Canadian Employment Law Today

2 | January 18, 2017 Canadian HR Reporter, a Thomson Reuters business 2017 Background check refusal grounds for dismissal Ontario court upholds termination of employee who refused to consent to background check after being hired BY RONALD MINKEN BACKGROUND CHECKS are a typical part of the hiring process. But what about after the employee is hired — can an em- ployer insist that the employee consent to a background check in that circumstance and, if the employee does not consent, can the employee be terminated? In Covenoho v. Pendylum Inc., the Ontario Superior Court of Justice tackled that issue and determined that Pendylum was en- titled to terminate Joss Covenoho without cause for refusing to consent to educational and criminal background checks after she had begun work and that the termination was not an act of bad faith. Covenoho was hired pursuant to a one- year fixed-term contract to perform ser- vices for one of Pendylum's clients, Cerid- ian Canada. Shortly after Covenoho was hired, Ceridian informed Pendylum that education and criminal background checks were required for Covenoho as well as oth- ers performing services for Ceridian due to the sensitive nature of the data accessible to these employees. Pendylum informed Covenoho and other staff members that if they declined to consent to either of these checks, "Ceridian has stated that it must re- lease you from your duties there." When informed of this new mandatory requirement, Covenoho refused to consent to the background checks, taking the posi- tion that the checks were not a term of her employment with Pendylum. Less than three months into her one-year contract and as a result of her refusal to agree to the back- ground checks (which were a mandatory requirement for Ceridian), Pendylum ter- minated Covenoho in accordance with the termination provision of the fixed-term con- tract, which allowed for termination by ei- ther party with at least two weeks' notice. In the termination letter, Pendylum stated that Covenoho's fixed-term contract was being terminated because of "Ceridian's decision to terminate its contract with Pendylum Inc. for your services." Covenoho commenced legal proceedings seeking damages based on the balance of the fixed-term contract and bad-faith damages, among other things. On a motion for summary judgment, the Ontario Superior Court of Justice held that the language in the fixed-term contract ex- pressly provided for early termination by either party upon provision of at least two weeks' notice and that Covenoho was not entitled to payment for the remainder of the term. In the court's view, the language of the early termination provision was "clear and unequivocal, and effect should be given to the reasonable expectations of the parties reflected therein. e court also determined that Pendylum's termi- nation of Covenoho was not an act of bad faith as Pendylum explained to Covenoho prior to terminating her that she would be terminated if she refused to consent to the background checks. e court stated that there was, "nothing untruthful, misleading or unduly insensitive about (Pendylum's) actions." Accordingly, Covenoho was not entitled to any additional notice or damages and the action was dismissed. Lessons for employees While many employees may not wish to undergo background checks if requested after they have been hired, if these back- ground checks are legitimately required, the employee may face termination for refusing to consent to these checks. is may be true even where consenting to a background check is not an express term of employment at the time of hiring. If an employee has a concern regarding a re- quest from an employer or a related third party for a background check during the course of employment, proper consider- ation should be given before the employ- ee refuses to comply with the request — a refusal to consent may result in the em- ployee being terminated, with or without cause, depending on the circumstances. Lessons for employers Employers should carefully consider whether background checks are required prior to hiring employees. If so, they should be conducted at the time of hiring. Further, employers should consider in- corporating into employment contracts the possibility of background checks be- ing conducted during the employment relationship. If a background check is re- quired during the employment relation- ship and an employee refuses to consent to the background check, the employer may be able to terminate that employee on the basis of the employee's refusal to consent to the background check. If an explanation is provided to the employee and the employee is notified in advance that her refusal to consent may result in termination, then the termination will likely not give rise to liability for bad faith damages. For more information see: • Covenoho v. Pendylum Inc., 2016 Carswel- lOnt 13667 (Ont. S.C.J.). ABOUT THE AUTHOR RONALD S. MINKEN Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in Markham, Ont. He can be reached at www.MinkenEmploymentLawyers.ca. Ron gratefully acknowledges Sara Kauder, Kyle Burgis and Gillian Fahy for their assistance in preparation of this article. The company explained to the worker before she was fired that refusal to consent to the background check would result in termination.

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