Canada – Between a Rock and a Hard Place: Conflicting Obligations between U.S. Security Requirements and Canadian Human Rights Legislation
By Trevor Lawson, Partner, McCarthy Tétrault LLP, Toronto, Ontario, Canada
Changes in technology and globalization of the world economy have led to a significant increase in the number of people and the amount of data that moves across international borders into other countries, and particularly into the United States. These exchanges can often be anything but seamless. Differences in the values of legal system on issues such as human rights, protection of personal information and security have been emphasized in this manner, as complying with the laws of one country can often lead to violating the laws of another.
For many companies with international operations, these issues are complicated by the fact that in the United States, where security concerns have increased significantly since 2001, it is not uncommon for laws to be created which impact not just how employees are treated in the United States, but also how they are treated in other jurisdictions, including Canada. Recently, the Quebec Human Rights Tribunal decision Commission des droits de la personne et des droits de la jeunesse c. Bombardier Inc. (“Bombardier”) considered the impact of U.S. aviation security regulations on Bombardier’s duty under Canadian law to not discriminate when offering a pilot licensing program. This article will discuss the employment implications of the decision for multinational organizations seeking to do business in Canada, or Canadian companies with operational ties to the United States.
The Bombardier Case
A Canadian pilot of Pakistani origin and Muslim faith filed a claim under the Quebec Charter of human rights and freedoms (“Charter”) alleging discrimination in the provision of a public service, and discrimination infringing on his right to safeguard his dignity and reputation. The pilot had twenty-five years of flying experience, and was seeking to be trained on various Bombardier aircrafts for employment opportunities between 2004 and 2008. The Bombardier Aerospace Training Centre (“BATC”) in Montreal offered the training under both U.S. and Canadian licensing programs. United States security regulations, however, required potential trainees under the U.S. license to obtain security clearance from the U.S. Department of Justice (“DOJ”) prior to 2005, and after 2005, the U.S. Transport Security Administration (“TSA”).
In March 2004, the complainant was denied security clearance by the U.S. DOJ, and therefore could not train at Bombardier under a U.S. license. While the complainant sought continued review of the denial from the U.S. DOJ, he requested to be trained under the Canadian license, which did not require security clearance. The Head of Standards and Regulatory Compliance at Bombardier in Montreal refused the complainant training under the Canadian license on the basis that he had been denied U.S. security clearance. As the BATC was the only centre in Canada which offered appropriate training under the Canadian license, and as the complainant was not able to train under the U.S. license, the complainant was not able to accept numerous work offers between 2004 and 2008.
The complainant claimed discrimination against the BATC solely in relation to Bombardier’s denial of his training under the Canadian license. The Tribunal found that the reason behind the decision to refuse the complainant Canadian training was primarily that he had been refused U.S. security clearance, and should therefore be considered a potential terrorist. The Tribunal further accepted expert evidence that U.S. post-9/11 security regulations had a discriminatory impact under Canadian human rights jurisprudence on Arabic and Muslim individuals based on the prohibited grounds of ethnicity or national origin. Where these actions together resulted in the complainant being denied a service ordinarily offered to the public in Canada, the Tribunal held that a prima facie claim of discrimination under the Charter had been proven.
In defence of the discrimination claim, Bombardier argued that it had applied a bona fide and reasonable standard, and that it would have constituted undue economic hardship for the training centre to grant the complainant training when it faced potentially severe sanctions from the U.S. authorities if it did so. The Tribunal dismissed the defence of a bona fide and reasonable standard on the basis that the BATC had applied an absolute standard for aviation security that was not required by the Canadian government. The Tribunal held that application of the absolute standard did not consider the individual circumstances of the complainant, especially since Bombardier did not know the reason behind why the complainant had been denied U.S. security clearance, and that it was not reasonable for the BATC to adopt a national security standard of its own initiative.
With regard to the claim of undue economic hardship from sanctions for the violation of U.S. regulations, the Tribunal held that Bombardier had not submitted proof that the U.S. regulations applied to the Canadian licensing process. Although the U.S. regulations provided for sanctions if their own licensing processes were compromised, Bombardier could not point to any Canadian or U.S. authority which indicated that the U.S. regulations applied to the Canadian licensing process. The Tribunal further held that Bombardier’s Head of Standards understood that the U.S. regulations did not apply to Canadian training, and that Bombardier could therefore not be subject to penalties through its Canadian licensing program. As a result, the defence of economic hardship became purely “hypothetical.”
For its breach of the Quebec Charter, the Tribunal awarded the complainant $309,798.72 USD in damages for loss of employment income between 2004-2008, $25,000 CAD in moral damages for discrimination and loss of reputation, and $50,000 CAD in punitive damages for the intentional interference of a protected right by the Head of the Standards and Regulatory Compliance. The Tribunal held that Bombardier was also liable for the punitive damages awarded for the intentional actions of its employee under specific provisions of the Quebec Charter. Finally, the Tribunal ordered Bombardier to cease applying U.S. security standards to its Canadian licensing program.
Although the Bombardier case involves a human rights complaint based on the provision of services, the case is instructive on discrimination and multi-national employer obligations in the employment law context as the legal analysis for discrimination in employment under Canadian human rights jurisprudence is similar.
Existence of a Conflict
In the employment context, a preliminary observation to be made from Bombardier is that Canadian organizations must ensure that U.S. legislation does in fact require that organization to apply the U.S. regulatory standard in the Canadian context. As the Bombardier case demonstrates, where an U.S. regulatory standard is found to not be applicable, Canadian human rights tribunals and courts will not be sympathetic to an argument that, where subject matters and areas of regulation are comparable between Canada and the U.S., it is reasonable to apply an U.S. standard, or that a company should be able to adopt an U.S. standard of its own initiative.
