Just Cause for Dismissal? Hard to Prove.

What kind of conduct is just cause for the dismissal of a teacher?  If the teacher has been a long serving employee, the threshold will be quite high, according to a recent Ontario Superior Court decision.

In the case of Fernandes v. Peel Educational & Tutorial Services Limted, the plaintiff was awarded one year’s salary.  Perhaps more significantly, he was awarded the value of disability benefits that he would have been eligible to receive because he became disabled within a short time period after being dismissed.

Mr. Fernandes had been a teacher with Peel Educational Tutorial Services for more than 10 years.  In 2009, the school alleged that Mr. Fernandes had falsified students’ marks and committed “academic fraud” by doing so.  Mr. Fernandes conceded that some of his calculations were incorrect and that there were some issues with his submitted marks.  But he denied his conduct was “fraudulent.”

This case involved a 10 day trial, which featured the evidence of numerous witnesses.  One of the witnesses called by the school was  a “Mr. Zero,” who certainly has an interesting name for a witness in which one of the allegations is that certain students should have been given a mark of “0” for failing to hand in assignments.

In any event, after all of this extensive evidence, Justice Lemon concluded that Mr. Fernandes had been wrongfully dismissed.

The court made some interesting findings including:

  • Mr. Fernandes gave incorrect marks;
  • The marks he gave were late;
  • He allowed students to have overdue assignments;
  • Even though he was a computer teacher, his own computer program did not provide accurate marks;
  • He lied to his employers about how the marks were calculated;
  • He lied to the court about the student presentations were marked;
  • He admitted to falsifying some marks on students’ records.

These are all findings made by the court and appear in the decision.

However, the court also noted that Mr. Fernandes had been employed for more than 10 years and up to these incidents, was considered a “well-regarded teacher.”

Taking into account all of the circumstances and relying heavily on a charitable reading of McKinley v. B.C. Tel (2001) S.C.C. 38, [2001] 2 S.C.R. 161, the court concluded that “immediate termination was not the appropriate sanction for this misconduct.”  The court noted that “the defendants could have fashioned a reprimand and a warning that such conduct, if repeated, would lead to summary dismissal.”   The court awarded Mr. Fernandes one year’s compensation amounting to just over $50,000.

Mr. Fernandes had also sued for $300,000 in “intentional infliction of mental distress.”  This claim was rejected.

However, in addition, he had brought a claim for “long-term disability benefits” for $226,000.  At trial, he demonstrated that he was suffering from severe depression and other related symptoms.  The court held that he became disabled after being dismissed and during the applicable notice period.  The employer was therefore responsible for the full value of the disability benefits.  Given that Mr. Fernandes was 52 at the time of dismissal, this could mean approximately 13 years of LTD benefits, for which the defendant school would be responsible.

It remains to be seen what the Ontario Court of Appeal will do with this case.  Given the findings of the judge, there seems to be significant findings of improper conduct that may well warrant a just cause dismissal.  Although the judge was in the best position to make these findings of fact, the Court of Appeal may well review the court’s conclusion that just cause dismissal was not warranted in the circumstances.  It should provide for some interesting reading if the case is actually appealed and argued.

Irrespective of what ultimately happens with this case on appeal, if it gets there, here are some key points to consider:

1.  Establishing just cause for long service employees is extremely difficult and costly.  Many judges are willing to give plaintiffs the benefit of the doubt, even where serious misconduct is alleged.  Even were there is evidence of some misconduct, courts will consider the whole employment history of a dismissed plaintiff;

2.  Dismissed employees can and should fight employer determinations of “just cause” if there is any reasonable prospect of success and sometimes, these cases can sometimes even be won where the prospects look grim;

3.  Dismissed employees are entitled to insurance benefits during any applicable notice period.  If they are cut off from these benefits by their employer and then later found to have been wrongfully dismissed, employers will be responsible for the full value of the benefits.  This means that if an employee dies during a notice period, the employer will be responsible for the full value of the life insurance policy that had been in effect.  If the employee becomes disabled, the employer will be responsible for the full value of the disability benefits.  Employers need to consider liability very carefully before cutting of an employee from all benefits when making a termination decision.

