Constructive Dismissal: Racism Ruling Overturned

How hard is it in Ontario to sue for constructive dismissal because of a racially poisoned work atmosphere?  According to a recent Ontario Court of Appeal decision in General Motors of Canada v. Johnson, released on July 31, 2013, the onus on the plaintiff is very significant.

Yohann Johnson, a black man, was a production supervisor with General Motors (GM).  According to the evidence, he had worked for GM, without incident, for almost eight years.   In early 2005, Johnson became responsible for training group leaders in a GM body plant.  An individual who was supposed to be trained by Johnson failed to show up for his training session.  The individual, Alex Markov,  claimed that he was uncomfortable with Johnson because of a remark that Johnson had made to him in the past, regarding Markov’s brother, who had been murdered.  Apparently, Markov’s brother had been killed by a black man.  Johnson understood that Markov was refusing to train with him because Johnson was black.  Markov was permitted by GM, initially, to train with another trainer instead of Johnson.

Johnson filed a complaint with GM alleging that Markov had refused to undergo training with him because he was black.  GM investigated these complaints.  Markov was initially told that he would have to train with Johnson or he would be forced to leave GM.  Apparently, with union involvement, GM agreed that Markov could be relieved of his group leader responsibilities so that he would not have to train with Johnson.  Shortly afterwards, Markov was working in the body shop, performing group leader functions, but GM claimed that this was only a temporary fill-in for another employee.  Markov was suspended for breaching the agreement but he filed a grievance and wound up overturning the suspension.   Johnson viewed this as evidence that GM was not prepared to enforce a deal that was agreed upon, to address Johnson’s concerns of racism.

Johnson ultimately went off on a stress leave that he claimed had come about as a result of workplace racism and the treatment of him.  He sued for constructive dismissal.  He alleged that GM had created a poisoned work atmosphere that tolerated racism at the workplace.

At trial, an Ontario Superior Court Judge, Alfred Stong J., accepted Johnson’s allegations.  The court held GM had “traded away Johnson’s human rights as a bargaining chip” and had created a poisoned workplace for Johnson.  The trial court awarded Johnson damages of more than $150,000 including constructive dismissal damages and other “Wallace” damages for bad faith conduct.  The court held that the evidence had shown that Johnson “satisfied the burden of proof placed on him of proving that he was constructively dismissed from his employment with GM.”

The Ontario Court of Appeal unanimously reversed the decision in its entirety.  It held that the trial judge’s findings should be overturned because they were “wrong, unreasonable or unsupported by the evidence.”  The Court of Appeal held that the foundational finding of racism was “unreasonable and unsupported by the evidence.”  The court noted that there had been no direct evidence of racism by anyone at GM.  The trial court’s conclusion was based on inconsistent statements that Markov had made, leading to a finding that he was lying.  Moreover,  the trial court based its decision on information provided by another employee, effectively “hearsay evidence.”  The Court of Appeal held that, on a proper evidentiary record, it was unreasonable for the trial court to make a funding that Markov’s refusal to train with Johnson was “solely racially based.”  The finding of constructive dismissal was overturned.

The Court of Appeal went on to state that the plaintiff bears the onus of establishing a poisoned workplace in a constructive dismissal case.  It is up to the plaintiff to demonstrate that “the objective reasonable bystander would support the conclusion that a poisoned workplace environment had been created.”  Further, the court stated that “except for particularly egregious, stand-alone incidents, a poisoned workplace is not created, as a matter of law, unless serious wrongful behaviour sufficient to create a hostile or intolerable work environment is persistent or repeated.”

The Court of Appeal rejected the argument that the refusal by one employee on one occasion,  to train with another employee, for racially motivated reasons, would have been enough to establish a poisoned workplace due to racism.  The court held that there was no evidence of systemic or institutional racist behaviour.  It noted that this was one incident over the course of an eight year working relationship and it was addressed, to the satisfaction of Johnson, initially.

Although the trial judge had put together a list of 8 factors that the judge felt established a constructive dismissal, the Court of Appeal rejected each of these factors, as improperly drawn conclusions, factual findings made without a proper evidentiary basis, or for other reasons, finding that the judge’s holdings were a “fundamental misapprehension of the evidence.”