With respect to the U.S. International Traffic In Arms Regulations (“ITAR”), which prohibits individuals holding citizenship outside of Canada and the U.S. from accessing specified information without security clearance from the U.S. State Department, the Quebec Commission des droits de la personne et des droits de la jeunesse has publically stated that it considers the application of ITARs in Canada to be discriminatory to employees based on their ethnic or national origin. In 2007 and 2008, human rights complaints of discrimination in employment settled in Ontario and Quebec, respectively, with employers agreeing to make reasonable efforts to minimize any discriminatory impacts of ITARs on their Canadian-based employees.
The issue of conflict is also relevant in instances where U.S. regulations may, upon first examination, seem to apply. If there are exceptions within the regulatory framework, or if there exist mechanisms to apply for exemptions from the regulatory requirements, there may in fact be no conflict and Canadian-based companies will be required to fully comply with Canadian human rights obligations. Potential exemptions to U.S. regulatory requirements will be considered below as a means of accommodating employees as well.
Effect of U.S. Security Legislation
As the Bombardier case illustrates, U.S. legislation which has direct or indirect adverse effects for individuals based on protected characteristics in Canadian human rights legislation will be characterised as prima facie discriminatory. Where Bombardier accepted that post-9/11 U.S. security regulation was discriminatory on the base of ethnicity or national origin, policies which incorporate security requirements based on citizenship, ethnicity, or national origin into employment applications or work distributions will likely be found discriminatory.
U.S. Regulations as a Bona Fide Occupational Requirement
Where a case of prima facie discrimination has been established, Canadian arbitrators and human rights tribunals have recognized that clear U.S. regulatory requirements which conflict with Canadian human rights legislation may be claimed as a bona fide occupational requirement, and that employers have accommodated their individual employees to the point of undue hardship. This argument was unsuccessful in Bombardier as the U.S. standards clearly did not apply, but it has been accepted in the cross-border bus and trucking context, where U.S. requirements for mandatory drug testing were considered bona fide occupational requirements, as long as Canadian employers accommodated disabled employees to the point of undue hardship.
In order for a policy instituted under an U.S. regulatory requirement to satisfy the bona fide occupation requirement test under Canadian human rights legislation, a Canadian employer must show that the policy was rationally connected to the position of employment, that the standard was adopted in good faith, and that the standard is reasonably necessary for the work-related purpose. A policy structured to impinge on an employee’s rights as little as possible in order to fulfill the cross-border regulatory requirements will likely satisfy the rational connection and good faith aspects of the test. However, under the third branch of the test of necessity, the employer must further show that it attempted to accommodate the employee to the point of undue hardship.
Under this framework, there are several best practice steps that Canadian organizations can take to comply with both U.S. and Canadian legal requirements.
1. Creating a reasonable policy in compliance with U.S. regulations
To the extent that U.S. regulations require employers to implement policies which distinguish between employees on grounds which are prohibited by Canadian human rights legislation, employers should be careful to implement policies which only inquire into prohibited grounds to the extent required by the U.S. regulation. For example, if an U.S. regulation requires information on the nationality of an employee, an employer should carefully review the regulations to determine what information is required, and whether there are exemptions to the requirement. Once determined, an employer should only ask for information necessary to comply with the law, and should identify to the employee the specific purpose for requesting the information. Employers should be careful not to consider this information for purposes other than to comply with the U.S. regulatory requirements.
2. Accommodating employees distinguished by U.S. regulations
In order for an employer to argue that it applied a bona fide occupational standard in incorporating U.S. regulatory requirements, an employer must show that it accommodated an employee to the point of undue hardship. This will likely include applying for any possible exemptions from applicable U.S. regulations, or reassigning a disqualified employee to alternate duties which do not fall within the U.S. restrictions. Attempts to accommodate an employee should take place after an individual has been distinguished based on a prohibited ground. Accommodations must also be tailored to the individual circumstances of the employee. As Bombardier demonstrates, the application of an absolute standard will not be sufficient to qualify as individualised accommodation.
Finally, in attempting to comply with both U.S. and Canadian legal obligations, employers should be wary of refusing to hire employees, of denying employees opportunities, or of terminating employees prior to seeking individual accommodations.
Although Canadian courts and human rights tribunals have yet to set clear guidelines for multinational employers bound by conflicting national legal norms, the Bombardier case provides insight into how the application of U.S. security regulations will be considered under the Canadian human rights framework. Taken together with the current human rights jurisprudence on employer obligations in applying U.S. drug testing laws, organizations may begin to navigate how to structure employment policies while caught in a cross-jurisdictional double bind.
 2010 QCTDP 16.
 Ibid. at paras. 298-300.
 Ibid. at para. 309.
 Ibid. at paras. 311-315.
 Ibid. at paras. 320-338.
 Ibid. at paras. 350-358.
 Ibid. at para. 357.
 Minus $66,639.00 CAD in income earned during that time period.
 Milazzo v. Autocar Conaisseur Inc., 47 C.H.R.R. 468 (C.H.R.T.); Allied Systems (Canada) Company and Teamsters Local Union 938, 2008 CanLII 13354 (Slotnick).
 Milazzo v. Autocar Conaisseur Inc., supra at paras. 174-176, 187.
 British Columbia (Public Service Employee Relations Commission) v. BCGSEU,  3 S.C.R. 3; British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights),  3 S.C.R. 868.