How can the HRPA serve both the interests of the public and the interests of its members ?

By Claude Balthazard, Ph.D., C.Psych., CHRL
Vice-President, Regulatory Affairs and Registrar at HRPA

The objects of the Association as spelled out in the Registered Human Resources Professionals Act, 2013, (the ‘Act’) are as follows:

Objects of the Association

4. The objects of the Association are,

(a)  to promote and protect the public interest by governing and regulating the practice of members of the Association and firms in accordance with this Act and the by-laws, including,

(i)  establishing, maintaining, developing and enforcing standards of qualification,

(ii) establishing, maintaining, developing and enforcing standards of practice,

(iii)establishing, maintaining, developing and enforcing standard of professional ethics,

(iv) establishing, maintaining, developing and enforcing standards of knowledge, skill and proficiency, and

(v) regulating the practice, competence and professional conduct of members of the Association and firms;

(b) to promote and increase the knowledge, skill and proficiency of members of the  Association, firms and students;

(c)  to promote and protect the welfare and interests of the Association and of the human resources profession;

(d) to promote inter-professional collaboration with other professional bodies;

(e)  to address any other matter that relates to the regulation of its members that the Board considers appropriate.

Objects are concise statements of the ultimate purpose of a corporation. All not-for-profit corporations must state their objects in their articles of incorporation.  Newer legislation such as the Ontario Not-for-Profit Corporations Act, 2010, and the Canada Not-for-Profit Corporations Act, 2009 use the word ‘purposes’ instead of ‘objects’ but the meaning is the same.

Objects are very important to not-for-profit corporations. The powers of a not-for-profit corporation are limited to what is written into its objects (purposes), whereas, typically, the for-profit corporation has no such limits.  In other words, not-for-profit corporations cannot operate outside the boundaries of their objects.  Objects are also important in relation to the duties and liabilities of directors.  Should Board members allow the corporation to undertake activities that are outside the authority of the corporation’s objects, they will become exposed to personal liability for the consequences of those actions.

Even a cursory scan of HRPA’s objects suggests a potential conflict among the objects of the Association. The first object states “to promote and protect the public interest by governing and regulating the practice of members of the Association and firms” and a few lines down one finds “to promote and protect the welfare and interests of the Association and of the human resources profession.” So whose interests does the Association serve—those of the public or those of the Association and of the human resources profession?  What happens when these conflict?  Which takes precedence?

The existence of objects serving the interest of the public and serving the interests of the Association and the human resources profession creates what is sometimes called a dual-object organization.

How can dual-object organizations achieve a balance between public interests and member interests?

Sometimes the issue is put in terms of how the Association should balance the interests of public with the interests of the members.

It should be pointed out that the interests of the public and the interests of the Association and the human resources profession are not always in conflict. Indeed, to a great extent, the interests of the public and the interests of the Association and the human resources profession are congruent.  However, the fact that the interests of the public and the interests of the Association and the human resources profession are congruent in many areas has the unfortunate effect of confusing matters.  For instance, it makes it more difficult to discern the true intent behind a given action, policy, or decision.  Now this confusion would be of no real effect if the interests of the public and the interests of the Association and the human resources profession were always congruent.  However, there are critical moments-of-truth where the interests of the public and the interests of the Association and the human resources profession will diverge, and for that reason it is important to sort out how to manage these two potentially conflicting objects.

Resolving the conflict between serving the interests of the public and serving the interests of the Association and of the human resources profession

It is argued that the objects of the Association must be read in such a way that the interests of the public must trump those of the Association and of the human resources profession. Three lines of argument are presented that point to this conclusion.  These three lines of argument are:

  1. That only legitimate purpose of legislation that creates self-regulating professions is to protect the public interest, and that this overarching purpose must inform the interpretation of the objects of the Association.
  2. The exclusion of HRPA from the application of the Not-for-Profit Corporations Act, 2010, indicates that the Legislature understands professional regulatory bodies to be different than other not-for-profit corporations and that the regulatory mandate must prevail over the interests of the members,
  3. The specific language used in the Act reinforces the interpretation that the Legislature understands HRPA to be professional regulatory body first and foremost.