 

 

 

CBC Decision to fire Jian Ghomeshi: More Details to Come?

Everyone is talking about the CBC decision to fire Jian Ghomeshi. Certainly, Canadians love a good sex scandal story as do readers across the world. In fact, I have already been contacted by several people in the U.S. and asked about the Canadian legal perspective in this type of case.  This story has legs.

But it is far too early to draw any definitive conclusions. I am not involved in this case in any way and have no first hand knowledge.  I am certainly in no position to assess whether or not Ghomeshi’s conduct was such that it actually substantiated the termination of his employment. But a few observations can be made to this point in time.

For one thing, unionized employees generally face quite an uphill battle in launching lawsuits. The Supreme Court of Canada has ruled, on a number of occasions, that unionized employees who are fired must use their grievance arbitration process. As a unionized employee, this means that Ghomeshi must proceed with a grievance arbitration with respect to the main  issue in his dispute – whether the CBC had just cause for terminating his employment.

Ghomeshi’s lawyers are obviously aware of this law. As a result, they have not sued for “wrongful dismissal.” Instead, they have framed the claim as one of “breach of confidence” and “defamation.” This is essentially a back-door effort to circumvent the existing case law and try to show that the essence of Ghomeshi’s case is not really wrongful dismissal.

Hard to imagine that much of the case will proceed successfully. In all likelihood, there will be a preliminary motion in which the CBC will seek to have most, if not all of the case thrown out. The basis for the motion will be the argument that this is really a lawsuit over the CBC decision to terminate Ghomeshi’s employment. The Statement of Claim itself alleges that the CBC fired Ghomeshi because it made a moral judgment about the appropriateness of Ghomeshi’s sexual conduct. For the most part, this type of allegation and dispute would be the type of issue that an arbitrator has the exclusive legal jurisdiction to adjudicate in a unionized context.

What about allegations of “breach of confidence?” In certain circumstances, dismissed employees can succeed with tort claims that are beyond the scope of the normal dismissal claim. But, for the most part, the court must find that the conduct is outside of the scope of the employment relationship.

Here the Statement of Claim alleges that Ghomeshi shared various details about his sexual practices, which it is alleged included consensual BDSM. The claim alleges that Ghomeshi shared this information with the CBC “voluntarily and in good faith” in the interest of working with the CBC to refute “false allegations.”

Does this duty of confidence normally exist? It might in certain limited circumstances. For the most part, when employees tell their employers about conduct in which they are involved, they are not normally immunizing themselves from their employer’s future assessment of the propriety of their conduct. To date, Canadian law has not normally recognized a principal of prophylactic, premature explanation as a means of inoculating oneself from future disciplinary action.

If the facts demonstrate that CBC either explicitly, or even implicitly, undertook to ensure confidentiality and agreed that it would not use Ghomeshi’s information for any other purpose, perhaps there might be an argument. But that does not even appear to be the allegation that is being made in the claim.

Overall, there may well be something to the suggestion that has been made by some commentators that the Statement of Claim is largely strategic, a further protective move aimed at discouraging any would-be complainants from coming forward under the threat of facing expensive litigation. But I did not read the Statement of Claim as one that was filled with defamatory statements made about other individuals. Nevertheless, given that the CBC is not likely to back away from the litigation any time soon, one can’t help but wonder about the real intended recipients of the claim and the real goals of the lawsuit.

As I mentioned, I am in no position to predict the final results or assess the various claims. But if at least part of the claim remains public (union arbitration hearings are not), salacious news stories will create lots of buzz. Canadians are bound to find the details of Ghomeshi’s alleged BDSM lifestyle titillating, particularly in the wake of the world wide success of 50 Shades of Grey.

The employment law question, assuming that Ghomeshi’s alleged conduct was in fact consensual, will be whether an employer can fire a high profile employee for legal personal behaviour to which it objects because of its concerns about its own profile and image. If the case is ever actually decided (rather than settled like most Canadian cases), the decision is likely to make for some fascinating and very entertaining reading.

