Canadian Versus U.S. Labor Laws

Canadian Versus U.S. Labor Laws Although we share the longest land border in the world, there is a laundry list of legal and cultural differences between the United States and Canada. So, those looking to head North for business should be aware of the legal landscape they are entering.

Here is a very basic overview of the major differences between U.S. and Canadian employment laws.

Provincial Control Over Federal Control When it comes to dealing with employment and labour issues, the U.S. Federal government is more hands-on than Canada’s federal government. Rather than meddle in provincial workplace affairs, Canada’s federal government only exercises power over a couple of industries: shipping and banking. Outside of that, almost everything labor and employment related is handled by provincial authorities. That means, for instance, there isn’t one equivalent to OSHA, but one in each of Canada’s provinces as well. However, that shouldn’t be much of a change for businesses that operate in multiple U.S. states, which each have localized laws and regulations that often go beyond what is prescribed by the U.S. federal government.

One of the regulations that differs between provinces is how overtime is calculated.

Overtime Differences In the United States, salaried employees are often classified as “exempt,” which means they are not (legally) owed overtime no matter how many hours a week they work. Except for a few high level occupations, such as lawyers and engineers, being classified as “exempt” in Canadian provinces is much rarer than in the U.S. In Canada, local governments have stricter standards for classifying exempt employees than most of the U.S. Therefore, a larger portion of your Canadian workforce will qualify for overtime than they would in the States. Certainly, it is a factor to consider when planning to hang a shingle in Canada.

While overtime is typically calculated at a 1.5 x an employee’s normal pay rate in Canada, how the hours are calculated differs in some provinces. For instance, employees in British Columbia receive overtime wages for any hours beyond the 8 they work in a day. Whereas, U.S. employees typically have to break the 40-hours/ week mark before they are eligible for overtime.

Employee Contracts When it comes to employee contracts, employees almost always get more favorable terms than the employers. Courts regularly defer to what is in the employees’ best interest if something is not covered in their employee contract. This is the Canadian way.

An employer that changes the contract can find themselves in a legal bind for doing so, which can lead to a whole set of legal troubles for the employer as employees can claim constructive dismissal if their contract is altered without agreement. This could end up leading to tens of thousands of dollars in separation compensation, not to mention associated legal fees. So, it’s a mistake businesses don't want to make.

As always, those looking to engage in business across the border should seek legal counsel in Canada to guide them through our robust set of employment and labor laws. Also, if you are coming from the United States to do business in Canada, don’t forget to add the “u” in labour.