Self-storage operators are crossing the U.S. border to expand their businesses, and although they may find similarities with how facilities generally operate in Canada as compared to their home turf, they must be aware of certain particularities that may affect operations. One key difference is in employment law.
Most significantly, Canada is not an “at will” jurisdiction. In the United States, the concept of “employment at will” means an employee may quit his job at any time for any reason; plus, the employer has the equal right to terminate an employee at any time for any reason.
In Canada, the courts have consistently held that every contract of employment, whether in writing or not, includes an implied term that no employee will be dismissed without reasonable notice or compensation unless the employer can establish justifiable cause for termination. In the event of such dismissal without cause, the Canadian employer is liable for economic consequences suffered by the employee.
In addition, the courts are sometimes forced to decide what period of notice is reasonable and the amount of compensation the employee is entitled to in lieu of notice. Any award is reduced by any employment income the terminated employee may have earned during the period of reasonable notice. That is not to say that employees cannot contract out of their right to receive reasonable notice. However, such notice must be at least equal to the minimum statutory notice periods provided within the laws of the particular province.
Further, the Supreme Court of Canada has ruled that any employment contract that attempts to contract out of minimum statutory notice periods will be considered void and unenforceable. A properly drafted Canadian employment agreement should include a contractual dollar limit to claims of lack of reasonable notice for termination.
Case in Point
A recent case in British Columbia provides a good example of this difference in employment rights, Pires v. Vectis Technologies Inc., in which Pires, a senior engineer, left his company to join a startup enterprise in a similar business. Pires had signed an employment agreement that stated, upon termination without cause, “prior written notice of three months plus three weeks for each complete year of employment with the company to a maximum of one year.”
When the new company began to suffer financial problems, Pires was fired, allegedly for negotiating with the company’s investors for a larger share of ownership with the company. The court found that Pires was entitled to the compensation set forth in his employment agreement, specially holding that the pretense for the termination was not a sufficient cause for termination. Instead, the court believed Pires was dismissed simply because the company went broke.
An employment agreement is an essential requirement between a self-storage operator and its managers. This agreement communicates benefits of employment (such as health insurance and vacations) and expectations of jobs to employees. Commonly, an employment agreement clarifies a self-storage manager’s responsibilities. This becomes the basis for measuring the manager’s job performance.
Examples of the written job duties might include:
Employee shall be responsible for showing clean, empty storage units to potential customers by walking potential customers to storage space and back to rental office.
Employee shall be responsible, after renting storage units, for thoroughly completing the rental agreements, receipts, journal sheet, ledger card and insurance addendum.
Employee shall be responsible for collecting all rent including, but not limited to, accepting rent and following up on delinquencies, posting rent and miscellaneous income receipts, making bank deposits daily or when receipts are on hand, and reporting of income collection to manager on a daily basis as needed.
Employee shall be responsible for managing the bookkeeping system or computer system as designed and controlled by employer, and preparing and mailing weekly and monthly reports on a timely basis as specified by employer.
Employee shall be responsible for properly operating any computer, printer and gate-interface equipment.
Employee shall be responsible for walking the facility for daily security checks. Should the security of the facility be threatened, employee shall immediately report such a threat to local police authorities, it being expressly agreed and understood that in no event shall employee take any other action in connection with a threat to the facility’s security or the safety of the employee.
Employee shall be responsible for timely sending required tenant legal notices, making telephone calls to collect past-due rent and documenting these calls on tenant-ledger cards or in computer.
Employee shall be responsible for preserving the office in a clean, organized, business-like manner. This includes keeping windows, storefront door, flooring, restrooms and area outside around rental office clean.
Generally, an employment agreement can be used to clarify a number of issues between the operator and its employees, leaving little room for misunderstandings and disputes. The following are provisions that can be included in standard employment agreements for this purpose.
Recording conversations. In the event an employer provides an employee with any review or critique of performance under this agreement, or employer or its representatives visits or calls the facility posing as prospective tenants, employer reserves the right to, and employee agrees that, employer may record such conversations. Such recordings shall be the sole property of employer and will not be disclosed to any third party except in the case of judicial or other legal proceedings where such conversations may be at issue.
Background checks and credit history. Background and credit history checks are a condition of this employment.
Drug testing. Employer reserves the right to perform random drug testing at its discretion.
Smoking. No employee, under any circumstance, is permitted to smoke within the residence, the office or any of the storage units.
Uniforms. Any uniforms provided for the employee’s use must remain the property of the employer and shall be returned upon termination of employment. Employer reserves the right to withhold any final wages needed to replace said uniforms.
Company property. Upon the termination of this agreement, for whatever reason, employee shall return to employer all customer lists, books, records, keys and any other property of employer in employee’s possession at the time of termination, it being understood that all such lists, books, records, keys and other property shall remain the exclusive property of employer.
Here and There
Companies using U.S. employment agreements or handbooks for their Canadian employees may find documents are unenforceable across the border. Canadian law strongly favors employees in the context of employer bad conduct. No employment agreement will defeat a justifiable claim against a Canadian employer who has treated employees unfairly, especially in the context of job terminations.
Canada has proactive employment and pay-equity laws protecting women, racial minorities and persons with disabilities. The government and each province have passed statutes restricting an employer’s ability to discriminate among employees based upon race, sex, religion, national origin, age or physical disabilities. The main goal of Canada’s equity laws has been to require employers and trade unions to proactively identify and redress discrimination in recruitment, treatment, compensation, promotion and retention of employees who historically may have been disadvantaged in the workplace.
The search for self-storage managers can be challenging. Operators seek individuals who are equally comfortable renting units as selling boxes, and can handle sophisticated computer systems while coping with difficult tenants. U.S. companies hiring managers to work in Canada must be cognizant of the differences in laws that establish the relationship between employers and their Canadian employees, otherwise legal conflicts could arise. Operators might be best to seek counsel for legal assistance as they travel over the border to open their self-storage facilities.
Scott I. Zucker is a partner in the law firm of Weissmann Zucker Euster P.C. He represents self-storage owners throughout the country in matters that include contracting for construction, preparing lease agreements, defending tenant claims and handling employment disputes. Mr. Zucker can be reached at 404.364.4626; e-mail [email protected].