Northern Exposure

Background Check Program Upheld as Reasonable Exercise of Management Rights

By Hadiya Roderique

In Canada, pre-employment background checks are generally permissible. With some exceptions in some provinces, these checks can include information about a candidate’s employment history, education, credit, fingerprints, and criminal record. Though Canadian employers can generally conduct such checks on potential or current employees if they have their consent, the legitimacy and permissibility of the use of criminal background checks by employers has come under fire.

In several recent decisions, unions, employees, arbitrators, and courts have questioned whether an employer’s need to access this information outweighs an employee’s right to privacy. The recent decision of Arbitrator Watters in Re Diageo Canada Inc. and C.A.W.-Canada, Local 2098 has added to the criminal background check dialogue.

Criminal background check process
Criminal background checks in Canada are obtained by agencies of the Canadian Police Information Centre (CPIC), a national database of the Royal Canadian Mounted Police (RCMP). Maintained primarily for law enforcement purposes, the RCMP’s database is the sole national database of criminal records, populated by CPIC agencies such as local police forces.

Employers can obtain information about job applicants through a CPIC agency either by contacting an agency directly or using a commercial service provider. The most basic kind of CPIC check, also called a “criminal records check,” identifies whether an individual has a record of a conviction or a discharge in the database. To obtain more details of a conviction, an employer must send the individual to be fingerprinted.

Diageo’s program
In Diageo, the employer instituted a criminal background check program in response to the United States Customs-Trade Partnership Against Terrorism (C-TPAT) program. As part of its series of compliance standards, the C-TPAT Importer Security Criteria stated that consistent with foreign, federal, state, and local regulation, background checks and investigations should be conducted for prospective employees. The criteria also recommended periodic checks and reinvestigations of current employees based on cause and/or the sensitivity of the employee’s position.

Diageo Canada Inc. enjoyed Tier 3 C-TPAT status, the highest rating under the C-TPAT. The company asserted that this resulted in fast-track movement of its goods into the United States and priority in terms of product shipments. To maintain this status (rather than be downgraded to Tier 2 status), Diageo chose to implement background checks in response to the C-TPAT criminal background check requirements.

The employer’s background check program would apply to new employees and those transferring into C-TPAT-sensitive positions. It would not apply to employees who had been with the company for more than five years or who had been subject to a background check pre-hire. Results were assessed on a case-by-case basis, and pardoned criminal offenses and provincial offenses (e.g., traffic tickets) would not prevent an employee from working in any of the C-TPAT-sensitive positions. Employees were entitled to appeal under the collective agreement if they were disadvantaged by the results of a check.

Despite all of Diageo’s procedures, the union filed a policy grievance challenging the background check program.

At the arbitration, Diageo was unable to demonstrate that failing to conduct background checks would result in a downgrade of C-TPAT status:

  • the opinion provided by U.S. Customs and Border Protection Agency stated that background checks were recommended, not required;
  • the opinion suggested only that failing to conduct background checks “might affect” the Tier 3 status; and
  • it also wasn’t clear how a downgrade in status would affect the movement of goods to the United States.

In response, Diageo asserted that anything less than a best-practice approach “could expose the company to an element outside of its control.”

Arbitrator Watters decided that Diageo’s proposed background check program was reasonable and was an appropriate exercise of management rights. He said the company had legitimate business and operational reasons for adopting a background check policy in response to a risk of reduction of status.

Arbitrator Watters accepted that a downgrade in C-TPAT status would likely impact the employer’s business by way of increased screening, more intense security checks, and possible quarantine of goods. This would likely culminate in shipment delays, which would compromise the product quality in respect to certain brands with a finite shelf life.

In the often discussed and cited Ottawa (City) and Ottawa Professional Firefighters Assn. (Re) case, another Ontario arbitrator rejected the use of periodic background checks of currently employed firefighters, noting that checks could be permissible only where they were justified by reasonable grounds. The arbitrator’s decision has provided insight into the kind of potential business problems that could constitute such grounds in Canada. Although this decision arises in Ontario and in the unionized context, it could be persuasive to other decision-makers in other Canadian provinces.