The Provincial or Federal Jurisdiction of Transportation Companies in Quebec

On August 15, 2018, the Superior Court of Quebec issued a judgment in which it concluded that the plaintiff, a bus carrier engaged in school and chartered transportation, fell under provincial jurisdiction. The Court reasoned that there was no regularity in the interprovincial service offered by the company, which prevented it from being considered as being a federal undertaking. In the above case, the question of the provincial or federal jurisdiction of the undertaking arose in the context of labor relations legislation. This decision, which is currently on appeal before the Court of Appeal of Quebec (application for leave to appeal granted on October 5, 2018), provides an opportunity to review the standard by which courts determine whether a transportation business is subject to provincial or federal jurisdiction.

In Canada, the division of powers between the federal Parliament and provincial legislatures is governed by the Constitution Act, 1867. Under s. 92(10)(a) of that act, extraprovincial transportation undertakings fall under federal jurisdiction, while intra-provincial transportation undertakings are subject to provincial jurisdiction. This distinction is of fundamental importance since it determines whether the activities of a company are subject to federal law, rather than the statutes and regulations of each province. A particular challenge lies in the application of labour and employment law, as a federally-governed entity is not subject to provincial labour relations and occupational health and safety legislation. In Quebec, a federal undertaking is thus not subject to the Act respecting labour standards or the provisions of the Act respecting occupational health and safety, including with respect to preventive maternity leave, but rather the Canada Labour Code, the provisions of which may be more favourable to management than are the laws of Quebec. Such a federal undertaking is nevertheless subject to the Act respecting industrial accidents and occupational diseases, which establishes a workers’ compensation system for victims in Quebec. It should also be noted that an entity under federal jurisdiction is not subject to the provisions of the Charter of the French Language that govern language obligations in employer-employee relations.

Not all companies offering extraprovincial transportation are subject to federal jurisdiction. Indeed, in order to be considered as such, the extraprovincial transportation activities carried out by the undertaking must meet the “continuous and regular” standard developed by the courts. In general, extraprovincial operations of a company will be considered “continuous and regular” if the entity is prepared to offer its clients an extraprovincial transportation service at all times. As long as that condition is met, other factors are of little importance, including: (i) the percentage of a business’s activities outside its home province; (ii) whether extraprovincial transport is or is not the primary focus of the business; iii) whether a company’s extraprovincial operations are seasonal; and iv) any peak periods or interruptions. For example, it was ruled that a transportation company, 6% of whose transportation movements were extraprovincial, was nevertheless an undertaking subject to federal jurisdiction, since those extraprovincial moves were made on a regular and continuous basis.

The current state of the law is that a transportation business will be subject to federal jurisdiction if it conducts extraprovincial activities on a regular and continuous basis, without there being a minimum percentage or minimum frequency to be met. Freight and passenger transportation companies with operations extending beyond the limits of their home province should pay particular attention to the upcoming decision from the Quebec Court of Appeal.

This article was prepared by McCarthy Tétrault’s Transportation and Logistics GroupFor more information, please contact David F. Blair or Brian Lipson.

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