Let’s review each argument in turn.

The primacy of the public-interest is inherent in the nature of self-regulation

William Lahey, Associate Professor of Law, at Dalhousie University’s Schulich School of Law, wrote a paper for CPA Canada in the context of the unification of the accounting professions which dealt with self-regulation[1].  Lahey’s argument for the primacy of the public interest is as follows: the only legitimate purpose for delegating regulatory powers to a self-regulating organization (SRO) through legislation is that it serves the public interest.  Thus, everything that is in the legislation should be interpreted through that lens.

“It is worth stressing that to be self-regulated under legislation means to be self-regulated in the public interest. As explained above, the rationale for any regulation of accountancy is that regulation is needed in order to protect those who require the specialized knowledge and skill of accountants. One implication of this is that the institute/association or Board that it is given legislative authority and responsibility to carry out regulatory functions must be thought of as a public body that is accountable to the public.”

“The rationale for being given legislative control of your own regulation is that this is the best public policy option for protecting and advancing the public interest that is the basis of the decision to regulate in the first place. On this understanding of the nature of the legislative mandate of SROs, in accounting or in any self-regulating profession, member interests must yield to public interest whenever the two conflict.”

But there is another layer in Lahey’s argument, the whole rationale of self-regulation is predicated on the ability to of the members of a profession to put self-interest aside. That professions are given the privilege of self-regulation stems from the ethos of the professions.  If the Legislature did not believe that the members of a profession would be able to act in the public interest, the delegation of self-regulatory powers would be irresponsible.  The premise is, therefore, that the Association will use its regulatory powers in the public interest.

Exemption from the Ontario Not-for-Profit Corporations Act, 2010

Subsection 3 (5) of the Registered Human Resources Professionals Act, 2013, states:

Not-for-Profit Corporations Act, 2010 does not apply

(5) The Not-for-Profit Corporations Act, 2010 does not apply to the Association, except as may be prescribed by regulation. 2013, c. 6, s. 3 (5).

Why would the Human Resources Professionals Association be exempted from the Not-for-Profit Corporations Act, 2010?  The answer is that the Not-for-Profit Corporations Act, 2010 contains provisions that would have granted members powers that might have been used to thwart HRPA’s regulatory mandate.  HRPA is not alone in having been exempted from the Not-for-Profit Corporations Act, 2010, virtually all Ontario professional regulators have also been exempted. The Legislature understands professional regulators to be fundamentally different than other not-for-profit corporations.

A discussion that is informative and relevant here relates to the arguments which were made in support of exemptions from the Not-for-Profit Corporations Act, 2010 by a number of professional regulatory bodies.  Hearings on the proposed Not-for-Profit Corporations Act, 2010 were conducted by the Standing Committee on Social Policy on August 23, 2010[2].  Four professional regulatory bodies appeared before the Committee: (1) the Ontario Architects Association, (2) the Law Society of Upper Canada, (3) the Ontario College of Veterinarians, and (4) the Institute of Chartered Accountants of Ontario.  All four professional regulatory bodies made essentially the same argument—that professional regulatory bodies need to be exempted from the Not-for-Profit Corporations Act, 2010, because of the inherent conflict of interest between accountability to the public and accountability to the membership.

For instance, it was argued that the power of members to remove any director or directors from office by ordinary resolution at a special meeting might cause a chill in a board or council debate over a measure that would protect the public interest but may be unpopular with the profession. One representative for one of the professional regulatory bodies was quite candid in saying “Frankly, if our members are happy with what we’re doing, we’re not doing our job.”

In the end, the government agreed and professional regulators governed by public act were granted exemptions from the Not-for-Profit Corporations Act, 2010. It goes without saying that other not-for-profit corporations such as member benefit associations did not receive such exemptions.  Indeed, intent of the Not-for-Profit Corporations Act, 2010 was to provide the members of such associations with greater powers and recourse. By exempting HRPA from the Not-for-Profit Corporations Act, 2010, the Ontario Legislature was reaffirming its intent that the interests of the public as served by the regulatory mandate should not be defeated or diminished by the interests of the members.

