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  • The Coronavirus Guide for Employers: Everyday Measures for the Workplace

    Employers must review their action plan on a daily basis to promote prevention, manage possible or proven contagion among their employees and ensure that business operations continue. Two actions are key: Seeking accurate information from public health officials and governments daily; Taking this information into account when deciding how to meet your obligations to employees while maintaining operations. With the stated objective of containing the spread of the coronavirus, each of us is responsible for adapting our behaviours to an evolving set of circumstances, particularly in the workplace. This new reality impacts the responsibilities of employers. New Directives from The Government of Quebec On March 12, 2020, the province declared a state of emergency and the Quebec government announced the following: All persons returning from abroad or having flu- or cold-like symptoms must voluntarily self-isolate for 14 days; Self-isolation is mandatory and paid for all public service employees and all private and public healthcare, education and daycare workers returning from abroad; Organizations must cancel all indoor gatherings of more than 250 people and any unnecessary gatherings for the next 30 days1. At his press conference, the Premier of Quebec invited private sector employers to take the particular situation facing our society into consideration and to be understanding with employees who must take time off work2. With these measures aimed particularly at establishing social distance to slow the spread of the virus, guidelines have been clarified and may serve as a basis for the needs and requirements of both employers and their employees, taking into account the particularities of each workplace. Obligations in the Workplace Employers must take the measures necessary to protect the health, safety and physical well-being of their employees, their clients and the public. Employees are held to the same standards; that is, to preserve their own health as well as that of their colleagues and any third parties they may be in contact with in the course of or in connection with their work. The Charter of Human Rights and Freedoms, the Act Respecting Occupational Health and Safety, the Canada Labour Code and fundamental principles such as those set out in the Civil Code of Québec provide that individuals must not behave in a way that would cause increased harm to others. They must also act in such a way as not to harm their own health, and, by the same token, that of the people in their workplace. These principles are well known to human resource managers and are foundational to establishing workplace policies and guidelines. Policies and Guidelines for Employees In order to encourage employees to contribute to maintaining a healthy work environment free from contamination risks, employers should diligently inform their employees of their intention to follow government guidelines. Internal guidelines could include the following: Cancelling meetings or other non-essential work events that may promote the spread of the virus; Reminding employees of their obligation to report any situation that may require them to self-isolate; Establishing and informing employees of necessary arrangements should isolation become necessary and telework not be possible; Explaining the steps to follow to plan telework and reminding people of the applicable rules under existing policies and employment contracts regarding the confidentiality of business or personal information used in the workplace; Informing employees about of a contingency plan to define, among other things, emergency contact persons and information transmission protocols; and instructing employees on how to access workplace premises or organize their work in the event of a containment situation. Employee Travel and Professional Activities An employer may cancel any professional activity that could reasonably be expected to pose a risk to the health of its employees, clients or the public. In so doing, an organization modifies its expectations as to workplace deliverables. In the current context and further to the government guidelines issued on March 12, 2020, an employer should: Prohibit all business travel both to affected or unaffected areas; Ask its employees to hold essential meetings by videoconference or other technological means; Provide that any other meeting or professional activity in its offices or elsewhere be held in such a way as to reduce the risk of contagion (e.g., videoconferencing, conference calls, observance of hygiene measures and reasonable distances between people). Isolation of Diagnosed Employees or Preventive Isolation Further to the recommendations of public health authorities and on the basis of the government guidelines issued on March 12, 2020, an employer should require that any employee returning from abroad proceed to self-isolate for 14 days. If the employee shows symptoms before the end of the 14-day isolation period, he or she should contact the services set up by the Ministère de la Santé (1-877-644-4545). A nurse may then refer the employee to a designated COVID-19 clinic if necessary. Prior to permitting such an employee to return to work, an employer should be informed of the outcome of these steps and be satisfied that the employee will not pose a risk to colleagues and clients, which may include requesting a medical certificate from the designated COVID-19 clinic if the employee was referred to one. In the case of business travel at an employer’s request prior to the government directives issued on March 12, 2020, any self-isolation period should be paid. If the travel was personal, the payment and form of remuneration during the self-isolation period depends on certain factors, including: At what moment the decision to maintain the departure was made: before or after the government’s instructions were issued or an explicit employer policy was implemented; Positive or negative diagnosis further to a test; Capacity for telework while in isolation. Should employees be unable to report to work (due to their return from abroad, other reasonable grounds to believe that they may be a carrier, or if they or one of their relatives has tested positive), their employer should consider possible avenues under the employment conditions applicable to each particular employee: Paid leave or other conditions available under the Act respecting labour standards and working conditions or collective agreements in the organization, which must then be agreed upon with the employee in question and with the union’s cooperation, if applicable3; Group disability insurance benefits; Record of Employment for sickness and employment insurance sickness benefits; Quarantine and employment insurance benefits as a result of forced leave from work4; Record of Employment for leave and caregiving benefits; Telework if the employee’s tasks can be performed remotely or adapted to do so. Refusal to work The Act Respecting Occupational Health and Safety allows employees to refuse to perform work if they have reasonable grounds to believe that the performance of said work would expose them to danger for their health, safety or physical wellbeing, or would expose another person to similar danger. This Act also provides for the process by which such refusal must be dealt with. However, the prevention and management of work refusal situations could likely be greatly facilitated if employees are aware of the actions taken by the employer to prevent contamination and other health risks to those present in the workplace. For the protection of employees, suppliers and customers, employers must implement the sanitation measures prescribed by government authorities and make any necessary materials available. It must also encourage its employees to follow sanitation instructions and do the following: Provide access to dispensers for alcohol-based antiseptics, tissues and waste bins; Regularly clean common areas (e.g. meeting rooms, cafeteria, etc.); Provide contact information for Info-Santé and the Ministère de la Santé for additional information or screening. According to the government guidelines issued on March 12, 2020, for work premises that can accommodate 250 or more people, the premises must be prepared, or the number of people limited, or those present must be instructed to remain at least two metres away from each other. Work reorganization In order to maintain their activities and provide service to their clientele, some businesses may find it advantageous to alter the way in which their employees work. In addition to resorting to telework, employers may consider alternative working arrangements to maintain adequate staffing while reducing the risk of spreading the virus: Flexible or modified work schedules or staggered working hours (in accordance with the conditions set out in section 53 of the Act respecting labour standards); Rotating schedules to reduce the number of employees in the workplace at the same time; Solicitation of retirees who can fill absences owing to sickness. Immigration Currently, Canadian immigration authorities have put in place emergency measures for foreign nationals in Canada or abroad whose applications for temporary residence have been delayed because of the closure of Canadian visa application centres in mainland China (among other locations). Extensions have been granted to help applicants to obtain now hard-to-get documents. All other applications and all other components of the Canadian program are not affected at this time. No new medical tests for newcomers have been announced and no specific travel restrictions have yet been adopted, with the exception of self-isolation measures for all those arriving from abroad. Health Canada screening officers are present at some Canadian air and land ports of entry, but this measure is still minimally applied at this time. We expect further restrictions at Canadian ports of entry to be implemented in the coming days as the situation progresses. The Key: Keep your Information Up to Date It is important to make sure that the information that you rely on as an employer to make decisions in the current environment is reliable so that your employees can perform their work safely, and for you to continue offering service to your clients. Prudent HR managers should visit the websites of the competent government authorities to confirm the exact terms of the requirements and guidance that these provide. Each workplace operates in its own context, and employers would do well to plan for various possible solutions depending on their circumstances and considering their specific workforce and the needs of their clientele. The events of the last few days have shown that guidelines can change rapidly (even in the course of a day), especially when the spread of the coronavirus suddenly gains speed or following the directives issued by governments to promote “social distancing” as counter the impacts of a possible mass contamination. The diligent implementation of preventive measures and appropriate action as the situation evolves will help ensure, employers are being responsible while, effectively guarding against future civil or criminal claims. The members of our Labour and Employment and Business Immigration teams are available to answer any questions you may have about measures you are considering or the solutions you are seeking given the realities of your organization and its activities.   Press release on March 12, 2020. See the same Government of Quebec press release. Employee and union cooperation may be necessary if working conditions need to be adjusted at the employer’s request, which may wish to offer paid leave to cover part of the isolation period. The federal government recently amended the conditions applicable to quarantine to suspend the one-week waiting period before Employment Insurance benefits are paid..

