Blocked: Why do-not-hire lists can be perfectly lawful – or very risky

A lawsuit facing CBC’s Yellowknife newsroom reads like a cautionary tale for HR: a former senior talent acquisition specialist has alleged that the workplace was so fraught there was an unofficial “crying room” for employees — and that managers quietly kept a “do not hire” list that disproportionately flagged marginalized, disabled and Indigenous candidates.

The CBC has said it disputes the allegations and will defend itself, and none of the claims have been tested in court.

However, the case shines a bright light on a murky corner of hiring: quiet “never again” files that many employers maintain when it comes to recruitment targets.

Two employment lawyers speaking with Canadian HR Reporter say the legal ground under those practices is far from solid – especially when these lists collide with human rights, privacy and competition law, or add up to retaliation.

If an employer insists on having one of these lists, it must be “super careful because it's just very risky,” says Adrian Ishak, partner at Piccolo Heath in Toronto.

“Employers have to negotiate those really cautiously and be prepared for any potential fallout if it moves into the public domain.”

‘Most organizations have some form of this’

So, how common are these alleged lists? Labour and employment lawyer Geoge Waggott says most organizations have some form of this.

“Whether they put it in writing or have it as a practice, it's the same legal effect: ‘We don't ever want to hire Sally again’ — that's it. Some of them will have a list in their system.

“Who knows what the number is, but I would say most employers do it in some way or another… There can be reasons to say, ‘He’s just not somebody we want to have back.’”

Employee turnover is one reason Waggott thinks these lists are so prevalent.

“We’re in an economy right now where I think it is an employer's market. And… the recruiting processes these days are generally taking longer.”

‘The short answer is they are lawful’

But the big question, of course, is are these lists legal?

“The short answer is they are lawful,” says Waggott. “There's no prohibition in Canada in a statute that says you can't have a list like that.”

But he’s quick to add that legality on paper doesn’t mean much if you can’t justify why someone ended up there.

“Having the list or the practice isn't the problem — it's being prepared to defend it,” says Waggott. “It doesn’t mean you’re insulated from being scrutinized on that.”

However, there are human rights considerations, he says, as jobseekers don’t lose their legal protections just because they never made it onto payroll.

“Every person who is seeking employment has legal rights, even if they don't become employed. Now, there'll be different rights depending on whether they do get employed or not… so, there can be cases where somebody will say, ‘I was denied employment for prohibited reasons’ [which] could include discrimination.

“So, if there's a list that says, ‘Do not hire people with these characteristics,’ then the existence of that list or practice is basically proof of discrimination,” says Waggott.

Politics, creed and do-not-hire lists

What if a candidate’s politics rub leadership the wrong way, or they take a public stand that conflicts with the organization’s values — and they end up on a do-not-hire list. Does that amount to discrimination?

Waggott says that can land uncomfortably close to the protected ground of “creed,” depending on the facts.

“Creed is quite interesting,” he says citing Ontario’s Human Rights Commission which defines creed essentially as a belief.

“We ran into this a little bit in some COVID vaccine refusal cases, about whether that is creed or not. Now, that was generally challenged successfully because it wasn't actually clear and obvious that it really was a belief — we're kind of bordering on religious belief in some cases,” says Waggott.

Even so, he sees legal exposure if someone is blacklisted purely because of their beliefs: “If somebody's put on a list, a blacklist because of that, I think they’ve probably got a potential case.”

Free market considerations

Ishak is less forgiving when it comes to the legalities of employers’ using do-not-hire lists — especially when more than one employer is involved.

“As a general rule, they're not permissible because the starting point of course in a free-market economy is a free market. And that includes the movement of people, not just of resources and goods... And so courts will not enforce no-hire provisions as a general rule — there are very few carve-outs,” he says.

Ishak puts no-hire language in the broader bucket of restrictive covenants – the same family as non‑competition and non‑solicitation clauses, so “anything that restricts anybody's ability to do what they want to do in a free market,” he says.

“Courts already view these as de facto unenforceable. The person seeking to enforce it — regardless of whether it's a no hire or [no rehire] — they have to demonstrate that there is no other way to protect their legitimate business interests otherwise. And ‘no hires’ are really hard to justify on that basis.”

