The Brave New World of Cross-Border Work: Which Province's Laws Apply?

 In my practice, I've been increasingly seeing questions about remote and cross-border work: As an employer, if I send my workers to a project in another Province, can I still just apply Alberta's employment standards, or do I have to structure overtime per that other Province's requirements?

If I hire a remote worker in Ontario, which Province's employment standards apply?

This turns out to be a difficult question, with no clear answer in many cases.

But let's talk about it. Specifically, I'm going to deal with these questions as being simply within the Canadian context, because once you get into international employment, you get into additional weird questions about tax remittances, etc. (But yes, I've seen those issues on more than one occasion, too.)

The Scenarios

While many employers operate across Provincial borders, the most standard employment relationship raises no jurisdictional considerations, because the employee works exclusively (or almost exclusively) in one Province supporting the employer's operations in that Province.

So the FIRST scenario arises when THAT relationship introduces cross-border elements, when the employer starts asking (for example) an Alberta employee to attend business meetings in Ontario, or work on a construction project in Saskatchewan. Temporarily, of course.

This scenario is complex, because it can have varying degrees of work in the other Province. A one hour meeting in Toronto versus a six month project in Saskatchewan engage different concerns.

The SECOND scenario is the inverse, involving a truly remote worker in a Province where the employer has no business operations.

The Different Statutes

One complicating factor is that different statutes have different language for this. Or none at all.

Without reviewing all statutes in depth, the only Province that I know of that has any helpful statutory language for these types of questions is Ontario.

3 (1) Subject to subsections (2) to (5), the employment standards set out in this Act apply with respect to an employee and his or her employer if,

(a)  the employee’s work is to be performed in Ontario; or

(b)  the employee’s work is to be performed in Ontario and outside Ontario but the work performed outside Ontario is a continuation of work performed in Ontario.  2000, c. 41, s. 3 (1)

This language is really helpful for the scenario of an Ontario employee doing occasional work elsewhere: Ontario law still applies. It doesn't tell us whether the other jurisdiction's standards might also apply.

It suggests that an Ontario employer hiring an out-of-Province employee (who doesn't work at all in Ontario) probably doesn't have to comply with the Ontario statute in that instance. That said, I wouldn't rule out some nuance here in terms of where the 'work' is performed, where remote work is at issue.

There isn't a lot of case law interpreting these clauses. Most of the cases turn on the effect of s.3(1)(b) to out-of-Province employees with some Ontario component, where the employee is trying to make a claim for, say, termination and severance pay under Ontario law, or where the employee is making a wage claim for the work performed in the other jurisdiction.

It's fairly natural that those claims turn on the extent to which the out-of-Province work is "a continuation of work performed in Ontario". However, I would suggest that a question of "Do I have to pay an Alberta employee overtime on Ontario's standards while they're working on a project in Thunder Bay" engages substantively different interpretive concerns - more specifically dealing with s.3(1)(a).

(Does this section suggest an all-or-nothing approach, that the entire relationship is governed by the ESA, or no part of it is? Is it possible to have an out-of-Province worker subject to the ESA while, and only while, in the Province - but in such a way that s.3(1)(b) doesn't extend its scope to cover broader facets of the relationship like termination, or wage entitlements earned outside the Province? These are questions for which I've seen no guidance.)

In other Provinces, however, there's not even that statutory language. For example, in BC, the scope of their employment standards legislation is said to extend to 'all employees', without any jurisdictional delineation. Alberta's scope is 'all employers and employees'. Subject to certain exceptions, of course.

Notably, Ontario ALSO expressly carves out Federally regulated employees. Alberta doesn't. That doesn't mean that Alberta's statute governs Federally regulated employment relationships, because - constitutionally speaking - it can't. However, it means that we need to read its scope a little bit more contextually, and probably treat it as speaking to all employment relationships within its constitutional purview.

Non-Exclusive Jurisdiction

That said, a word on jurisdiction is called for: There's no rule against non-exclusive jurisdiction.

In law school, we studied a scenario involving a 'boiler room' in Toronto where scammers phoned seniors in the United States to trick them into wiring funds to their accomplices in Mexico. The question: Which country gets to prosecute these criminals? The answer: Canada, the US, and Mexico would probably all be within their rights to do so.

It is entirely plausible for multiple Provinces to have jurisdiction over the same set of transactions, and there's no real operative conflict there unless one law has requirements directly inconsistent with another. That's not an issue here: All Provinces set minimum entitlements, and permit parties to exceed those minimum entitlements.

So it is entirely plausible that more than one Province might assert jurisdiction over an employment relationship, and the outcome would be that the employer has to provide the more generous requirements so as not to violate the law of either Province.

Interpretation

Statutes are supposed to be interpreted in a manner broadly consistent with their overall scheme, purpose, and operation. The purpose of employment standards legislation is to protect employees and ensure minimum standards.

Permanent Remote Work

So let's start with the easiest question: If I have some decentralized web-based business, can I incorporate and have my registered head office in an employer-friendly jurisdiction, and then pay my employees across the country in accordance with that employer-friendly jurisdiction, ignoring the laws of the Provinces they're actually located in?

