Case Report – Arbitrator affirms background check program based on soft C-TPAT requirement

28 Feb

On January 20th, Arbitrator Watters held that a criminal background check program initiated in response to the United States Customs-Trade Partnership Against Terrorism program was reasonable.

The key features of the company’s background check program: (1) it applied to new employees and current employees transferring into positions deemed to be sensitive based on C-TPAT requirements; (2) it excluded employees who were checked by the company pre-hire and employees employed by the company for more than five years; (3) the company assessed the results of checks on a case-by-case basis; and (4) the company undertook not to rely on information received about provincial offences convictions and pardoned criminal offences in excluding an employee from an opportunity to work in a sensitive position.

The company wanted to ensure that its “Tier 3” C-TPAT status would not be jeopardized because this status is associated with fast track movement of goods into the United States. Yet the grievance posed a challenge for the company because the C-TPAT criminal background check requirement is flexible, in that it is subject to restrictions in local laws. Moreover, U.S. Customs and Border Services provided a very qualified opinion to the company that only suggested that failing to conduct conduct background checks “might affect” its top tier status. The company was also not certain how being degraded to Tier 2 status would affect its ability to move goods in to the United States. It could only argue that it did not want to find out.

Despite these challenges, Arbitrator Watters held that the company’s background check program was reasonable. He said:

Once the Employer elected to enter the program, I think it reasonable for the company to want to achieve, and then maintain. Tier 3 status through the adoption of the best practices identified by C-TPAT. While it is difficult to precisely gauge own CBP would respond to a change to Tier 2 status. I am inclined to accept the Employer’s view that a reduction in Tier status, as a consequence of a decision not to require criminal background checks for employees in sensitives roles, would likely result in increased screening of the company’s product and resulting delay in the shipment process. I was given no reason to reject Mr. Dunn’s evidence that delay at the ports of entry into the United States could result in the loss of market share as consumers move to the available product of some other competitor. I further not his testimony that delay could compromise product quality in respect of certain brands with a finite shelf-life.

Arbitrator Watters appears to have been influenced by the company’s willingness to take steps to ameliorate the impact of its program. At the hearing, the company expressed willingness to take additional ameliorative steps that were not embodied in its existing policy. Arbitrator Watters ordered the company to implement these steps.

Unfortunately, the parties appear to have argued the case as if Ontario provincial public sector privacy legislation applied to the company. Though a common misunderstanding, provincially regulated employees in Ontario (whether public or private sector) are not protected by  privacy legislation.

National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada), Local 2098 v. Diageo Canada Inc. (Amherstburg Plant), [2010] O.L.A.A. No. 21 (Wattters) (QL).

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