The Court of Appeal was satisfied by GM’s evidence of numerous investigations, the steps it took to deal with the situation and its offers to Johnson to have him working in locations in which he would not have contact with Markov.  The Court of Appeal held that there was no evidence that any conduct on GM’s part signified an intention to “repudiate its contact of employment” with Johnson.  In fact, the Court of Appeal had this to say about the trial decision:

“The trial judge appears to have concluded that GM repudiated Johnson’s employment contract by failing to provide him with a discrimination free employment environment.  With respect, this misconceives GM’s obligations in the circumstances.”  The Court of Appeal, went on to add “GM, however, was not obligated to immunize Johnson from any future contact with Markov or any other body shop employees.”  The Court of Appeal rejected the trial court’s findings that there had been at least one threat made, indirectly, against Johnson.

The Ontario Court of  Appeal decision is an unusual example of a case in which an appellate court will delve into the trial record and overturn various factual findings and conclusions made by the trial court judge.  This is quite rare.  The standard is a very high one for this type of review and appellate courts are not usually interested in “retrying the case.”  Here, however, the Court of Appeal was obviously persuaded that the trial court judge’s conclusions were so unfounded that it felt it was warranted to review all of the findings.

The Court of Appeal’s decision also establishes that claims of a poisoned work atmosphere due to racism will be required to meet a high threshold.  Evidence of one encounter or incident, unless it is particularly “egregious” will not be sufficient to enable an employee to resign and sue for constructive dismissal.

It remains to be seen whether Johnson will file a Request for Leave to Appeal to the Supreme Court of Canada or how this decision will otherwise be applied if Johnson does not.  It is important to note that the case was all based on one incident where one employee had refused to train with another, without any direct evidence that this refusal was racially motivated.  That is to say, this case is certainly not dismissive of poisoned work environment claims based on racism.  However, the Court of Appeal has indicated that it will require a high standard, of explicit, direct incidents of racism in order to uphold a claim of constructive dismissal.

The difficulty with this approach is that many incidents of racism are more subtle and are not nearly as explicit as the standard that the Court of Appeal seems to require.   However, these incidents may still cause significant and far-reaching damage to the victim.  The Court of Appeal recognized that Johnson “believed that he had been a victim of racism in his workplace.”  But it concluded that this was not a “work environment poisoned by racism.”









Is A “Layoff” Really A Wrongful Dismissal?

Some employment lawyers and HR professionals have been buzzing about a recent decision of the Ontario Superior Court which looked at the issue of whether a layoff could be a wrongful dismissal.  Some management lawyers have claimed that the case, Trites v. Renin Corp. is a “game changer” which makes it possible for employers to layoff most employees instead of dismissing them outright.  Even though the case is apparently not being appealed, its significance is probably being overrated.

The plaintiff, Sandra Trites, was a Division Controller for the defendant Renin Corporation.  She had been with the company for more than 6 years.    The defendant was undergoing financial difficulties.  It gave more than 50 employees lay off notices with varying recall dates.  In Trites’ case, it gave her a notice recalling her to work some seven and a half months after the start of her “layoff.”   Renin was asked to sign a consent agreeing to her “layoff” status in return for which Renin indicated that it would continue certain of her employment benefits.

The main argument was over whether an employee could claim that she was constructively dismissed if she was put on a layoff as contemplated in the Employment Standards Act, 2000 (“ESA”).  The judge wrote ” [i]n my view, there is no room remaining at law for a common law claim for a finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the Act.”  However, here the Court held that Renin had not put Trites on a proper layoff.  It had not continued her benefits or otherwise complied with the Act.  Trites was awarded wrongful dismissal damages of 33 weeks’ pay, which was equivalent to the time she was out of work.

It does not seem that there would have been any significant reason for Ms Trites to appeal the decision since she was awarded damages that apparently compensated her for the time she was out of work.  From the perspective of a judicial precedent, the case is ultimately an example of an employer being ordered to pay an employee wrongful dismissal damages after trying to play around with layoff rules unsuccessfully.