LGBTQ Workplace Issues

It is Worldpride Week in Toronto, the first Worldpride celebration held in North America and one of the largest in the world of its kind.  The festival touts itself as honouring and celebrating the past, present and future for LGBTQ communities everywhere.  It is fitting that the celebration is taking place in Toronto.  Canada is one of the most welcoming countries in the world for LGBTQ communities.  In 2005, Canada became the fourth country in the world to legalize same sex marriage.  Canadian human rights legislation enshrines the prohibition against discrimination, and, of course, expressly references sexual orientation.

Despite the progress that Canada has made, are there still LGBTQ issues in Canadian workplaces?  Absolutely.  Sadly, it is extremely difficult to eradicate every possible manifestation of discrimination, especially those behaviours that are more subtle.  But the challenge facing employers is to take pro-active steps to ensure that workplaces are inclusive and welcoming, rather than merely responding to discrimination when it occurs.

With that in mind, I thought I might reference a few workplace issues that tend to arise that might affect LGBTQ employees.  The list is not all inclusive.

1.   Inclusive Language:  Canadian employers should make every effort to ensure that language used in the workplace is inclusive and non-discriminatory.  Some people may not be aware that they are offending others when they use certain words or expressions.  In other instances, written material, such as newsletters and brochures might not use inclusive language.

Employers should not wait to receive complaints about workplace language or about the lack of inclusivity in written materials.  It may be that the offended employees are not publicly out and would not want to be seen as the ones raising the issues.  But beyond that, it is not even a matter of who was offended on a particular occasion.  The challenge of ensuring an inclusive workplace means that employers must be vigilant about making sure that the workplace and the language used in it is welcoming at all times, even to those who might not be “visible.”

2.  Diversity Training:  Diversity training can help build awareness of LGBTQ issues in workplaces, just as it can also help build awareness of issues that affect other minority religious and cultural groups.   Diversity training can help build sensitivity for managers and supervisors in dealing with LGBTQ employees and can foster an appropriate and welcoming environment in Canadian workplaces.

3.  Publicizing LGBTQ Policies:  Employers should ensure that policies and promotional materials that are used in internal and external communications clarify employer support for LGBTQ employees.  This means that employee handbooks, for example, should mention the use of inclusive language as a policy, diversity training, if it is offered and the fact that the workplace welcomes LGBTQ employees just as it welcomes employees from all other walks of life.

4. Human Rights Policies:  Perhaps it goes with out saying that the Canadian human rights legislation, for example, the Ontario Human Rights Code prohibits workplace discrimination on the basis of sexual orientation.  Employers are required to have policies in place that provide procedures for investigating and handling complaints.  Any allegations of violations of such policies should be taken seriously and dealt with appropriately.

These are just a few of the many issues that LGBTQ employees might face.  During Worldpride week, one presentation on June 26, 2014 focuses on issues that LGBTQ lawyers face in working in the legal profession.  So it is clear that even among lawyers, there are still workplace issues affecting the LGBTQ community.

But overall, Canadians should be proud that these issues are being dealt with, both legislatively and otherwise, in a manner that is, generally, inclusive, fair and welcoming.  Wishing a Happy Worldpride Week to everyone.

 

Huge Aggravated Damages Awards For Reprehensible Conduct Upheld

Punitive and aggravated damages in employment cases are alive and well in Canada, thanks to a recent decision of the Ontario Court of Appeal.  The ground-breaking decision in Boucher v. Wal-Mart (2014) ONCA 419 upheld significant findings of a trial decision even while reducing some of the amounts awarded.  The end result was that an Ontario employee was left with a court award of more than $400,000 after proving the tort of intentional infliction of mental suffering.  It is a tremendously useful decision for employees, particularly those who are subjected to workplace abuse.  For employers, the decision demands increased vigilance in dealing with complaints of inappropriate workplace treatment made by employees.

