8

Hypothetical Facts

  1. U.S. company ("A") hires Canadian worker ("B") to work as an unpaid intern.
  2. B never physically leaves Canada and does all her work by telephone, computer and internet.
  3. A has a physical presence in the U.S. only.
  4. The parties enter into an internship agreement that, among other things, (purports to) commit/s the entire arrangement to the jurisdiction of the U.S.

Questions

  1. Is A or B subject to Canadian employment law? (Will either party get into trouble with the Canadian government?)
  2. If so, what enforcement (and/or punitive) mechanisms are available to the Canadian government to enforce their employment laws against A or B?
  3. Can B later (successfully) sue A in a Canadian court for back wages?
3

Is A or B subject to Canadian employment law?

Canada and the relevant province(s) will decide in their courts if Canadian or US law applies. The USA and the relevant state(s) will decide in their courts if Canadian or US law applies.

It would be open to the employee to bring an action in any relevant court; the court will then decide what law applies and if they have jurisdiction - that is part of what sovereignty means! A Canadian court can decide a matter using US law and vice-versa.

Things that the court would take into consideration are if the company did business (outside this single arrangement) in Canada or was US exclusive, the number of other trans-national interns, if the arrangement was seen as a device for avoiding employment obligations in either jurisdiction.

If one is subject to Canadian law then they both are.

Will either party get into trouble with the Canadian government?

Assuming that the arrangement is subject to Canadian law then the company would be obliged to pay wages and may be subject to fines for not having done so.

If so, what enforcement (and/or punishment) mechanisms does the Canadian government have at their disposal to enforce their employment laws against A or B?

B - nothing; they have not broken the law.

A - an order to pay wages and fines. Enforcement may require a judgement in a US court; either by bringing the case in one the first instance or applying to have a Canadian judgement given effect in the US.

Edit

The OP has added the proviso that the document states that it subject to US law and jurisdiction.

If it just says that, it is prima facie invalid - a contract cannot exclude the jurisdiction of any court and an attempt to do so renders it unlawful.

However, if it said that it was subject to the non-exclusive jurisdiction and law of, say, Wisconsin, then a Canadian court would consider the parties intent and the relevant Canadian national and provincial law and might decide that the proper forum is a Wisconsin court and refuse to hear the complaint. Things they will consider are that there will be Canadian and provincial laws that cannot be excluded by contract, the hardship changing the forum will have on the plaintiff or defendant, if the result (assuming the facts are proven) would be demonstrably different in a US vs. a Canadian court etc.

  • There's been an edit made to this question that somewhat obsoletes parts of your answer. – jimsug Sep 18 '15 at 1:53
  • @jimsug: Yes. I think you are referring to the part of the answer that states... "Assuming that the arrangement is subject to Canadian law..." I felt it was important to add fact number 4 to clarify that the parties intend for the arrangement to be subject to U.S. law. But this intent apparently does not necessarily make it so in the Canadian legal system as this answer points out. So that doesn't necessarily obsolete DaleM's answer. – Mowzer Sep 18 '15 at 2:19
  • You're right, it doesn't, in its entirety. However, if the contract has either choice of law or jurisdiction clauses, or both, then this may well (and almost certainly will) affect the parties' standing to bring a case in court. Although the first, and longest, section of the answer is technically still correct, it doesn't take this into account. – jimsug Sep 18 '15 at 2:43

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