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  • The 2020-2021 Quebec Budget: New Measures to Promote Innovation!

    Quebec’s Minister of Finance tabled his budget for 2020-2021, titled Your Future, your Budget1, on March 10. Among the new measures introduced by the government, new tax incentives for innovation and the commercialization of Quebec intellectual property were announced. The incentive deduction for the commercialization of innovations: establishing the most competitive tax rate in North America The Quebec government is committed to promoting research and development (R&D) and accelerating the development of innovative products through a highly competitive tax environment. The incentive deduction for the commercialization of innovations (the “IDCI”) will allow businesses to benefit from a combined tax rate of 17% on eligible income. Businesses that have an establishment in Quebec, have incurred R&D expenses there and commercialize intellectual property (“IP”) in Quebec will have their revenues from the sale or rental of goods, services and royalties from such IP taxed in Quebec at an effective rate of 2%. IP covered by the IDCI includes software protected by copyrights, patents, certificates of supplementary protection for drugs and plant breeders’ rights. The IDCI also replaces the deduction for innovative companies as ofJanuary 1, 2021. Companies eligible for that deduction will be eligible for the IDCI. The synergy capital tax credit: investing in start-ups The synergy capital tax credit is designed to encourage businesses to invest in innovative SMBs with high growth potential, more commonly known as “start-ups.” A business corporation with a permanent establishment in Quebec that is not primarily engaged in financing or investing in businesses may receive a non-refundable tax credit equal to 30% of the value of its eligible investment, up to a maximum of $750,000 per year, for a total tax credit of $225,000 per year. An eligible investment is an equity participation that does not result in control of an eligible SMB, which the investing corporation deals with at arm’s length. An eligible SMB is a Canadian-controlled private corporation with a permanent establishment in Quebec, with paid-up capital of less than $15 million and gross income of less than $10 million, operating in one of the following sectors: Green technology; Information technology; Life sciences; Innovative manufacturing; Artificial intelligence. Corporations claiming the synergy capital tax credit will have to hold the shares of the eligible SMB for a minimum period of 5 years. Start-ups interested in obtaining the designation of eligible SMB will have to submit an application to Investissement Québec. The investment and innovation tax credit: Modernizing SMBs The investment and innovation tax credit (the “C3i”) is designed to encourage businesses in all sectors to invest in their modernization, particularly in digitization and the use of leading-edge technology. A credit of 10%, 15% or 20%, determined according to the economic vitality index of the area where the investments are made, will be applicable for the acquisition of: Manufacturing and processing equipment; Computer hardware; Management software packages. The C3i will apply to acquisitions made before January 1, 2025, and will be fully refundable for SMBs2. Businesses with total assets and gross income of $100 million or more will also have access to this credit, although it will not be refundable. Eligible expenses for the C3i will be amounts exceeding $5,000 for the acquisition of computer hardware or management software packages and amounts exceeding $12,500 for the acquisition of manufacturing and processing equipment. Businesses involved in the distribution of such hardware and software packages would certainly benefit from informing their customers that the acquisition of their products is potentially eligible for the C3i. Businesses located in resource regions and still benefiting from the tax credit to foster the acquisition of manufacturing and processing equipment introduced in 2008 will be able to choose to continue to benefit from this credit or claim the C3i. Conclusion Quebec’s tax landscape is full of opportunities for innovators and creators of leading-edge technology. We should also mention the enhancement of R&D tax credits that promote collaboration between private businesses and research institutions that contribute to the vitality of Quebec’s knowledge economy. If you are a company involved in R&D and IP commercialization in Quebec, the professionals of Lavery’s intellectual property and taxation teams will be able to support you throughout your projects.   Ministère des Finances, Budget 2020-2021, “Your Future, your Budget,” City of Québec, Government of Quebec The credit repayment rate decreases linearly based on an SMB’s total assets and gross income when they exceed $50 million but are less than $100 million.

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  • Development of a legal definition of artificial intelligence: different countries, different approaches

    As our society begins to embrace artificial intelligence, many governments are having to deal with public concern as well as the ongoing push to harness these technologies for the public good. The reflection is well underway in many countries, but with varying results. The Office of the Privacy Commissioner of Canada is currently consulting with experts to make recommendations to Parliament, the purpose being to determine whether specific privacy rules should apply to artificial intelligence. In particular, should Canada adopt a set of rules similar to European rules (GDPR)? Another question raised in the process is the possibility of adopting measures similar to those proposed in the Algorithmic Accountability Act of 2019 bill introduced to the U.S. Congress, which would give the U.S. Federal Trade Commission the power to force companies to assess risks related to discrimination and data security for AI systems. The Commission d’accès à l’information du Québec is also conducting similar consultations. The Americans, in their approach, appear to also be working on securing their country’s position in the AI market. On August 9, 2019, the National Institute of Standards and Technology (NIST) released a draft government action plan in response to a Presidential Executive Order. Entitled U.S. LEADERSHIP IN AI: A Plan for Federal Engagement in Developing Technical Standards and Related Tools1, the plan calls for the development of new robust technologies to make AI solutions more reliable and standardized norms for such technologies. Meanwhile, on November 21, 2019, the Congressional Research Service published an updated version of its report entitled Artificial Intelligence and National Security2. It presents a reflection on the military applications of artificial intelligence, and, in particular, on the fact that various combat devices have the capacity to carry out lethal attacks autonomously. It also looks at ways to counter deep fakes, specifically by developing technology to uncover what could become a means of disinformation. The idea is thus to bank on technological progress to thwart misused technology. In Europe, further to consultations completed in May 2019, the Expert Group on Liability and New Technologies published a report for the European Commission entitled Liability for Artificial Intelligence3, which looks into liability laws that apply to such technology.  The group points out that, except for matters involving personal information (GDPR) and motor vehicles, the liability laws of member states aren’t standardized throughout Europe. One of its recommendations is to standardize such liability laws. In its view, comparable risks should be covered by similar liability laws4. Earlier, in January 2019, the Consultative Committee of the Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data published its Guidelines on Artificial Intelligence and Data Protection5,whichincludes recommendations to comply with human rights conventions not only for lawmakers, but for developers, manufacturers and service providers using such technology as well. Even with these different approaches, one fundamental question remains: If special rules are to be adopted, to which technologies should they be applied? This is one of the main questions that the Office of the Privacy Commissioner of Canada is posing. In other words, what is artificial intelligence? The term is not clearly defined from a technological standpoint. It covers a multitude of technologies with diverse characteristics and operating modes. This is the first issue that lawmakers will have to address if they wish to develop a legal framework specific to AI. The document of the European expert group mentioned above gives us some points to consider that we believe to be relevant. In the group’s view, when qualifying a technology, the following factors should be taken into consideration: Its complexity; Its opacity; Its openness to interaction with other technologies; Its degree of autonomy; The predictability of its results; The degree to which it is data-driven; Its vulnerability to cyber attacks and risks. These factors help to identify, on a case-by-case basis, the risks inherent to different technologies. In general, we think it preferable to not adopt a rigid set of standards that apply to all technologies. We rather suggest identifying legislative goals in terms of characteristics that may be found in many different technologies. For example, some deep learning technologies use personal information, while others require little or no such information. They can, in some cases, make decisions on their own, while in others, they will only help to do so. Finally, some technologies are relatively transparent and others more opaque, due in part to technological or commercial constraints. For developers, it becomes important to properly label a potential technology in order to measure the risks its commercialization involves. More specifically, it may be important to consult with legal experts from different backgrounds to ensure that the technology in question isn’t completely incompatible with applicable laws or soon to be adopted ones in the various jurisdictions where it is to be rolled out.   https://www.nist.gov/system/files/documents/2019/08/10/ai_standards_fedengagement_plan_9aug2019.pdf https://fas.org/sgp/crs/natsec/R45178.pdf https://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupMeetingDoc&docid=36608 Ibid, p. 36. https://rm.coe.int/guidelines-on-artificial-intelligence-and-data-protection/168091f9d8

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  • Constant supervision: how does the recent court decision impact CPEs, daycare centres and home childcare providers?

