HIRING AND FIRING RECORDS

CRISTINA WENDELDENTONS CANADA LLPOctober 9, 2013

OVERVIEW• JOB ADVERTISEMENTS & APPLICATION FORMS – What employers should

and should not ask when hiring.

• PRE-EMPLOYMENT CHECKS – What checks are available? When should employers conduct checks on prospective employees?

• EMPLOYMENT CONTRACTS - Are they necessary? What should they include?

• TERMINATION LETTERS – What employers should and should not say when terminating an employee’s employment.

• RELEASES – When should they be obtained? Will they be enforceable?

• REFERENCE LETTERS – Should they be given? What should they say?

HIRING RECORDS

Job Advertisements and Application Forms

Key concernsDiscrimination allegations - Alberta Human Rights Act˗ Section 7 - prohibits discrimination in employment practices,

including hiring, on the basis of the protected grounds˗ Section 8 – prohibits applications, advertisements and inquiries

of applicants that express any limitation, specification or preference indicating discrimination on the basis of the protected grounds or would require an applicant to provide information concerning the protected grounds

˗ Protected grounds: race, religious beliefs, colour, gender, physical disability, mental disability, age, ancestry, place of origin, marital status, source of income, family status and sexual orientation

How to minimize the risk of a discrimination claim:

Prepare a job description

Determine the core requirements and competencies required for the position

Tailor advertisements and application forms appropriately

DO’S

• DO set out the requirements for the position in the advertisement

• DO request information in the application form that will enable you to determine if the applicant can perform the job.

DON’TS

• DON’T word the advertisement in a way that shows a preference, or could exclude a person or group of persons, based on the protected grounds.

• DON’T request information in the application form that would require the applicant to disclose information relating to the protected grounds.

Exceptions:

Bona fide occupational requirement

Reasonable and justifiable contravention

Affirmative action/employment equity

Targeted recruitment – for greater representation of historically disadvantaged groups

What else can I do to avoid discrimination claims but still obtain the information I need?

Make the offer of employment conditional on the successful results of pre-employment checks

HIRING RECORDS

Pre-employment Checks

Types of background checks:

• Reference checks• Medical and fitness tests• Drug & alcohol tests• Criminal record checks• Credit checks• Education and professional certification checks• Immigration and terrorism checks• Psychometric checks• Online/Google searches

Key concerns

Privacy˗ consent˗ reasonable

Human Rights˗ protected grounds – discrimination allegations˗ bona fide occupational requirements

Reference checks

Ensure consistency when references are checked

Obtain consent to contact references – especially current employer

“Confirmation of employment” reference – limited value

Medical and fitness tests

Sometimes necessary to determine ability to perform key duties

Use least intrusive means possible

May trigger duty to accommodate

Disclosure of test results˗ third party provider will generally conduct testing ˗ test results disclosed to employer should be limited

Drug and alcohol tests

Drug and alcohol dependencies are recognized as disabilities under human rights law

In Alberta, pre-employment drug and alcohol testing is generally allowed for safety sensitive positions

Criminal Record checks

In Alberta, a criminal record is not a protected ground under human rights law

Privacy concerns

Requirements:˗ informed consent form˗ format of search results˗ fingerprint verification

Practical concerns – timing issues

Credit checks

Generally for positions where the potential for fraud exists or the employee will deal with money or other sensitive information

Must show that check was reasonably necessary

Specific statutory requirements – Fair Trading Act (Alberta)

Education and Professional Certification checks

Most commonly falsified on resumes

“Diploma mills”

Other checks

Immigration and terrorism checks

Psychometric checks

Online or Google searches• Caution!

Background checking policy

Consistency is key

Policy should be reasonable

Conduct only the necessary tests

Deal with consent and disclosure issues

HIRING RECORDS

Employment Contracts

Employment contracts can be oral or written

Why get it in writing?• certainty• clarity• proof• to include specific terms

• probationary term• termination clause• confidentiality clause • restrictive covenants

Termination clauses

Employment Standards Code (Alberta) – statutory obligations• Minimum standards

Common law obligations• reasonable notice• key factors:

• age• length of service• remuneration• position• duties/responsibilities

• Can be significant

Contract must meet or exceed minimum statutory requirements but can limit common law obligations

Confidentiality clauses• clarify what is covered• clarify expectations and obligations

Restrictive covenants• non-competition• non-solicitation• key is whether the restrictions are reasonable in the

circumstances• depends on:˗ certainty˗ geographic scope˗ temporal scope ˗ scope of business

Form of written employment contract

Can be in the form of a simple offer/hiring letter or a formal contract

Other employment documents can be incorporated by reference - for example, policies and procedures

How to ensure an employment contract will be enforceable

Make certain the minimum standards are met or exceeded –i.e. Employment Standards Code (Alberta)

