American Companies' Difficulty with Canadian Employment Law
- Aug 1, 2025
- 2 min read
A recent lawsuit has caught public attention—not for its facts alone, but because it illustrates a pattern I’ve seen repeatedly in my many years practicing employment law in Ontario: U.S. companies operating in Canada without fully adapting to Canadian employment laws.
Canadian human rights legislation protects against discrimination based on pregnancy and family status, and our courts and tribunals apply these protections broadly.
But the bigger takeaway is this: this isn’t an isolated problem. Over and over, we see American companies fail to appreciate the ways in which Canadian law diverges sharply from U.S. norms. In Canada, the threshold for establishing discrimination is lower than in many U.S. jurisdictions, and protections are applied broadly. Likewise, severance entitlements in Canada are far more generous than in “at‑will” U.S. states, where terminations can be immediate with minimal payouts. Under Canadian common law, reasonable notice can often amount to many months—or even years—of pay.
In one case I handled many years ago, a large American company (with thousands of Canadian employees) attempted to defend a human rights claim that we initiated by pointing out that it had eliminated an entire division (including my client, who was on maternity leave at the time) based on the advice of third party business consultants. They felt that these consultants insulated them from liability, and argued there could be no discrimination if a decision was made regarding an entire division rather than with respect to my client alone. Despite their being represented by experienced Canadian employment lawyers, they took this position and attended mediation supremely confident that they owed nothing further to my client. We demonstrated indirect discrimination: other employees working in the same division that was closed were offered interviews for other roles within the company, while my client was not. Some of the other employees in that division were able to find other positions within the company in interviews with the above-noted consultants, while the majority were not successful and received severance packages. We were able to demonstrate that our client was subjected to prima facie discrimination, as she was deprived of the opportunity to interview for another role within the company due to her being on maternity-leave at the time.
Even though this different treatment resulted in only “indirect” damage, and demonstrated not active malice on the part of the company towards our client, we were able to successfully recover significant damages for our client in the form of both a substantial severance package as well as damages for the breach of her human rights.
The lesson for employers is clear: Canadian law is not U.S. law plus a few tweaks. Failing to appreciate our enhanced protections can—and frequently does—lead to larger awards for Canadian employees.
For Canadian employees, this means that cross-border misunderstandings sometimes work in their favour.
