospects, gain market intelligence and, most especially, win business. Supported by three key federal government agencies, CanExport, the Trade Commissioner Services and Economic Development Canada, the Chamber fastidiously vets and prepares trade mission participants for a “best foot forward” approach. The primary event of the mission will be the NGLCC (USA’s National LGBT Chamber of Commerce) annual conference and trade show in Palm Springs.
Why Buy Canadian?
My “Why buy Canadian” pitch is directed to American corporations and organizations with boots on the ground – whether employees or independent contractors – in Ontario, Canada. Those employers require competent and cost-effective employment counsel to navigate the countless employment laws north of the forty-ninth parallel. The investment helps to avoid workplace disputes and foster a respectful, productive workplace that complies with the distinct laws of our jurisdiction.
Canada regards the relationship between employee and employer as highly significant; thus, heavily regulated. The importance was underscored by the Supreme Court of Canada, Canada’s highest Court. In a decision from 1987, then-Chief Justice Dickson, writing for the majority, wrote:
Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being.
"All too often, however, given the many cultural similarities between Canada and USA, I see employers south of the border make decisions from their American headquarters without consulting local counsel."
Opening an office or engaging workers in Canada can bring growth and opportunity for business. All too often, however, given the many cultural similarities between Canada and USA, I see employers south of the border make decisions from their American headquarters without consulting local counsel. My colleagues and I frequently advise and represent American companies focused on cross-border operations when a legal issue arises and they require local counsel. Examples of such client issues include (i) receiving an employee harassment complaint which triggers a statutory obligation to investigate, (ii) being served with a lawsuit for insufficient pay at termination of employment and (iii) being accused of discrimination on the basis of a protected ground from the Human Rights Code. The surprise often comes from applying an American sensibility to solve a Canadian legal problem and is often preventable. Square peg, round hole. Regrettably, we are often retained after the dispute has arisen where the lawyer’s focus becomes reducing the liability and containing the damages (ie money) rather than avoiding them entirely.
Given the intricacies and ever-constant evolutions in Canadian employment law, prudent American employers ought to exercise caution and care in making workplace decisions relating to their Canadian operations. In my practice, I would much prefer the client who asks “What should I do?” in advance of a critical decision rather than “What the heck did I do?” once it’s too late.
It dismays me when an instructing client from the USA, deep in a thorny and sometimes expensive settlement negotiation to resolve an unexpected workplace dispute in Ontario, expresses regret for entering the Canadian market. The USA and Americans have a special place in my heart. The origins of the relationship run deep. With cousins in California with whom I forged memories when my family attended the 1984 Summer Olympics in Los Angeles and frequent trips to Orlando, Florida to visit Disney World, the USA became a special spot. And, of course, growing up in Hamilton, Ontario, barely an hour from the New York border, back-to-school shopping runs to Niagara and Buffalo were tradition.
As a result, seeing the US-Canadian trade relationship crack, even at a micro level with my clients, stings.
"...some American employers are fearful of Canada’s comparably more employee-friendly laws and protections. They have angst that, if Canadian operations are unsuccessful and need to cease or simply that an employee or worker is not the right fit, the employer cannot terminate the employment relationship without bags of cash."
At the opposite end of the spectrum, some American employers are fearful of Canada’s comparably more employee-friendly laws and protections. They have angst that, if Canadian operations are unsuccessful and need to cease or simply that an employee or worker is not the right fit, the employer cannot terminate the employment relationship without bags of cash.
However, contracts can be drafted and strategies can be implemented to reduce an employer’s liability while still respecting the employee or worker.
The Devil is in the Details and the Proof is in the Caselaw
The benefits of local Canadian legal counsel to advise and advocate is evident in the caselaw. Recent decisions by Courts and tribunals are frankly helping to sell Canadian counsel. Pardon this author for briefly ‘geeking out’ on the jurisprudence that helps to underscore this premise.
In a 2018 trial decision out of the Province of Ontario called Raposo v CA Canada, a 39-year-old employee named Hugo Raposo commenced a wrongful dismissal claim against his employer, a subsidiary of a global IT management software provider corporation headquartered in the USA. The plaintiff argued that he was entitled to generous pay in lieu of notice of the termination of his employment and that the company’s employment agreement attempting to limit his entitlements at termination were unenforceable. Among his lawyer’s submissions regarding the allegedly unenforceable contract was ambiguity of the term “at will” in the agreement. Counsel submitted that the term is American and “commonly understood in Ontario to mean a termination without any notice or pay whatsoever.”
"However, the defendant corporation surely spent thousands of dollars in legal fees and precious time to defend a poorly drafted Canadian contract that included an American legal term inapplicable in Canada."
Ultimately, the judge in Raposo was not persuaded by the plaintiff’s argument and the agreement limiting his entitlements at termination of employment was rescued. However, the defendant corporation surely spent thousands of dollars in legal fees and precious time to defend a poorly drafted Canadian contract that included an American legal term inapplicable in Canada.
A procedural decision from the Ontario Superior Court earlier this year called Maule v IBM Canada, the judge ruled that a plaintiff in a wrongful dismissal and discrimination claim against IBM Canada was able to enter evidence of the parent company - IBM USA – relating to mandates around promotion and termination, particularly of highly-paid older employees.
While the allegations have not been proven in court – thus far the Court has only decided on the Defendant’s motion to dismiss – it is an important reminder that decisions from a US headquarters are not insulated and can be relevant and admissible in a Canadian action.
In Shearing v James Way Construction Inc, the issue decided in 2007 by the Ontario Labour Relations Board – an administrative tribunal – was if the overtime provisions of the Employment Standards Act, 2000 applied to work performed by the employee, Tony Shearing, in the USA. The employee helped to build fast food outlets for a construction business that was based in Kitchener, Ontario. The construction company periodically sent Shearing south of the border to build fast food outlets there. Thereafter, Shearing would resume his duties in Ontario. The Ontario Labour Relations Board found that the employee’s work in the USA was a continuation of his work in Ontario and thus he was entitled to overtime provisions under the Ontario act for work conducted in the USA.
These cases illustrate the distinct liability that American employers can assume when entering the Canadian market and underscore the necessity of counsel familiar and current with Canadian employment law. In my own practice, I have had the satisfaction of witnessing American clients fully converted to the practice of relying on sound legal advice at critical workplace decisions.
Competent lawyers can significantly help American employers to avoid breaches and contain legal issues, thereby protecting Canadian workers while cementing Canada’s role internationally as a great place to do business.
For more information, please visit the Zubas | Flett Law website at https://www.employment-lawyers.ca/
Ted Flett is the Principal Lawyer at Zubas Flett Law Barristers and Solicitors. He advises and represents employers on the full arc of the employment relationship, from hiring to firing. Ted has appeared before the Ontario Human Rights Tribunal, Superior Court of Ontario and Ontario Court of Appeal.