Give the employee time to review the contract and obtain advice before signing

Have the employee sign the contract BEFORE starting work

Consider amending the contract if matters have changed over time

HIRING RECORDS

Termination Letters

A termination letter should be given to the employee in every case – advantages:

• Clarity – termination must be clear and unequivocal

• Trigger commencement of limitation period

• Limit liability risk (benefits, severance)

• Remind employee of ongoing obligations

• Compliance with statutory requirements

What information should a termination letter contain?• Basics – employee name and address• Date the employment is terminated• Reasons for dismissal• What sums will the employee be receiving and when (statutory

payments)• What happens with benefits• Company property• Ongoing obligations• Severance offer• Release

Reasons for dismissal

• Whether termination is with or without cause

• If with cause – provide brief summary of cause

• Leave the door open - after acquired cause

• Potential for finding of bad faith

Date of termination

Effective immediately or working notice?• pros and cons• when appropriate

Statutory payments

Employment Standards Code (Alberta)

• s.9(1): without cause termination – earnings must be paid within 3 consecutive days after last day of employment

• s.9(2): with cause termination - earnings must be paid within 10 consecutive days after last day of employment

• What are “earnings”?

• wages, overtime pay, vacation pay, general holiday pay and termination pay

Benefits

Employers must choose whether to continue benefits or terminate

If working notice is given, generally should continue benefits throughout period of employment

If providing lump sum payment and not continuing benefits – consider including sum for value of benefits

Generally should terminate disability benefits and life insurance benefits when employment terminates

Check with benefits provider for continuation and conversion options

Advise employee of any conversion options and provide contact person

Company property

List of company property that must be returned

Deadline (if not at termination meeting)

Appropriate person

Ongoing obligations

If appropriate, remind employee of any ongoing obligations• contractual • confidentiality• intellectual property• non-solicitation• non-competition

Impose new obligations?• consideration will be required

Severance offers

• Consider whether appropriate• with cause – gratuitous payment• without cause – reasonable notice• contractual requirements

• How much to offer?• finding the right balance• offer structuring – tax savings

Form of offer – various options available:• lump sum

• salary continuance

• salary continuance with incentive

• combination

• other items – for example: counseling fees, extended benefits

• Offer should be conditional on the employee signing a release

HIRING RECORDS

Releases

When should a release be obtained?

Generally a release is recommended whenever the employer is paying more than the statutory amounts required

If the employer is only paying out the statutory amounts, but payment is made conditional on a release, the release would be unenforceable for lack of consideration

What if paying pursuant to a contract?• generally, will not be required unless it was a term of the contract

Contents and complexity

Short form versus long form of release?

• will depend on the particular circumstances including:

• the employer’s liability exposure;

• the sophistication of the employee; and

• the stage at which it is being obtained.

Release may include:

• potential human rights complaints

• confidentiality clause

• potential claims against other employees, directors, officers

• EI acknowledgement

• indemnity for withholdings

Matters which could affect the validity of a release:

• Problematic language• Claims included• Consideration• Unconscionable• Undue influence• Independent legal advice• Duress• Knowledge about rights• Lack of capacity• Forgery• Fraud

HIRING RECORDS

Reference Letters

There is no specific duty or obligation on an employer to provide a reference letter to a departing employee

Employers should give careful consideration to requests for reference letters

Generally, employers should refuse to provide a reference letter only if the termination was based on serious misconduct which the employer is confident it can prove

Why provide a reference letter?

• May assist in employee’s search for new employment

• May be part of the duty of good faith and fair dealing in the

treatment of departing employees

• No legitimate reason to refuse the request

• Avoid finding of bad faith

• Decreased hostility – more likely to settle

• Argue failure to mitigate

What should the reference letter say?• Factual information˗ positions held˗ length of service˗ duties and responsibilities

• Include truthful, positive comments

• “Letter of employment” vs. “letter of reference”

• Do not embellish the truth

• Avoid the use of negative comments wherever possible

• Avoid subjective opinions – focus on objective facts

Potential Liabilities

Liability towards the departing employee

• Refusal to provide a reference letter• bad faith

• Negative reference letter• defamation for untrue statements• interference with contractual relations• inducing breach of contract• increased notice period • bad faith

Potential Liabilities

Liability towards prospective employer

• unnecessarily positive reference letter

• negligent misrepresentation

Questions?Cristina WendelPartner

cristina.wendel@dentons.comD+1 780 423 7353Dentons Canada LLP2900 Manulife Place10180 – 101 StreetEdmonton AB T5J 3V5T+1 780 423 7100F+1 780 423 7276

The preceding presentation contains examples of the kinds of issues that businesses dealing with hiring and firing could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.