    On January 15, 2020, the Court of Québec handed down an important decision that could have an impact very quickly on the entire childcare network.1. In its ruling dealing with a breach of the obligation to provide constant supervision of the children, the court questioned the concept of auto-pauses (also known as pauses jumelées or pauses autogérées). This widespread practice consists of having a single childcare staff member, usually an educator, temporarily supervise two groups of napping children to allow another childcare staff member to go on a break. The court took advantage of the opportunity to delimit the obligation of constant supervision set out in section 100 of the Educational Childcare Regulation2 (The “Regulation”), awhich applies indiscriminately to all childcare providers: the centres de la petite enfance (CPEs), daycare centres and home childcare providers. Finally, the court made some interesting comments on the calculation of the ratios, although this was not a central issue in the dispute. The court’s reasons and comments will likely lead childcare providers to question the organization of their work, their practices, directives and even their individual or collective work agreements. Decision Facts In April 2018, an inspector from the Ministère de la Famille visited a CPE to conduct a full inspection for the renewal of its permit, and to deal with a complaint about child supervision during naps. In the afternoon, the inspector entered a room and found seven children lying on small mats scattered on the floor. Some of them were not sleeping and no educator was present. However, in an adjacent room, an educator was sitting along the back wall. This second room had ten other children, also lying down for a nap. The evidence showed that an observation window separated the two rooms, which were also connected by a shared bathroom. The court noted that it was impossible at that time for the educator to get a full view of the adjacent room, in particular, because of the furniture that was dispersed about the room and partially obstructed the view. A statement of offence for failure to maintain constant supervision was issued to the CPE, although the practice of placing two groups under the supervision of a single educator at nap time, to allow a colleague to take a break, is a well-known practice. The concept of constant supervision To date, there are very few decisions dealing with the concept of constant supervision in a childcare context. The court, therefore, used this opportunity to consider this concept in greater detail [translation]: « [23] The CPE [...] must ensure that the children to whom childcare is provided are constantly supervised for their safety; [24] The French adjective constante [constant] is defined in the Larousse dictionary as follows: [translation] that which is uninterrupted, continuous; durable. [25] Le Petit Druide des synonymes et des antonymes has the following synonyms for the adjective constante: [translation] continual, continuous, at every moment, unceasing, uninterrupted, perpetual, without end. The antonyms are: [translation] discontinuous, intermittent, irregular. [26] The Larousse dictionary defines the French word surveiller [to supervise] as the act of observing attentively. In the decision in Directeur des poursuites criminelles et pénales c. Centre de la petite enfance (CPE) Le petit sentier, Judge Rivest noted that it is the action of watching over someone in one’s care and/or for whom one is responsible, taking care of them, being attentive. [27] There are few reported decisions dealing with this issue. Based on the decisions filed with the pleadings, the Court finds that the adequacy of the supervision depends on the specific facts of each case. [28] Since young children are involved in this case, the Court finds that this supervision must be visual and auditory to be effective. (References omitted) Applying this reasoning to the facts in this case, the court found, beyond any reasonable doubt, that the children in the group for which there was momentarily no educator were not under constant, but rather “intermittent", supervision. Due diligence and the auto-pause concept At trial, the CPE presented a so-called "due diligence" defence, arguing that all reasonable precautions were taken to avoid committing the offence. In particular, it referred to an internal memo sent to all the employees on how to proceed during an auto-pause. According to the memo, educators must be near the observation window and walk regularly between the two rooms to verify the children’s status. In the event that a child wakes up, the instruction is then to respond to his or her needs promptly and engage in a quiet game with the child in order to respect the other children’s nap time. The CPE demonstrated that this directive had been communicated to all the staff and that it was regularly discussed at meetings. In addition, a pedagogical adviser ensured that this rule was respected. The failure to comply with this obligation could result in disciplinary sanctions up to and including dismissal. Despite the foregoing, the court rejected the CPE’s due diligence defence. It stated that in the context of an auto-pause, the directive was not able to bring the CPE into compliance with the Educational Childcare Act3 (the “Act”). It was in fact inevitable, in the court's view, that the educator would have to attend to a specific child at some point in time and would no longer be able to see what was happening in the other room. The court concluded by adding that a reasonable person placed in the same circumstances should provide for a sufficient quantity of staff to replace the educators during their breaks. On this point, it noted that [translation] “the children's safety must take precedence over the economic interests of the [childcare] service providers”4. Furthermore, it stated that, despite the CPE's efforts to ensure compliance with its directives, it was the auto-pause concept itself that was problematic and, in the court’s words, [translation] “completely inappropriate”5. Thus, the CPE was convicted of breaching the obligation of constant supervision of the children and ordered to pay a fine. What is the impact with respect to the organization of work for childcare providers? The court’s decision will likely raise doubts about the organization of work for many childcare service providers, particularly permit holders who make use of the auto-pause concept. However, the ramifications could be much more far-reaching. Level of supervision We can easily imagine that the issue of adequate supervision could give rise to many challenges on a daily basis. The court indicated that such supervision must be auditory and visual, but may also vary depending on the circumstances. The analysis of a situation could therefore be influenced by various things, such as the premises (private residence, facility, park, etc.), their layout (presence of furniture, size of openings, etc.), the location of the workers and children while services are being provided, and the nature of the activities conducted. Given the court’s requirement that the supervision must be both visual and auditory, the assessment of its adequacy would seem to be all the more likely to raise questions for home childcare providers and compliance officers in coordinating offices who conduct visits to monitor these providers. Calculating ratios It should be noted that the offence with which the CPE was charged in this case did not concern compliance with the ratios provided for under the Act for the number of children to childcare staff that are required to be present on the premises during the provision of services. The issue before the court was strictly to determine whether the CPE was providing constant supervision of the two groups of children at the time of the inspection. While the court stated that it would reserve its comments on the question of the ratio, it nevertheless clearly added that it did not agree with the CPE’s interpretation of the number of childcare staff that were needed to care for the children in its facility. Thus, despite the fact that the educators could not leave the facility during their breaks, the court noted that by ordering the educators to split their time between two rooms, the CPE was disregarding the ratios provided for in the Act. Thus, the court's view was evidently that the ratios set out in section 21 of the Act would apply to each group of children, and could not be calculated as a whole, across the entire facility. The auto-pause concept In light of the specific facts submitted as evidence, the court found that the very concept of auto-pause is inappropriate. While some might therefore be tempted to conclude that all auto-pauses should be abolished, or that they are necessarily illegal, it should be remembered that each situation must be analyzed separately, based on its specific circumstances. Thus, a permit holder may still be able to show that they are in compliance with their obligation of constant supervision, for example, through a combination of adequate premises, resources, work instructions and protocols. This being said, the fact that the court has raised doubts about the very concept of the auto-pause will necessarily lead permit holders to question the organization of their work. In a context in which the court relies, inter alia, on its own calculation of the ratios applicable to the group of children, it could be even more complex for permit holders to determine the scope of their obligations. The same thing can be said for the manner in which they will be able to meet their obligations taking into account their mission, budget, human and material resources, individual or collective work agreements, and the specific needs of the children in their care. Conclusion The decision rendered by the Court of Québec on January 15, 2020 sheds light on the notion of constant supervision in the context of the provision of childcare services. Thus, to ensure that they are in compliance with their obligations and avoid penal or administrative penalties, it may be appropriate for childcare providers to review the organization of their work. A notice of appeal of this decision was filed on February 14, 2020 by the CPE. We will keep you informed of further developments. Should you wish to obtain further information on this topic, or discuss possible solutions for your own situation, please do not hesitate to contact our team of professionals.   Directeur des poursuites criminelles et pénales c. Centre de la petite enfance Soulanges (CPE Soulanges), C.Q. Beauharnois, 760-61-124110-199, January 15, 2020 (hereinafter DPCP c. CPE Soulanges). CQLR, c. S-4.1.1, r. 2. CQLR, c. S-4.1.1. DPCP c. CPE Soulanges, para. 42. Idem, para. 45.