That becomes especially problematic when big employers quietly agree not to poach from each other, says Ishak, citing as examples Google reaching an agreement with Microsoft about not poaching each others’ workers: “It’s anti-competitive.”

Potential carve-out: restrictive covenants

If there is a sliver of room for a no‑hire clause, Ishak says it tends to be in the mergers‑and‑acquisitions world, if an employer is essentially buying expertise.

If a company is acquiring another company where “the nature and identity of the employees is the key thing” because it's a knowledge business and skills are specialized, it might be able to negotiate a no-hire provision, he says.

“But even then, it would have to be very specific around timelines, around who qualifies — if you're a business of tens of thousands of people, then clearly not all the tens of thousands of people are going to be key employees at the core.”

When do-not-rehires make sense

However, when it comes do-not-rehire lists within a single employer — like that alleged at the CBC — Ishak says he’s less concerned about the legalities but more concerned about a “PR nightmare — for obvious reasons. Like ‘Why are people getting on the no rehire list?’”  he says.

“Is it because you’ve exited them as a result of a settlement due to a sexual harassment?”

Valid reasons can include friction while the person was employed, performance issues or misconduct or attitude problems, says Ishak, but if the employee decides to sue after termination, that can be a problem.

If the employer feels they offered a reasonable severance package, they might then hire a lawyer and decide, “Look, we don't need this person back. We just paid them out and paid our lawyers a ton of money to settle this matter. We don't want them back’ — that’s totally legit,” says Ishak.

Fears of retaliation with do-not-rehire lists

Waggott also highlights another big risk: using the no-hire list to punish people for exercising their rights.

“They might be on a list because they're just tough to get along with or they're not performing to standard, or assessments are made — and let's just say those are defensible reasons,” he says.

“The other piece is it's not permitted if you do it as a retaliation for them exercising their lawful rights.”

That could be as simple as someone raising a pay issue for overtime.

“Even if the complaint is not substantiated, you may have an organization say, ‘Hey, Fred claimed that he was short on overtime. We don't want to deal with that again. Put him on the list’ — that's retaliation,” says Waggott.

“The reason for putting them on the list can be scrutinized. So, I'm not saying you can't have the list, but it doesn't just give you the right to pick and choose who you want arbitrarily.”

And timing doesn’t make the problem go away, he adds.

“The retaliation is only going to happen when they apply for that job — it could be years later. So, that's the same with the human rights part.”

Privacy, third parties and HR systems

Beyond discrimination and retaliation, privacy law is another important consideration when it comes to blacklisting.

Waggott says employers generally have an implied and statutory right to manage the employment relationship – including keeping records while someone is on staff.

The trouble starts around the issue of consent when that information lives on in systems long after someone leaves, particularly if vendors or external recruiters can see it.

“You need to be having some sense of what you're going to do to defend it. So, who has access to that information? Is it limited to those that actually need to know? Your former co-workers don't need to know — people who make hiring decisions do.”

Ishak, meanwhile, flags the risk of lists escaping formal systems entirely and reappearing in informal spaces such as WhatsApp chats between HR peers at different companies.

“It can be dangerous because, at the end of the day, it's about the Competition Act more than anything else. And how far along that spectrum you've gone such that you really have breached the Competition Act.”

He notes that, so far, enforcement in Canada has been limited and “no-hire agreements or behaviours that are crossing that line aren't — so far as I can tell — at the top of their list of enforcement priorities [which] may very well be what leads certain people into this false sense of comfort.”

Having the final word

As a last tip for HR, documenting reasons for why someone is on a do-not-hire list is recommended. Waggott leans toward putting at least something on record, similar to how employee terminations are handled.

“Sometimes, people just say, ‘Well, it's just without cause and there's no reason.’ Now, there's generally no legal obligation to provide those reasons, but recording that sometimes becomes important when the person challenges and says, ‘Oh, well, you discriminated against me because I am somebody who took too much sick leave’ or ‘I am from this ethnic background,’” says Waggott.

In that context, even a brief explanation can help, he says.

“Obviously it's got to be a proper reason, but putting ‘a bad attitude’ or ‘complaining about coworkers’… an absenteeism problem, whatever it is, [is OK]. You don't have to defend those to a criminal standard. You're not actually trying to show ‘OK, here's my hundreds of pages to justify that.’”