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Arbitrator Strikes Down Annual Drug and Alcohol Testing Policy and Awards “Significant Damages” for Breaches of Workers’ Privacy Rights

Seaspan ULC v. Canadian Merchant Service Guild (Chambers and Group Grievances), [2017] C.L.A.D. No. 22 (McEwan).

The Canadian Merchant Service Guild (the “Union”) challenged Seaspan’s (the “Employer”) right to require annual drug and alcohol testing for officers under threat of penalty. The Employer felt it was entitled to introduce the testing because it agreed to do so as a term of its contract of Affreightment with its client, Shell.

One employee, Chambers, was restricted from working in the harbor and was denied a valuable job posting after he refused to take the test. He grieved the Employer’s right to demand such testing.

There was no evidence of a substance abuse problem in the workplace to justify the extended testing. In the absence of such evidence, Seaspan relied solely on its contract with Shell to support its demand for mandatory annual testing.

Arbitrator McEwan reiterated the law set out the Supreme Court of Canada’s landmark decision Irving Pulp and Paper, Ltd. v. Communications, Energy and Paperworkers Union, Local 30, 2013 SCC 34. She found that, even in safety-sensitive industries and except in the “rarest of situations”, drug and alcohol testing is only permissible where:

(i) there is reasonable cause to believe that the employee is impaired while on duty,
(ii) the employee has been directly involved in a workplace accident or significant incident, or
(iii) the employee is returning to work after treatment for substance abuse.

Irving, at para. 29

This approach is a marked departure from American jurisprudence which reflects the importance Canadian law has placed on privacy rights.

Arbitrator McEwan agreed with the Union’s argument on behalf of the Union that the policy breached the collective agreement and was an unreasonable exercise of management rights. She said, at page 34:

The sanctity of the employees’ privacy rights must be given precedence over any hypothetical concern regarding the potential loss of Shell business—particularly given the evidence that Shell continued its business relationship with Seaspan undeterred by confirmation in various SIRE Reports of Seaspan’s non-adherence to its warranty. The highly questionable commercial benefit to Seaspan is simply not proportional to the harm to the employees’ privacy. Seaspan has overstepped the bounds of reasonableness by attempting to enact a policy similar to those that have been rejected by the courts and labour arbitrators across the country.

As a result the policy was unlawful and arbitrator McEwan had no difficulty awarding “significant” damages for breaches of the officers’ privacy rights. Mr. Chambers was awarded compensatory damages for his loss of work and failure to obtain the job posting in addition to $7,000 for the breach of his privacy rights. Each of the other employees who had been subject to testing were awarded $3,000.00 each.