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  • Three key points about the Regulation respecting damage insurance brockerage

    On December 13, 2019, the Regulation respecting damage insurance brokerage (the “Regulation”), adopted under the Act respecting the distribution of financial products and services (“ARDFPS”), came into force. The Regulation includes the following changes: New titles for firms and qualification requirements; New obligations for damage insurance brokers; and New disclosure requirements New titles for firms and qualification requirements The Regulation amends the Regulation respecting the registration of firms, representatives and independent partnerships by creating two new titles, namely “damage insurance brokerage firm” (hereinafter “Brokerage Firm”) and “damage insurance agency” (hereinafter “Agency”). To qualify as a Brokerage Firm, a firm must meet the following conditions: It must not be an insurer; and Its capital must comply with section 150 of the ARDFPS, which stipulates that no financial institution, financial group or related legal person may hold an interest allowing it to exercise more than 20% of the voting rights attached to the shares issued by the firm in question or an interest representing more than 50% of the value of the firm’s equity capital. To qualify as an Agency, a firm must meet the following conditions: It must be bound by an exclusive contract with a single insurer; and The natural persons through whom it pursues activities, if any, must be damage insurance agents. It should be noted that neither an independent representative nor an independent partnership may act as an Agency. As for a firm that does not meet the conditions to qualify as a Brokerage Firm, it must register as an Agency and abide by the conditions that apply to Agencies. Firms registered in damage insurance have until March1, 2020, to submit a qualification form to the Autorité des marchés financiers (“AMF”). The AMF has confirmed that it will send one of the following notices to all registrants by mid-March 2020: A notice confirming registration as an Agency or Brokerage Firm; or A notice of change giving the firm in question ninety (90) days to comply as an Agency. When the 90-day period expires, if applicable, the firm will be registered as an Agency, and the title of its representatives will be changed to “agent,” unless they are attached to another Brokerage Firm. Such representatives will not be allowed to hold the titles of “agent” and “broker” at the same time. New obligations for damage insurance brokers Section 38 of the ARDFPS provides that a damage insurance broker offering insurance products directly to the public must be able to demonstrate the ability to obtain quotes from at least three (3) insurers that are not part of the same financial group. Section 1 of the Regulation specifies that this obligation applies to brokers offering automobile or home insurance products (property and civil liability insurance on a principal residence that an insured owns or rents). This means that commercial insurance brokers are not subject to this obligation. New disclosure requirements A damage insurance broker who directly offers automobile or home insurance products, as described above, to the public, is now subject to a disclosure obligation. According to section 2 of the Regulation, before inquiring into a client’s needs in accordance with the obligation set out in section 27 of the ARDFPS, a broker must disclose to the client the name of the insurer to which the broker, as an independent representative, or the firm or independent partnership on behalf of which the broker is acting pays 60% or more of the personal-lines damage insurance premiums. This requirement exempts a broker from disclosing the names of insurers with which the broker or the firm or independent partnership on behalf of which the broker is acting has a business relationship, and from the obligation to confirm said disclosure in writing (obligations set out in sections 4.8, 4.10(2) and 4.13 of the Regulation respecting information to be provided to consumers). Summary The amendments regarding firm qualification and disclosure requirements are intended to ensure transparency with respect to business relationships between registrants and insurers. The draft version and current version of the Regulation differ significantly in relation to the way in which these two components are set out. Following consultation sessions and various publications, the disclosure obligation was eased and the concept of hybrid agency was removed. Although the change in qualification only directly affects firms, the form issued by the AMF must be completed by all registrants, including independent partnerships and independent representatives, to confirm that they comply with the requirements that apply to them. All damage insurance registrants should thus take note of and set aside time for the AMF online qualification form, which must be completed by March 1, 2020, at the latest.

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  • Bill 141: Checklist on insurance products offered via the internet and distribution without a representative

    Download your checklist A major reform of the financial sector and, more specifically, of the standards surrounding the practice of professionals governed by the Autorité des marchés financiers (the “AMF”) is now applicable under the Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions1, formerly known as Bill 141. One of the main goals of this reform is to offer greater protection to consumers by providing a framework for online insurance product offers and for distribution without a representative. This framework is provided for in the Regulation respecting Alternative Distribution Methods (the “RADM”)2. Considering that 60 laws are amended by Bill 141, many of which apply to insurance firms3 and insurers4, it is important to be well informed of your key obligations in order to navigate through this transition. Here is what you need to know: The obligations of insurance firms for insurance products offered via the internet5 If you offer insurance products online, as of June 13, 2019, you must comply with the following: Information to be provided to the AMF Before offering a product online: The information about your “digital space” The information about the products you offer The insurers whose products are offered Annually: The number of insurance policies issued The amount of premiums written through your digital space The number of cases where clients cancelled their insurance contracts Information to be provided to the client: At all times: Make the means to interact with a representative of the firm visible The information must be presented in a clear, readable, specific and non misleading way Make readily accessible through your digital space: The name, contact details, sectors and AMF registration number of the firm The information on where the client can file a complaint and the summary of the complaint processing policy A specimen of the policy for each product offered and any available endorsement, if applicable6 Before a contract is entered into: The name and contact information of the insurer offering the product The product coverage, exclusions and limitations The warnings about the consequences of misrepresentation or concealment The premiums, and other fees and expenses, including applicable taxes The period of validity of the quote Immediately before a contract is entered into: The information collected from the client and the options and conditions the client has chosen As soon as a contract is entered into: Confirmation that the contract has been entered into and the temporary insurance, if applicable The right of rescission and the procedures for exercising it The way in which the policy will be provided to the client Obligations specific to the operation of the digital space: Ensure the proper operation and reliability of your digital space at all times Require an action from the client each time confirmation or consent is needed Detect and automatically suspend or terminate an action initiated on the digital space if the information provided may lead to an inappropriate result or the client does not meet the product eligibility criteria Enable the client to correct a mistake at any time prior to entering into a contract Where the firm offers an insurance of persons contract that is likely to replace another contract and is unable to proceed with the replacement through its digital space, the firm must interrupt such offer, and provide the information as it would have been done in the presence of a representative7 Suspend the action initiated through the digital space when no representative can interact immediately with a client who asks to interact with a representative Ensure that the information provided by the client is kept in a manner that ensures its confidentiality and security Prohibitions It is forbidden, through your digital space: To present advertising unrelated to the product offered To automatically make a choice for the client regarding the products offered To exclude or limit your liability to the client relating to the proper operation or reliability of your digital space or the accuracy of the information presented thereon Obligations of insurers for insurance products offered through a distributor8 A distributor is a person who, in pursuing activities in a field other than insurance, offers, as an accessory, for an insurer, an insurance product which relates solely to goods sold by the person or secures a client’s adhesion in respect of such an insurance product.9 Information to be provided to the AMF Before offering an insurance product through a distributor: A list of distributors10 A list of the contracts offered by a distributor, including a description of the insurance coverage provided by those contracts11 The hyperlink to access the distributor’s offer through the Internet The contact information of the insurer’s assistance service Annually, for each product offered through a distributor: The number of insurance policies and certificates issued and the amount of premiums written The number of claims and the amount of indemnities paid The number of rescissions and cancellations The remuneration paid to all distributors and third parties to which the insurer has entrusted the performance of the obligations of an insurer with respect to the distribution of a product through a distributor Documents and information to be provided to the client The notice of free choice The notice of specific consent The notice of rescission of an insurance contract The fact sheet The product summary12 As soon as a contract is entered into: A summary of the information collected from the client The policy, the insurance certificate or the temporary insurance Prohibitions With respect to replacement insurance for insured vehicles or insured parts and with respect to the life, health and employment insurance of a debtor or investor, no insurer may13: Enable the distributor to keep its remuneration within a time period not commensurate with the term of the product, which time period may not, however, be less than 180 days Pay to the distributor a bonus or a share in the profits based on contract experience Set different commission rates applicable to a distributor for products with similar insurance coverage Other changes effective June 13, 2020 For Internet offers you must: Make a specimen of the policy for each product offered and any available endorsement available on your digital space Adopt a procedure for the design, use and maintenance of your digital space and ensure its implementation For each insurance product offered by a distributor, the insurer must make available on its website: A specimen of the insurance policy or insurance certificate and any available endorsements The product summary14 For the offer of insurance products by a distributor, the insurer will have to: Adopt and implement procedures that enable the supervision and training of its distributors Provide training to its distributors covering the topics listed in the RADM Penalties Certain breaches of your obligations may have administrative and criminal consequences that may be imposed at the initiative of the AMF. The AMF has broad powers to carry out preventive inspections and inquiries to demonstrate that infractions have been committed. Consistent with the consumer protection objectives of Bill 141, the ARRFS now provides for greater protection for those who report an offence and much stiffer fines for those who obstruct inspections and inquiries. It should also be noted that certain contraventions of the ARDFPS or the RADM can lead to the cancellation or revocation of the firm’s registration. Administrative monetary penalties of up to $2,000,000 may also be imposed by the Financial Markets Administrative Tribunal. It is therefore essential that you be aware of and comply with your new obligations under the Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions.   S.Q. 2018, c. 23. CQLR, c. D-9.2, r. 16.1. The term "firm" is used for brevity, but the information in this bulletin also applies to independent partnerships. Most of these amendments can be found in the Insurers Act, CQLR, c. A-32.1 (the “IA”); this act replaces the Act respecting insurance, CQLR, c. I-21. A-32, the Act respecting the distribution of financial products and services, CQLR, c. D-9.2 (the “ARDFPS”), and the Act respecting the regulation of the financial sector, CQLR, c. E-6.1 (the “ARRFS”: the Act respecting the Autorité des marchés financiers, which has been renamed) Chapter II of the RADM mainly provides the framework applicable to insurance firms and insurers offering products online via a transactional website. This requirement is subject to a transitional period of one year ending June 12, 2020. In accordance with section 22 of the Regulation respecting the pursuit of activities as a representative (chapter D-9.2, r. 10.) Chapter III, of the RADM provides the framework applicable to insurers that offer their products through a distributor. ARDFPS, s. 408. The insurer must, without delay, inform the Authority of any change to this list. The insurer must, without delay, inform the Authority of any change to this list. The distribution guide filed with the AMF before June 13, 2019 can be used until June 12, 2020 and until then, delivery of the guide will be equivalent to the delivery of the summary and the fact sheet. In accordance with sections 424 and 426 of the ARDFPS, these insurance products are deemed to be insurance products which relate solely to goods. The distribution guide that can be used until June 12, 2020 must be currently accessible on the Insurer’s website.