Employers who wish to ensure that there is no doubt about their ability to rely on the ESA lay off provisions can include clauses in their employment agreements stating the employer has the right to lay the employee off provided that it complies with the ESA.  If an employer uses this language and then puts employees on a proper lay off, there will be little that the employees can do until the lay off period expires.

F’or employees, if they are working in a workplace situation that does not seem to contemplate a “lay-off” as a term of employment, but the employees are placed on a lay-off anyways, they may still be able to claim constructive and/or wrongful dismissal.

Like the situation before the Trites v. Renin Corp. decision, these cases will often depend on the facts of the particular case including the type of workplace, the work history and whether the employer, in purporting to lay off employees, complies meticulously with the requirements of the ESA.  Many, like Renin Corp., do not.



Wrongfully Dismissed Employees May Be Required to Return to Work if “Recalled”

Can an employer “recall” an employee back to work as a way of avoiding a wrongful dismissal lawsuit?  Even if the employee was wrongfully dismissed?  Since the Supreme Court of Canada’s decision in  Evans v. Teamsters Local Union No. 31 (Joblaw blog: Evans), this has become a serious strategy for some employers, especially if the offer is seen as one that was made in good faith.

In a recent case of the Ontario Superior Court, Chevalier v. Active Tire & Auto Centre, a wrongful dismissal case brought by a 33 year employee was dismissed for failure to return to work.

The plaintiff, Earl Chevalier, a service centre manager with Active Tire, was placed on a lay-off with minimal notice and no compensation.  Mr. Chevalier wasted no time in suing Active Tire for wrongful dismissal two weeks after being dismissed.  He claimed that he could not be “laid-off” with no pay  and that this was a constructive dismissal.  In response to the lawsuit, Active Tire wrote to Mr. Chevalier, apologized and asked him to come back to work.  Mr. Chevalier elected not to return to work and instead proceeded with his law suit.

At trial, the Court agreed that Mr. Chevalier had been constructively dismissed.  Active Tire could not just lay him off with no notice after 33 years.  However, the main issue was whether Mr. Chevalier should have been required to return to work in these circumstances.  He argued that Active Tire had tried to “make his life miserable” in the period leading up to his dismissal and he therefore would have had to return to work in an atmosphere of “hostility, embarrassment or humiliation.”

After reviewing the evidence, the Court rejected Mr. Chevalier’s claims.  It held that a “reasonable person” would have returned to work in all of the circumstances.  Mr. Chevalier was not able to demonstrate to the Court that his workplace had become intolerable and he was therefore required to return.

If Active Tire had not called Mr. Chevalier back to work, the Court ruled that he would have been entitled to 16 months’ compensation – the time period it took Mr. Chevalier to find new employment.  However, the result in this case was that he was not entitled to anything and was required to pay legal fees to Active Tire, as well as his own.

This case is an example of the risky nature of wrongful dismissal litigation.  It illustrates the importance of obtaining proper legal advice and following it.  Under current Canadian case law, employees who are dismissed or laid off off must seriously consider an employer’s offer to return to work, if it is an offer made in good faith.  Important points to consider may be:

  • Is the offer to return an offer for the same position that the employee held?
  • Will the pay and working condition remain the same?
  • Is there significant evidence of conduct that is embarrassing or humiliating?
  • Does the employee have other employment possibilities?

Dismissed employees should carefully review all of these issues, as well as other related matters, with competent employment law counsel.  Making the wrong decision can be costly and harsh.

Ex-Walmart Employee Awarded $1.4 Million Damages in Wrongful Dismissal Case

Dismissed employees and their legal counsel continue to push the envelope in Ontario by using jury trials to obtain large damages awards.  Even though these awards are usually scaled back by the Ontario Court of Appeal or by the Canadian Supreme Court, the wrongful dismissal landscape in Canada is beginning to shift noticeably.

In the latest example, the plaintiff, Meredith Boucher of Windsor, Ontario, was awarded $1.4 million by an Ontario jury.

Ms Boucher had brought a case for constructive dismissal.  She had alleged that she had been forced to leave Walmart after being subjected to sexual harassment and discrimination, intentional infliction of emotional suffering and other misconduct including actual physical assault.