Almost certainly not. That would undermine the purpose of employment standards statutes, if they could be circumvented by simply having an out-of-Province employer.

From a constitutional perspective, it's almost a certainty that the Province has the right to regulate employment relationships where the employees are physically located within the Province, and so the kinds of broad language used in Alberta and BC very likely captures them on that basis.

The most difficult question, on the other hand, is the inverse side of that one: If the employee's Province has the LESS generous statutory minimums than the employer's Province does, can the employee make a claim under the legislation of the employer's Province?

This one, I think, depends. Ontario's statute seems to suggest that the answer is 'generally no', but again, I think there's room for nuance.

My first instinct would be that the same logic applies in other Provinces, but there are certainly arguments to be made to the contrary. Particularly in Alberta, where the legislation is said to apply not only to employees, but also to employers, there's a stronger pitch that the employer's presence in Alberta brings it within the scope of Alberta's Employment Standards Code.

(Alberta's requirements are generally less onerous than other Provinces, but this isn't without exception.)

So for 'remote work' generally where an employee lives and works (exclusively or almost exclusively) in a Province where the employer has no operations, my view generally is that the employee has to claim where they live. Though this isn't well-explored in the case law, and there may be exceptions.

Temporary Assignments/Cross-Border Work

As we've discussed, the Ontario statute clearly says that an Ontario employee, assigned temporarily to a project out of Province, continues to be governed under that statute.

There's also case law suggesting that it's not necessarily a question of where the employee spends most of their time. Adjudicators are reluctant to give Ontario's termination entitlements if the connection to Ontario is fleeting or merely incidental, but they're quite willing to extend Ontario's protections to a relationship even where the work performed in Ontario was comparatively "minor".

So we can also say that a worker who spends most of his time in Alberta, and some time in Ontario, may be able to seek recourse under Ontario's statute as a general proposition.

But again, coming around to the question of things like wages and overtime pay in connection with a single project carried out in a Province outside where you normally work...

I can't seriously see this question working out any other way than the employee having recourse in both jurisdictions.

On the one hand, the relationship is generally governed by the statute of the home Province, and I don't think you're going to deprive the home Province of jurisdiction just because the employee has temporarily stepped outside of it. The nexus to the home Province is still strong, and the framing of most statutes suggest that the mere fact that the Province can take jurisdiction is enough reason to think that the statute applies.

If nothing else - notwithstanding certain Alberta-specific cases suggesting the contrary - I remain of the view that the minimum entitlements under the home Province's statute are implied into the employment contract, leaving intact common law claims in contract based in those statutory entitlements.

Imagine this: Your regular hourly wage is $30/hour. You normally average 56 hours per week, and you're not exempt from overtime in your home Province, so you get 12 hours paid at time-and-a-half - $1860 per week. You get assigned for six months to another Province to do the same job, at the same hourly rate, and then your employer tells you, "By the way, your job is overtime-exempt here, so you don't get your overtime premium." Suddenly your compensation drops by nearly 10%, costing you about $4700 over the course of that six month assignment.

On my approach, that's a problem.

On the other side of the equation (why can employees ALSO claim in the visiting jurisdiction), it comes back to my earlier view that it's not consistent with the goals of employment standards legislation to allow interjurisdictional workarounds for work conducted within the Province.

It's a little less problematic here in the sense that it wouldn't give substandard treatment to people who ordinarily work in the Province...but it raises other concerns about competitive marketplaces and even playing fields: If I'm looking for a contractor for a large project in Golden, British Columbia, and the Alberta-based employers can tender at lower prices because they're able to save on labour costs due to more lenient labour regulation, that's an impact that hurts BC businesses and workers. The cost of an in-Province job shouldn't depend on where the workers are from, and employment standards legislation probably shouldn't be read in a way that would have that effect.

And again, on the text of most statutes...the fact that the work is being carried out within the Province definitely provides the Province with jurisdictional authority to regulate it, and with statutes being framed in a way that suggests they apply wherever the Province has jurisdiction...it seems to support the conclusion that BC has legislated in a way that requires their employment standard minimums to be satisfied where out-of-Province workers are concerned.

(Note: For work that is out-of-Province by its nature, such as long-haul transport, aviation, interprovincial rail, etc., that's usually governed separately by a Federal scheme. Completely different framework.)

The Bottom Line

For employers, the practically safe answer, and probably the legally correct one in most scenarios, is to pay employees in line with the laws of the (potentially multiple) places they work. If they work in more than one Province, you can't go wrong giving them the greater benefit of both Provinces' minimum standards.

That said, there's uncertainty in this area, and probably room for exceptional treatments in certain cases.

*****

Dennis Buchanan is a lawyer practicing labour and employment law and civil litigation in Edmonton, Alberta.

This post does not contain legal advice, but only general legal information.  It does not create a solicitor-client relationship with any readers.  If you have a legal issue or potential issue, please consult a lawyer.