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  • Judicial Review: impact of the Vavilov Judgment

    In Vavilov, the Supreme Court of Canada revised the applicable legal framework for the determination and application of the standard of judicial review of administrative decisions. Changes were made to the analytical framework for determining the applicable standard of review and clarification was provided as to how the standard of reasonableness should be applied. The objective was a more easily identifiable standard and diminished debate on the standard of review applicable to a given administrative matter. On December 19 and 20, 2019, the Supreme Court of Canada published three administrative judicial review decisions in the cases of Vavilov1, Bell Canada2 and Canada Post Corporation3. In the first case, which dealt with espionage, the majority set out a new approach to the judicial review of administrative decisions, with particular regard to the application of the reasonableness standard. The other two decisions similarly illustrate the application of these new principles. Determining the appropriate standard of review Presumption of reasonableness The new analytical framework includes a presumption that reasonableness is the applicable standard in all cases. Going forward, whenever a court reviews the merits of an administrative decision, it should begin with the presumption that the applicable standard of review for all aspects of that decision will be reasonableness. As a result, it is not necessary for courts to engage in a contextual analysis as there are no longer categories of questions for which the standard of review is not identified at the outset. Categories of questions subject to the correctness standard The categories of questions to which the standard of correctness applies remain essentially the same: Constitutional questions; Questions regarding the respective jurisdictional boundaries of the specialized tribunals; Questions of law of central importance to the legal system as a whole; more specifically, it is no longer necessary for the question submitted to be outside the area of expertise of the decision-maker; rather, it is sufficient that it is of central importance to the legal system as a whole. Category of jurisdictional questions “Jurisdictional questions”or “true questions of jurisdiction” are no longer questions for which the correctness standard must be applied. Although this is not a major change in itself, the Supreme Court has often stated that this type of question is exceptional. Now that the fate of these questions has been clarified, the standard of reasonableness applies. Cases where the law provides for a statutory appeal mechanism In cases where the law provides for an appeal of an administrative decision to a court of law4, counsel must now defer to the appellate standards of review, keeping in mind the nature of the question at hand (question of law, question of fact or question of mixed fact and law) as opposed to the standards of judicial review. Cases where the law specifies the applicable standard of review The presumption of reasonableness review can be rebutted where a legislature expressly outlines the standard of review applicable to a given administrative decision. In such cases, the standard determined by the legislature applies. Important Take Aways The Vavilov judgment marks a major shift in the state of the law of judicial review. For this reason, prior case law should be treated with caution. The situations in which the presumption of reasonableness review can be rebutted are limited to the five listed above: the three categories of questions where the application of the correctness standard is required, cases of appeal provided for by law, and cases in which the legislature has expressly specified the applicable standard. Nevertheless, the Supreme Court appears to have opened the door to subsequent recognition of new exceptions, albeit on an exceptional basis and in accordance with the analytical framework and principles set out in the decision. Applying the reasonableness standard – Moving forward In addition to revising the analytical framework for determining the applicable standard of review, the majority provides a series of clarifications and indications on how the standard of reasonableness should be applied, and refers to a “more robust form of reasonableness review.” It is important to follow future judgments of the Supreme Court (in addition to other lower courts) in order to accurately measure the impact of this new framework for applying the reasonableness standard. Our colleagues specialized in administrative law, labour law and litigation remain at your disposal for any questions that may arise.   Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Bell Canada v. Canada (Attorney General), 2019 SCC 66. Canada Post Corporation v. Canadian Union of Postal Workers For example, the appeal of certain decisions of the Administrative Tribunal of Québec to the Court of Québec.

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  • Can an Expert Report be Inadmissible for Bias as a Preliminary Stage? The Superior Court of Quebec decides