Among other allegations, Ms Boucher had claimed that she was called a “(expletive)” idiot and that she was forced to count skids in front of others to prove that she knew how to count.

The jury of three men and three women took only 2 1/2 hours to make its decision after a two and a half week trial.  Although the jury did not award any damages for sexual harassment or discrimination, it awarded $200,000 for intentional infliction of emotional suffering, $1 million for punitive damages and $10,000 for assault.  The jury also made an award of $250,000 against the assistant manager.

Walmart will certainly appeal and it is likely that the award will be scaled back considerably, given Canadian legal precedents.   However, this type of award and the publicity that it attracts will cause dismissed employees across the country to reconsider their lawsuits and to reevaluate the potential damages that they might receive if they take their cases to trial.

It is worth remembering that these types of awards are only made in cases involving extremely inappropriate conduct. Fortunately, for Canadian employers and employees, these types of allegations are absent in most Canadian wrongful dismissal cases.



Employees Not Required to Stay When Constructively Dismissed

Constructive Dismissal cases are risky and contentious and often make their way through the court system.  A recent decision of the Ontario Court of Appeal will greatly assist many employees, who are concerned about whether they are required to stay with their employers in unsatisfactory roles to “mitigate their damages” after being constructively dismissed.

The decision in Adrian Chandran v. National Bank of Canada helps clarify these issues.  The Ontario Court of Appeal has ruled that where the workplace might be perceived as humiliating or embarrassing, employees are not required to remain with the employer to mitigate their damages after being demoted.

Mr. Chandran was a senior manager at the National Bank for 18 years.  He was a supervisor with 11 reports.  The Bank decided to conduct a survey of employees about Mr. Chandran.  From comments in the survey, it concluded that Chandran’s behaviour was, at times, condescending, embarrassing and bullying.  The Bank accepted these allegations and told Mr. Chandran that it was removing all of his supervisory responsibilities.  It proposed two alternate positions, at a similar rate of pay and level, but without the supervisory role.  Mr. Chandran did not accept either of these positions and instead sued for constructive dismissal, arguing that he had been demoted.

From a Canadian legal perspective, the Bank should have conducted a better investigation and then warned Chandran if it came to the conclusion that there had been misconduct.  It should have taken steps to address the concerns that had been raised.  Removing Chandran’s supervisory responsibilities was not an acceptable response by the Bank was viewed as a demotion, triggering a claim for constructive dismissal.

Does Forced Geographic Relocation Constitute Constructive Dismissal?

Constructive dismissal in Canada is a fundamental breach of an employment contract that allows an employee to act as if he or she has been dismissed and obtain compensation.  Successful claims can result in significant awards for wrongful dismissal damages.  However, employees must be cautious when making constructive dismissal claims.  If they act too early or with improper advice, they can find themselves on the losing end of an expensive lawsuit, with no interim income.

At the very easy end of the constructive dismissal spectrum are cases where employers unilaterally reduce an employee’s pay, with little or no notice.  Similarly, a significant demotion for an employee, even where the overall compensation is kept intact will usually be grounds for a constructive dismissal claim.  But there are many other cases that are in a much greyer area.  The reduction of some responsibilities, a change in reporting structure and sometimes, a change to the terms of a bonus plan, are all the types of changes that may not lead to clear results.

What about geographic relocation?  Can employees be asked to move as part of their employment?  Intuitively, one might have thought the answer would usually be “no.”  Although this might often be the case, the legal answer can depend on the context and the particular background.  Has the employee moved around before as part of the position?  Is the industry one in which employees are routinely expected to relocate?  Is the employer paying for moving expenses?  Is the employer offering any other alternatives?  These are all factors to consider.

In a recent case, the Alberta Court of Appeal (Robin Brown v. Pronghorn Controls Ltd.) held that a transfer from Red Deer, Alberta to Sedgwick, Alberta, approximately two hours away, was not a constructive dismissal.  The Court held the employee would be a branch manager in both places and would be entitled to the same terms and benefits, despite the disruption to his family life.

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