Breaking through the Border:
Tips for Companies Employing Cross Border Employees

The globalization of business is occurring at an unprecedented rate. Focusing a corporation only on home soil dramatically limits the size of market a firm can serve. With this realization comes a push for business leaders to seek growth opportunities. This leads motivated companies across the border, expanding into the U.S. or Canada.

Unlike many locations overseas, cross border expansion offers a full spectrum of advantages such as the use of Western business models, English as the first language of business, highly developed infrastructure, and quality labor assets.

While there are similarities in organizational culture between the U.S. and Canada, it is crucial to the success of an expanding business to be aware of the disparity that exists as well. Companies unfamiliar with the differences between the Canadian and American employment fields can face many challenges. To ensure the transition is successful, it is vital that a company understand the legislative differences between Canada and the U.S. employment, and the consequences of overlooking those differences.
There are two major differences within American and Canadian employment environments: cultural and legislative. The history of social welfare in Canada has led to higher labor standards in areas such as employment insurance, collective bargaining, workers’ compensation, leaves and terminations. For example, it pays to be aware that in Canada most employees are entitled to up to 52 weeks protected maternity/parental leave, and “at-will employment” does not exist. Additionally, workplace alcohol and drug testing is much less prevalent in Canada - most mandatory testing is prima facie discriminatory and the employer will have to justify it as a bona fide occupational requirement.

Companies who fail to adhere to a country’s employment laws can find themselves in time consuming and costly litigation. For example, employees in Canada and the U.S. can file complaints against an employer through Employment Standards Tribunals, at no financial cost to the employee but at a significant burden to the employer in time and cost.

The good news is that there are many resources available to assist new companies in breaking through the border. Companies can acquire information from government bodies, and can hire an employment lawyer or a Human Resource Manager well versed in employment legislation. However, for companies who lack the time and funding, or prefer more flexibility, another solution is to use a total Human Resource Outsourcing Provider. This is distinct from a Functional Human Resource Outsourcer that specializes primarily in one area of HR, such as job placement or payroll.

A total Human Resource Outsourcing Provider is the solution for a company needing Canadian or American expertise in all areas of Human Resources and employment. Such a company will build and implement a Human Resource infrastructure that is not only in compliance with Canadian legislation, but fits with the needs and culture of a U.S. company in Canada, and vice versa.

Another valuable option for new companies in Canada is a total HR Outsourcing Provider that can offer Outsourced Employment services, becoming the employer of record for some or all employees if a company lacks the infrastructure to be an employer themselves in their own country or across the border. This employment can be short term or long term based on the company’s needs. As the employer, the Third Party Employer should ensure all employment laws are adhered to and should handle employee payroll, tax remittance, workers’ compensation, registration, benefits, separation paperwork, performance management and conflict resolution, while keeping day-to-day management of the employee in the client company’s hands.

Business in the U.S. and Canada differs in many respects, despite similarities in customs, language, economic trends and judicial principles. These differences demand considerable review, amendment and modification of standard employment practices. With informed appreciation of these matters along with the aid of Human Resource Outsourcing Provider, businesses should find the cross border transition relatively smooth and successful.

Tim Baker, CHRP
Consulting Services
HR Options, Inc
www.hroptions.ca

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About HR Options
HR Options provides human resource solutions that are uniquely suited for small and medium sized companies. We provide On-Call, On-Site and Off-Site support for a wide range of clients. Our areas of expertise include ensuring Outsourced Employment for cross-boarder employees, legislative compliance across Canada and the U.S., policy & best practice development, and outsourced employment. Our clients are typically positioned for growth in their particular industry and have reached a critical point in size and complexity that calls for a formally defined Human Resources infrastructure.