    The Code of Civil Procedure gives a party the ability to apply for the dismissal of an expert report as soon as it is disclosed by the adverse party. This process is governed by the courts. In the decision in Safran Nacelles v. Learjet inc.1, rendered in August 2019, the Superior Court granted an application to dismiss an expert report and excluded it even before the trial was held, after finding that its author did not have the requisite impartiality to enlighten the court. Facts In 2007, Bombardier Inc. (hereinafter “Bombardier”) retained the services of the plaintiffs, Safran Nacelles and Safran Landing Systems (hereinafter jointly referred to as “Safran”). Safran became a supplier of Bombardier in connection with the Learjet 85 program. In October 2015, Bombardier stated that it was forced to abandon its program, citing poor sales as the reason for doing so. However, Safran felt that the contracts, which were binding on the parties, had been terminated without cause and claimed damages. In 2018, in the context of the proceedings instituted by Safran, Bombardier filed an expert report in the court record which determined the reasons for the abandonment of the Learjet 85 program. In particular, the expert analyzed the market trends, reviewed Learjet sales, and compared them with the sales of competing products. However, the expert had been an employee of Bombardier since 2007 and was even the head of the market analysts team at Bombardier. Thus, his work had served as the basis for Bombardier’s decision to terminate the program. Decision Justice Thomas M. Davis, of the Superior Court, dismissed Bombardier’s expert report after stating the requirements of objectivity, impartiality and thoroughness associated with the expert’s work2. He also noted that the purpose of the expert’s report is to enable the trial judge to assess the technical, scientific or specialized aspects involved in the proceeding before him or her. The expertise should extend beyond matters within the knowledge and experience of the judge, without however taking the form of a legal opinion or pleading3. Where expert evidence does not meet these criteria, it can be rejected at the preliminary stage, but only in cases where the inadmissibility of the evidence is clear. While judge Davis acknowledged the great experience of Bombardier’s expert, he noted that this experience was acquired in the context of his job4. Furthermore, the judge also noted that the expert’s work was key to Bombardier’s decision to terminate the Learjet 85 program5. The expert was involved in the program, participated in presentations made to Bombardier’s suppliers, and would undoubtedly have to testify at trial as a witness to the facts. The judge concluded that he was [translation] "the main supplier of the information that enabled Bombardier's management to make its decision"6, making him an advocate for Bombardier’s position, and therefore biased. Noteworthy points of decision Since the current Code of Civil Procedure came into force on January 1, 2016, the debate on the admissibility of expert reports should normally take place prior to trial. Article 241 of the Code of Civil Procedure provides that a party may, at that stage, apply for the dismissal of the report on grounds of irregularity, substantial error or bias. However, whether an expert is biased is sometimes an issue that is difficult to resolve prior to trial. Both judges and lawyers have a tendency to leave this issue to the assessment of the judge on the merits and deal with it as a question of probative value. Therefore, there are few examples of situations, in the course of proceedings, that justify the dismissal of an expert report on grounds of bias. Judge Davis’s decision in the case of Safran Nacelles v. Learjet inc. is one of the most instructive. It is all the more interesting as it was rendered solely on the issue of bias, in the absence of any other form of irregularity in the report. For judge Davis, it was not the expert’s job with the defendant Bombardier that led to the dismissal of his report, but rather, the fact that his conclusions formed the very basis of the decision that was being attacked by Safran, i.e. the main issue in the debate between the parties. The judge’s reasons were consistent with two other decisions of the Superior Court in which the substantial involvement of the experts in the facts at issue justified the dismissal of their reports on grounds of bias7. The question of the admissibility of expert reports must be reviewed on a case by case basis. Our team can advise you on this issue and assist you in choosing an appropriate expert.   2019 QCCS 3269. Id., para. 23. Id., para. 25. Id., para. 28. Id., para. 29. Id., para. 30. Procureure générale du Québec c. L’Unique Assurances générales, 2018 QCCS 2511; Roy v. Québec (Procureure générale), 2016 QCCS 1829.

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  • Are you protected against phishing email?
    What the Court of Appeal said in insurance matters

    Phishing fraud is a rampant problem that causes major losses throughout the world. It consists in bad actors sending emails in which they falsely claim to be a trusted third party or legitimate company in order to obtain confidential information from the recipient for the purpose of committing fraud1. In Co-operators c. Coop fédérée2, the Court confirmed the insurer's obligation to indemnify its insured for losses resulting from such fraud, thereby confirming that the insurer was precluded from raising a new defence at trial. The Court of Appeal also addressed the notion of specific insurance provided for in article 2496 of the Civil Code of Québec (hereinafter "C.C.Q.") in the presence of a plurality of insurance. Facts In August 2014, La Coop fédérée (the "Coop") was the victim of phishing fraud. Due to false pretenses, its comptroller sent a payment order to the Coop's bank (the "Bank"), which complied with the order and transferred the sum of $4,946,355.26 in U.S. dollars to a foreign company. On August 23, 2014, the Coop became aware of the fraud, but the Bank was unable to stop the transaction or recover the funds. At that time, the Coop's account was overdrawn by $3,386,361.80, to which was added the amount of the transfer. The Coop contested the validity of the fraudulent transfer and the resulting additional overdraft with the Bank. It also informed its insurers of the losses incurred. However, The Co-operators General Insurance Company ("The Co-operators") denied the claim on the basis that the increase in the overdraft was not a property covered by the policy, that the misappropriated money belonged to the Bank and, incidentally, that the Coop had not suffered a compensable loss. As for Liberty International Underwriters ("Liberty"), which had issued an insurance policy against fraud and embezzlement, it accepted the claim subject to the rules of contribution between multiple insurers. The Coop therefore went to the Superior Court to force The Co-operators to indemnify it for the loss suffered. At the same time, Liberty claimed from The Co-operators the reimbursement of part of the indemnity that it had paid to the Coop. Superior Court As for liability for the loss, the trial judge first concluded that the Bills of Exchange Act ("BEA") does not apply to electronic funds transfers ("EFT"), that is, transfers without the exchange of paper documents. He then concluded that the overdraft on the Coop's bank account constituted a loan, that the Coop had become the owner of the misappropriated sum in accordance with article 2327 of the C.C.Q., and that it thus had to bear the loss. This conclusion led the judge to, in particular, dismiss the application filed by the Co-operators to amend its defence so that it could argue that the Coop's refusal to raise the invalidity of the payment order could not be set up against it and constituted a reason for non-coverage. Instead, the judge agreed with the Coop and Liberty, which argued that The Co-operators could not invoke new grounds for denying coverage at such a late time. According to the Court, The Co-operators had sealed its fate upon the initial denial of coverage. As for The Co-operators' insurance coverage, the judge pointed out that a contract for "property and business interruption insurance" existed, and as it was considered as a negotiated policy, the intention of the parties had precedence. However, no evidence of this intention was filed. In the absence of a specific exclusion on fraud, the judge ruled that the loss suffered by the Coop constituted a risk covered by this insurance policy. The trial judge found that the loss suffered was covered by both insurance policies, namely that of the Co-operators and that of Liberty. According to the trial judge, the Liberty insurance policy was not a specific insurance policy in that it covered all of the insured's property and all the risks that could affect it, as did the Co-operators policy. Given that both insurance policies covered the same risks, the Court concluded that there was of a plurality of insurance and apportioned the contributions of each of the insurers in proportion to their respective share of the total coverage, while taking into account the applicable deductibles. Quebec Court of Appeal The judges of the Court of Appeal dismissed the appeal except for the conclusion on the nature of the Liberty insurance policy. Like the Superior Court judge, the Court of Appeal held that the BEA does not apply to a payment order because an EFT is not a bill of exchange within the meaning of the BEA. In addition, the Court of Appeal further distinguished the two by the fact that an EFT does not include a procedure for presenting payment, is immediate and final and, unlike a bill of exchange, beneficiaries of an EFT have no title or written document that enables them to claim payment should the transaction fail. Regarding The Co-operators' application to amend its defence, the Court reiterated that the decision to grant an application for an amendment belongs to the trial judge. That judge must base this decision on three principles: An amendment is permitted if it does not delay the proceedings or is not contrary to the interests of justice; If it does not constitute an entirely new application; The lateness of the application cannot be the only justification for dismissing the application. The Court of Appeal also found that The Co-operators had sealed its fate by failing to mention these grounds upon the initial denial of coverage. In addition, the Court of Appeal confirmed that the misappropriated sum was indeed the Coop’s property. As a result, the trial judge did not err in determining that the policy covered all property of any kind and all risks, including a loss resulting from computer fraud. The policy was not ambiguous and no exclusions applied. The Court ruled that there was indeed of a plurality of insurance within the meaning of article 2496 C.C.Q. Also, the Co-operators policy and the Liberty policy contained excess clauses, resulting in the effect of such clauses having to be cancelled in order to prevent the insured from finding itself in a no-compensation situation, in accordance with the teachings of Family Insurance Corp3. In this case, the Court of Appeal determined that the Liberty policy was in fact specific insurance, as it covered a particular category of risks, namely fraud and embezzlement. As a result, this insurance became the primary insurance. On the basis of the foregoing, the Court of Appeal did not rule on the calculation method the Superior Court applied to apportion the insurers' contributions when insurance penalties of the same rank exist. Conclusion This judgment contains many noteworthy points. Among other things, it is important for insurers to make sure, when denying coverage, that all the reasons for refusing to pay benefits are fully stated. Also, with regard to a plurality of insurance, we note that even if an insurance policy includes an excess clause, it may not apply if the insured has another insurance policy with the same type of clause. Ultimately, the Court of Appeal confirmed that qualifying an insurance policy as specific should not be unduly limited to only cases where certain and determinate property is covered, and that the insurance granted for a particular category of risk may, depending on the context, constitute such specific insurance.   Canadian Anti-Fraud Centre, Phishing. Compagnie d’assurances générales Co-operators c. Coop fédérée, 2019 QCCA 1678. Family Insurance Corp v. Lombard Canada Ltd., [2002] 2 SCR 695.

