BEFORE MOVING TO THE STATES, MAKE SURE YOUR ENTITLEMENTS ARE SET DOWN IN WRITING

One of the many ways that the globalization of the economy affects the working lives of individuals is international transfers. An employee who originally started working for a Canadian corporation is transferred to the United States to work for the American mother corporation. Usually, such a transfer is also a promotion and good news. People should be aware, however, that the rights they have as an Ontario employee do not always follow them when they move to a new corporation in the United States. Often, however, they do.
 
A man we will call Fred worked for 17 years for a Canadian corporation and held a management position.
 
A sister corporation offered him an executive position in the United States and he accepted the offer. Everything was done in a hurry and there was no contract signed. He moved himself and his family on very short notice, but 19 months later was terminated without just cause.
 
Many states are what the Americans call “at will employment” states. That means that you can be terminated with no notice or pay in lieu of notice. They can simply walk into your office and say good-bye.
 
Fred returned to Canada and sued in the Ontario courts for wrongful dismissal. The American company brought a motion asking the judge to strike out Fred’s statement of claim and rule that Fred had to bring any action against his former employer in the United States and under the law in the state in which he had worked.
 
Luckily for Fred, the judge declined to do so. The judge noted that throughout Fred’s 17 years of employment, he dealt with a number of sister companies.  He was always encouraged to think of all the related companies as one great mothership and to work for the good of that global entity. As a result, when the call came to take a job in the United States, he did it without hesitation and without considering what would happen to him if he was terminated without just cause.
 
Fred said that he was of the understanding that this was just a 3-year secondment and that he would be guaranteed a job back in Ontario when it was over. The employer, of course, denied it.
 
The employer, however, got tripped up by the Visa application which it signed when it was getting the appropriate papers to allow Fred to work in the United States. It told the American immigration department in those papers that this was just a 3 year transfer after which Fred would be returning to Ontario. Oops.
 
The judge noted that Fred had spent most of his working life in Ontario. It would be unfair for the corporate mothership that encouraged him to think of all the related companies as one big entity to suddenly hide behind a corporate shield, claiming that Fred’s employment in the United States was a new start. I have no doubt that when this matter eventually reaches trial, the courts will hold that Fred was entitled to reasonable notice of his termination.
If Fred, however, had paused for a few moments before he rushed off to the United States and got the American company to agree in writing as to what he would be entitled to if her were terminated, Fred would never have had to spend money on this motion before a judge.
 
Wrongful dismissal is a concept unknown to law in most American states. They are either at-will states where people can be terminated without notice or the notice required by law is minimal compared to what is required by Ontario law.
 
People don’t like to think about the possibility of being terminated when they are getting a big promotion and moving to a warm, sexy place, but Fred’s lesson is that it can happen. Things can change quickly. A half an hour consultation with an employment lawyer before you get your suntan lotion out is well worth it.
 
As published in the Hamilton Spectator, August 10, 2004
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com