Refusal to have background check grounds for worker’s dismissal in Ontario

New employee felt recently announced checks were not a term of her employment
By Ronald Minken
|Canadian HR Reporter|Last Updated: 01/23/2017
Pendylum’s offices in Richmond Hill, Ont. (Google Street View)

Background checks are a typical part of the hiring process. But what about after the employee is hired — can an employer insist a person consent to a background check? And if she does not consent, can the employee be terminated?

In Covenoho v. Pendylum Inc., the Ontario Superior Court of Justice tackled that issue and determined Pendylum was entitled 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 by Pendylum.

Covenoho was hired pursuant to a one-year, fixed-term contract to perform services for one of Pendylum’s clients, Ceridian Canada. Shortly after the hire, Ceridian informed Pendylum that education and criminal background checks were required for Covenoho employees as well as others performing services for Ceridian due to the sensitive nature of the data accessible by these employees.

So Pendylum informed staff that if they declined to consent to either of these checks, “Ceridian has stated that it must release you from your duties there.”

When informed of the requirement, Covenoho refused, taking the position 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 background checks, Pendylum terminated Covenoho’s employment in accordance with a provision of the fixed-term contract, which allowed for termination by either 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.” But 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 said the language in the contract expressly provided for early termination by either party upon provision of at least two weeks’ notice, and Covenoho was not entitled to payment for the remainder of the term.

The court also determined Pendylum’s termination of Covenoho was not an act of bad faith as it told her she would be terminated if she did not consent to the background checks. The court stated 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 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 incorporating into employment contracts the possibility of background checks being conducted during the employment relationship.

If a background check is required during the employment relationship and an employee refuses, the employer may be able to terminate that employee on the basis of his refusal to consent.

If an explanation is provided to the employee and the employee is notified in advance that her refusal to consent may result in her termination, then the termination will likely not give rise to liability for bad faith damages.

For more information see:

Covenoho v. Pendylum Inc., 2016 CarswellOnt 13667 (Ont. S.C.J.).

Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in Markham, Ont. He can be reached through www.minkenemploymentlawyers.ca. He gratefully acknowledges Sara Kauder and Kyle Burgis for their assistance in preparation of this article.

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