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  • What lessons can we take from the fatal accident in Arizona in 2018 involving an autonomous vehicle?

    On March 18, 2018, in Tempe, Arizona, a vehicle being operated by self-driving software which was under development, collided with a pedestrian, causing her death. Following this accident, the U.S. National Transportation Safety Board ("NTSB") conducted an investigation and, on November 19, 2019, issued its preliminary results and recommendations.1 The circumstances of the accident involving an autonomous car from Uber The autonomous vehicle ("AV"), a 2017 Volvo XC90, was equipped with an automated driving system being developed by Uber Technologies Inc. ("Uber"). At the time of the collision, the vehicle was travelling at a speed of approximately 72 km/h, and was completing the second portion of a predetermined route as part of a driving test. The pedestrian was struck while crossing the street outside the crosswalk. The NTSB's investigation found that the vehicle's automated driving system had detected the pedestrian, but was unable to qualify her as a pedestrian and predict her path. Further, the automated driving system prevented the activation of the vehicle's emergency braking system, relying instead on the intervention of the human driver on board to regain control of the vehicle in this critical situation. However, videos from inside the vehicle showed that the driver was not paying attention to the road, but was rather looking at her cell phone lying on the vehicle console. Since the collision between the pedestrian and the vehicle was imminent, the inattentive driver was unable to take control of the vehicle in time to prevent the accident and mitigate the damages. What are the causes of the accident? The NTSB issued several findings, including the following: Neither the driver's experience nor knowledge, her fatigue or mental faculties, or even the mechanical condition of the vehicle, were factors in the accident; An examination of the pedestrian showed the presence of drugs in her body which may have impaired her perception and judgment; Uber's automated driving system did not adequately anticipate its safety limitations, including its inability to identify the pedestrian and predict her path; The driver of the vehicle was distracted in the moments preceding the accident. Had she been attentive, she would have had enough time to see the pedestrian and take control of the vehicle to avoid the accident or mitigate its impact; Uber did not adequately recognize the risks of distraction of the drivers of its vehicles; Uber had removed the second driver from the vehicle during the tests, which had the effect of giving the sole remaining driver full responsibility for intervening in a critical situation, thereby reducing vehicle safety. The probable cause of the accident was found to be the driver's distraction and failure to take control of the AV in a critical situation. Additional factors were identified, including insufficient vehicle safety measures and driver monitoring, associated with deficiencies in the safety culture at Uber. The NTSB issued recommendations, including the following: Arizona should implement obligations for AV project developers regarding the risks associated with the inattentiveness of vehicle drivers which are aimed at preventing accidents and mitigating risks; The NTSB should require entities conducting projects involving AVs to submit a self-assessment report on the safety measures for their vehicles. Additionnaly, the NTSBshould set up a process for the assessment of these safely measures; Uber should implement a policy on the safety of its automated driving software. Can an identical tragedy related to autonomous vehicles occur in Quebec and Canada? Following the update to the Highway Safety Code in April 2018, level 3 AVs are now permitted to be driven in the province of Quebec when their sale is allowed in Canada. Driving of level 4 and 5 automated vehicles is permitted where it is expressly regulated in the context of a pilot project.2 According to SAE International Standard J3016, level 3 AVs are vehicles with so-called conditional automation, where active driving is automated, but require the human driver to remain attentive so that they can take control of the vehicle in a critical situation. Thus, the vehicle involved in the Arizona accident, although still in the development phase, corresponded to a level 3 AV. Level 3 AVs are now circulating fully legally on Quebec roads. In Canada, the Motor Vehicle Safety Act3 and the relevant regulations thereof govern “the manufacture and importation of motor vehicles and motor vehicle equipment to reduce the risk of death, injury and damage to property and the environment”. However, there is currently no provision specifically for the regulation of automated driving software or the risks associated with the inattention of Level 3 AV drivers. With the arrival of AVs in Canada, taking in consideration the recommendations of the NTSB and to ensure the safety of all, we believe the current framework would need to be improved to specifically address VA security measures.   National Transportation Safety Board, Public Meeting of November 19, 2019, “Collision Between Vehicle Controlled by Developmental Automated Driving System and Pedestrian”, Tempe, Arizona, March 18, 2019, HWY18MH010. Highway Safety Code, CQLR c. C-24.2, s. 492.8 and 633.1; the driving of autonomous vehicules in Ontario is regulated by Pilot Project - Automated Vehicles, O Reg 306/15. Motor Vehicle Safety Act, S.C. 1993, c. 16; see, in particular, the Motor Vehicle Safety Regulations, C.R.C., c. 1038.

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  • Amendments to the Labour Standards Act: What is the rule for paid leave?

    The latest amendments to the Labour Standards Act (“LSA”) provide that, in certain specific circumstances, the employers must pay the first two days of absence of their employees instead of granting them a leave without pay. In some instances, employees claimed two additional days of paid leave from their employers even if they were already offering such leave before the amendments came into force. Two recent decisions confirmed that the government’s intention was to grant two days of paid leave to employees who did not benefit from a paid leave and not to give two additional days to employees who already had such benefits1. Amendments to the Labour Standards Act Since January 1, 2019, employees may take leave without pay for the following reasons: Family reasons: absences related to the care, health or education of their child or their spouse’s child, the state of health of their spouse or a close relative; Health reasons: absence owing to sickness, an organ or tissue donation, an accident, domestic violence, sexual violence or a crime. The duration of such authorized absence without pay depends on the reason for the absence. However, according to the latest amendments to the LSA, the first two days of absence per year taken for such reasons are now paid to employees who have three months of continuous service. The LSA stipulates that employees must notify their employer of their absence and the reason for it as soon as possible and, at the employer’s request, provide documentation attesting to this reason. You can refer to the 6 main amendments to the Act respecting labour standards in our guide for employers. Extra paid leave? Many employers, with or without unionized employees, already offer their employees various types of leave in addition to annual vacations: personal leave, flexible leave, sick leave, family leave, special leave, etc. The working conditions of employees were analyzed in two recent arbitration awards and additional paid leave on the basis of the new provisions of the LSA was denied to them. In these cases, the employers involved already offered flexible leave to their employees, which could be used at the employees’ discretion, and in particular for absences authorized by the Labour Standards Act (“LSA”) for the aforementioned family and health reasons. The arbitrators thus refused to grant these employees two additional paid days of leave for family or health reasons, given that the flexible leave days they already benefited from were equivalent to those the LSA provides for. The fact is that these employers already paid for the first two days of absence as soon as employees had three months of continuous service, even though the requirements set out in their collective agreements were stricter in this regard. It was also demonstrated that these employers were not strictly applying the provisions set out in their collective agreements in respect of required absence notices and were thus complying with the Labour Standards Act (“LSA”), which only requires that employees indicate that they will be absent as soon as possible. As long as the working conditions applied comply with the minimum provided for in the LSA, employers are not required to add to them. In conclusion: Before granting additional paid leave to comply with the latest amendments to the Labour Standards Act (“LSA”), managers should check whether, in practice, the paid leave they already offer to employees meets the LSA’s requirements. Our Labour and Employment Law team is available to provide you with advices and solutions related to the new labour standards.   Syndicat des travailleurs spécialisés de Sintra (CSD) et Sintra inc. (Région Estrie), 2019 QCTA 502 and Union des employés et employées de services, section locale 800 et CANMEC Industriel inc., 2019 QCTA 411