The plaintiff, Meredith Boucher, worked for Wal-Mart for a total of 9 years.  She had a strong employment history and had been promoted on a number of occasions.  By the time the relevant events occurred, Ms Boucher was working as an assistant manager at a Wal-Mart location in Windsor.

According to the trial court decision and the decision of the Ontario Court of Appeal, Ms Boucher refused to go along with her manager’s request to falsify a temperature log in the store that tracked produce and dairy product temperatures.  After this refusal on her part, her manager, Jason Pinnock, became irate and vindictive.  Mr. Pinnock proceeded to launch a “torrent of abuse” against her which included belittling, humiliating and demeaning conduct.

Ms Boucher complained to the district manager.  Rather than deal with the complaints properly, the district manager shared the complaints with the manager, who became even more vindictive.  Ms Boucher complained again.  She was told that her complaints were “unsubstantiated,” (despite overwhelming evidence) and she was threatened with consequences for continuing to undermine her “manager’s authority.”

At trial, a jury awarded $1M in punitive damages to the plaintiff, payable by Walmart.  It also awarded a host of other damages including damages for intentional infliction of mental suffering and punitive damages against the manager, Mr. Pinnock, personally. It awarded aggravated damages against Wal-Mart.  In total, the trial award came to more than $1.4M.

In a 2-1 majority decision, the Court of Appeal upheld some of these awards, while reducing the punitive damages awards.

The Court had little difficulty upholding the finding that the actions of the manager and of Wal-Mart were “reprehensible.”  In the case of Wal-Mart, the Court upheld findings that Wal-Mart had refused to take the complaints seriously, dismissed them as unsubstantiated, threatened to dismiss the plaintiff for making the complaints, refused to discipline the manager and, overall, acted in a “reprehensible” manner.

However, the Court was still left with the question of what this is all worth under Canadian law.  While it upheld an award of $100,000 for damages for “intentional infliction of mental distress” against the manager personally, the Court reduced the award of punitive damages against him from $100,000 to $10,000, seemingly out of concern for the appearance of a double recovery.  This total of $110,000 against a manager for intentional infliction of mental distress is still one of the higher awards of its type in Canadian employment law.

The Court also upheld an award of $200,000 for aggravated damages against Wal-Mart, finding that some of Wal-Mart’s actions, including its threat of a reprisal, were particularly vindictive.

However, the Court refused to uphold a jury award of $1M in punitive damages against Wal-Mart, finding that this would be too high.  Instead, it reduced the award to $100,000, which is still a very significant amount in all the circumstances.

Conclusion

The bottom line here is that an employee facing abusive treatment wound up with an Ontario Court of Appeal award of more than $410,000 plus legal fees – in addition to damages for severance.

This case is of tremendous significance.  Some of the previous Canadian cases have involved facts that are far more extreme.  For example, in one case, Pate Estate, the plaintiff had been the subject of a wholly unsubstantiated criminal trial.

In this Wal-Mart case, the facts, unfortunately, are far more common, at least in my experience.  It is not always easy for employees to prove that they were subjected to abuse.  But many Canadian employees are faced with somewhat similar treatment.

Here, fortunately for Ms Boucher, the co-employees apparently testified and provided evidence that bolstered her claims.

It is also fair to say that Canadian employers, more often than not, when faced with these types of claims, will attempt to deal with them properly and fairly.  It is rare that an employer will take no action whatsoever and instead threaten the employee who has made the complaint.  However, this certainly does occur more often than one might think.

I regularly represent clients who face abusive scenarios at work, even if many of those scenarios are not quite as extreme as what occurred in the Wal-Mart case.  Employees will now have a much wider range of options available, including the possibility of obtaining much greater damages awards.

For employers, this decision will really serve as a serious warning that complaints of workplace harassment must be investigated and handled appropriately.  The consequences of not responding properly can be dramatic and very costly.