Construction of the text in the Act

In legislation, the choice of words is telling.

Specifically, the fourth object—to promote and protect the welfare and interests of the Association and of the human resources profession—does not explicitly say that HRPA can or should advocate on behalf of its members.  HRPA’s legislation says that HRPA will promote and protect the welfare and interests of the profession. The objects do not talk about undertaking activities that would protect the members. If we assume that the language was drafted with care, this wording was intentional.

There is an important shade of meaning between serving the interests of the profession and serving the interests of the members of a profession.  Indeed, a number of the members of the provincial Legislature who spoke on behalf of the Act (none spoke against the Act) noted how the enhanced regulation of HR professionals by public act would, by creating a robust professional regulatory body for the profession, foster a strong and professional HR profession—an outcome which serves all stakeholders[3].  Fostering a strong and professional HR profession is not quite the same as promoting the interests of the members of a profession.  Now many would agree that a strong and professional HR profession is also in the interest of the members of the profession, but what driving the support for the profession on the part of the Legislature is that it ultimately serves the public interest.

The type of language that is usually seen in the objects for professional associations will generally refer to activities that directed at or on behalf of members. Typical language would include things like:

  • sharing information for the mutual benefit of the members;
  • to represent the members and present their views to other associations and government and regulatory agencies.

This object seems to have been crafted in such a way as to assist HRPA in balancing its public protection mandate with its responsibilities to the members. It suggests, that HRPA should serve its members’ interest on the more global level by ensuring the integrity of the profession and fostering professionalism, rather than promoting the self-interests of members.

The fifth object is often referred to as the ‘basket clause’ because it is intended to capture appropriate purposes and actions of the corporation that may not have been enumerated specifically in the objects.

It is interesting to note that the “basket clause” included in HRPA’s legislation references only matters that relate to “the regulation of its members that the Board considers appropriate.”   This suggests that the Board may undertake activities related to the regulation of the profession that may not be specifically listed in the objects, but with respect to its association functions it should not go outside of what is permitted in 4(c).  The wording of the basket clause also reinforces the interpretation that the essential purpose of the Association is to govern and regulate its members in the public interest.

What does this all mean?

The objects of the Association must be read in such a way that primacy is given to HRPA’s regulatory mandate. At the end of the day, it is not a matter of balancing the interest of the public with the interests of the members.

“To ask the question in this way suggests a tension between the interests of the two constituencies. It suggests that SROs [self-regulating organizations] need to manage this tension (or conflict) by trading one set of interests off against the other in a way that gives some effect to both. This may not be the appropriate way to think of the relationship between public interest and member interests.”

As noted above, to the extent that the public interest is at odds with the member interests, the public interest must take precedence. Rather it is a matter including in the fulfilment of the Associations’ regulatory mandate aspects that are also beneficial to members such as enhancing the competence and professionalism of members.  It is important to keep in mind, however, that the ultimate reason for doing these things is not to serve the interests of the members but to serve the public interest.

[1] Lahey, W., (Undated). Self-Regulation and Unification Discussions in Canada’s Accounting Profession. CPA Canada.

[2] Official Report of Debates (Hansard), Monday 23 August 2010, Standing Committee on Social Policy, Not-for-Profit Corporations Act, 2010. http://www.ontla.on.ca/web/committee-proceedings/committee_transcripts_details.do?locale=en&BillID=2347&ParlCommID=8875&Business=&Date=2010-08-23&DocumentID=25150

[3] Ontario, Legislative Assembly, Official Report of Debates (Hansard), 40th Parl, 2nd Sess, No 82 (5 November 2013) http://www.ontla.on.ca/web/house-proceedings/house_detail.do?locale=en&Date=2013-11-05&detailPage=/house-proceedings/transcripts/files_html/05-NOV-2013_L082.htm#tidyout

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