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  • Labour shortage: answers to your questions about hiring a foreign worker

    The labour shortage that affects Quebec as a whole as well as many other provinces has been a well-known issue for several years. Almost every week, we hear about companies that are forced to close their doors or limit their activities due to a lack of staff in positions of all nature. In order to work in Canada, foreign employees must first obtain the necessary authorizations. Employers planning to hire a foreign worker must ensure that an assessment of the candidate's profile is conducted to determine if the candidate is eligible for an immigration program. If so, it will be important to determine which program is most effective and appropriate. To guide you through this process, here are the answers to certain frequently asked questions. True or False: An employer must obtain a Labour Market Impact Assessment (LMIA) before a foreign worker can apply for a Canadian work permit False. Although a Labour Market Impact Assessment (LMIA) is normally required to obtain a work permit, an LMIA exemption may apply in some cases. Remember: a positive Labour Market Impact Assessment (LMIA) confirms the need to hire a foreign worker to perform a particular job and that no Canadian worker is available to fill this position. If the LMIA application is approved, the foreign applicant may subsequently apply for a work permit. There are however Labour Market Impact Assessment (LMIA) exemptions, of which the following are frequently used: Work permits issued under an international agreement, such as North American Free Trade Agreement (NAFTA) or Comprehensive Economic and Trade Agreement (CETA); Intra-company transferees; Youth exchange programs; Spouses or common-law partners of skilled workers or students; Work permits issued to certain holders of a Quebec Selection Certificate (“Certificat de selection du Québec – CSQ”) who reside in Québec. For a complete list of exemptions, click here. Before starting the complex process of obtaining an LMIA, we strongly suggest that you confirm that no exemption applies in that foreign worker’s case. True or false: Filing an application for permanent residence grants temporary Canadian residence status to the applicant False. Once a temporary resident has obtained a permit to remain in Canada, whether to visit, study or work, they must ensure that they maintain valid temporary resident status. To do so, the applicant must submit an application for extension or modification of their status before the expiry of their immigration documents. Applying for permanent residence does not have the direct effect of extending temporary residence status in Canada. In Quebec, temporary residents wishing to apply for permanent resident status must first obtain a CSQ, issued by the Ministère de l'Immigration, de la Francisation et de l'Intégration (MIFI). Once they obtain a CSQ, temporary residents can apply for permanent residence. Note: Holding a CSQ has no direct impact on the applicant's temporary resident status. They may be required to extend their temporary status in Canada if their permanent residence is not finalized before the expiry of their temporary status. In all cases, temporary residents are therefore required to extend their temporary status in Canada until they become permanent residents, if that is their objective. Your strategies for future recruitment Whether or not the staffing process for a vacant position has proven difficult, HR managers may find it beneficial to consider recruiting foreign candidates. A key factor not to be overlooked: verify whether an LMIA exemption applies. Foreign candidates may be responsible for obtaining their work permit and maintaining valid status in Canada, but HR managers can maximize candidates’ efforts if they are familiar with existing immigration programs. The professionals of our Business Immigration team are available to provide you with all necessary information and assist you in obtaining the necessary documents and permits.-->

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  • Intellectual property in open innovation and co-innovation in the field of artificial intelligence

    Moving far beyond the traditional models of closed innovation, artificial intelligence is progressing by means of collaborations and exchanges, both with the academic world and between companies. In Canada, the United States and Europe, innovation has evolved in ways that have changed the very design of research and development projects. In the world of information technology, closed innovation within one company is generally not sufficient, particularly for technologies using artificial intelligence. Distinguishing between collaborative innovation, open innovation and co-innovation In the field of information technology, collaborative innovation was the first model to replace closed innovation. In this type of innovation, an organization collaborates with various partners to build a value chain that it tries to organize and control. Apple is often cited as an example: it has some control over both the hardware (usually sold under its brand) and the software (third party software is made available through a virtual store that it controls). The most significant change in recent years has been the arrival of open innovation, in which several companies foster innovation both internally and externally1. Exchanges between companies are generally targeted to meet the needs of each company. Large companies, such as Samsung, enter into partnerships with start-up companies and assist them in their development. Collaborative innovation was therefore a precursor to open innovation. Indeed, the focus in collaborative innovation is on the company creating a new product or developing a new technology by means of the offerings of external parties. Open innovation, on the other hand, has a broader purpose and refers to all the means that can be used by a company to access new technology.2 Co-innovation3, or collective innovation, is the emerging model within the artificial intelligence community. It aims to promote an ecosystem that fosters innovation across several entities. Co-innovation can go hand in hand with respect for intellectual property. It is likely to4: Generate a continuous flow of ideas; Build a broad pool of knowledge, in particular through sharing data and analysis; Foster a culture of innovation through a shared vision and common objectives among partners; andCreate tacit convergence strategies between partners that are unique to them and difficult to replicate. This last point is particularly important for those who fear losing the benefits of their efforts. In this context of co-innovation, stakeholders create complex relationships between themselves, and each becomes difficult to replace. This is currently the case in artificial intelligence for some stakeholders who have developed specialized platforms that integrate into other companies' software. For example, as part of the integration of chatbots, the roles of the developers of these platforms, the companies offering conversation analysis tools, marketing firms and user companies all intersect. The implementation of APIs (application programming interface) between these players makes it possible to exchange information between them in a fairly fluid way, with each stakeholder playing a more important role in its own field of expertise. Protecting intellectual property in this context Open innovation and co-innovation are not incompatible with the notion of intellectual property. Strong intellectual property rights promote open innovation, according to the most recent studies5, as they protect members of the innovation community. Moreover, intellectual property can provide a way for stakeholders to coordinate6 and can even be a reason for a company to innovate in an open way. For example, where patents are possible7, they promote interaction between stakeholders during innovation because they ensure the innovation is protected and also disclosed. When the patent application is published, the other stakeholders obtain a fairly complete description of the technology, while at the same time becoming able to establish the identity of the party that holds the rights to it. The publication of the patent is therefore a form of knowledge exchange that also promotes alliances between stakeholders. Moreover, a potential licence would allow the company to earn revenue from a technology it has developed if it chooses not to exploit it itself. An example of this development in innovation comes from the academic world. Rather than simply licensing their technologies, universities now frequently offer technology transfer services and research partnerships.8 Some measures can be implemented to accelerate the development of artificial intelligence solutions: Adopt a design thinking approach, taking into consideration the fluid nature of innovation. Identify an ecosystem of partners, particularly keeping an eye on patents and published patent applications. Establish a flexible contractual framework for sharing data and allowing its use by partners. File patent applications, where possible. Facilitate the licensing of your technology to your partners. Implementing these measures requires agreements with various partners. It is important for your lawyers and patent agents to be involved in your company’s innovation process. In particular, they must ensure that the contracts to be entered into and the measures to protect intellectual property are in line with the desired approach to innovation.   Chesbrough, Henry William. Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press, 2003. Gallaud D. (2013) "Collaborative Innovation and Open Innovation. " In: Carayannis E.G. (eds) Encyclopedia of Creativity, Invention, Innovation and Entrepreneurship. Springer, New York, NY Lee, Sang M. and Silvana Trimi. "Innovation for creating a smart future" Journal of Innovation & Knowledge 3.1 (2018): 1-8 Ibid. Da Silva, Mário APM. "Open innovation and IPRs: Mutually incompatible or complementary institutions?" Journal of Innovation & Knowledge 4.4 (2019): 248-252 Bortolami, Giovanni. "Risolvendo il paradosso dell'innovazione: come la protezione della proprietà intellettuale promuove l'innovazione aperta." (2018). Algorithms alone are usually not patentable, but several applications of artificial intelligence can be. See: https://www.lavery.ca/en/publications/our-publications/3167-artificial-intelligence-intellectual-property-cross-border-challenges-to-protect-personal-information-and-privacy.html. Nambisan, Satish, Donald Siegel and Martin Kenney. "On open innovation, platforms, and entrepreneurship." Strategic Entrepreneurship Journal 12.3 (2018): 354-368.

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