While Wal-Mart may well ask the Supreme Court of Canada to hear this case, it is far from certain that the Supreme Court would see any reason to intervene.  If the Supreme Court does choose to hear the case, it may well consider a cross-appeal to reinstate the $1M in punitive damages that had been awarded at trial, given all of the harsh factual findings in this case.  It seems unlikely to me that the Court would interfere with the aggravated damages awards that were upheld by the Ontario Court of Appeal.

After-Acquired Cause – Employee Fired For Drug Transactions

What is “after-acquired cause?”  It is a legal doctrine that allows employers to prove just cause – even after they have fired employees on a “without cause” basis.

In other words – the employer decides to fire an employee “without cause” and offers to pay some severance.  The employee challenges the severance amount and goes after the employer for more compensation.  The employer then digs through the employee’s old expense accounts, cell phone transactions, computer files etc., looking for some evidence of wrongdoing.  If the employer finds evidence and it can prove serious wrongdoing, the employer can take the position that the employee had been dismissed for just cause – even if it did not allege this at the time the employee was first fired (because it didn’t know about the misconduct).  This is known as after-acquired cause.

This is exactly what happened in the recent B.C. Court of Appeal decision in Van den Boogaard v. Vancouver Pile Driving Ltd. (2014) BCCA 168.

The plaintiff was working as a project manager.  He was responsible for the safety of the job site in a high risk, heavily regulated industry.  He was also responsible for enforcing the company’s drug policy.  His employment was terminated after he had worked for the company for just over a year.

Initially, the plaintiff was let go without cause and paid four weeks’ pay.  He sued for wrongful dismissal.  After the plaintiff challenged the dismissal, the defendant employer went through the company cell phone that the plaintiff had returned.  It found a series of text messages, sent during work hours, in which the plaintiff was soliciting and procuring drugs from one of the employees he supervised.  The main drugs were Dexedrine and Clonazepam, though others were also mentioned.  All of the drugs were illegal or restricted substances.  The defendant concluded that it had just cause for letting the plaintiff go and relied on the legal doctrine of after-acquired cause.

I have to admit that I am sometimes amazed at the types of cases that make it to trial.  Given the plaintiff’s position, the activities in question, the fact that the conduct was all admitted or proven, the fact that it involved the plaintiff’s subordinate and numerous other factors, this would seem like a no-brainer, that is a virtually unwinnable case.

Yet the plaintiff took the case to trial, using a summary trial procedure in B.C.  Not surprisingly, he lost at trial.  The trial court judge held that the plaintiff’s conduct was seriously incompatible with his duties as a project manager.  The court held that there was just cause, even though it was after-acquired cause.  The court dismissed the case and ordered the plaintiff to pay legal costs to the defendant.

The plaintiff then appealed to the B.C. Court of Appeal.  The CA also had little difficulty upholding the trial court decision unanimously.  The Court concluded that the plaintiff had been involved in “criminal conduct with a person over whom he had supervisory authority…”  This misconduct went to the root of the employment relationship and warranted a dismissal for cause.

This case is a clear example of after-acquired cause.  It can be devastating for an employee, particularly one who was dismissed at first on a “without cause” basis and perhaps even offered severance.

Lessons for Employees and Employers

There are important lessons from this type of decision for both employees and employers.

For employees, this case reinforces the point that lawsuits are always risky.  Employees who challenge a severance package run the risk that employers will go through their expense accounts, computer files, cell phone records and other items with a fine tooth comb.  For most employees, this will not create any major problems.  But for employees who have a reason to be concerned, there is a possibility that a diligent employer will discover the misconduct and rely on it to deny any further severance, using the after acquired cause argument.   Employees should make sure to canvass any such concerns carefully with their legal counsel before deciding whether or not to challenge a severance package.

For employers, this case illustrates the fact that employers can investigate an employee’s conduct carefully, even after the employee has been dismissed on a without cause basis.  If the case has not yet been settled and the employer finds something significant, it can be used to save a substantial amount of money.  The employer must prove that it did not know about the misconduct at the time it dismissed the employee and that the misconduct is serious enough to warrant a cause dismissal.

For employees and employers, this case demonstrates the costs and risks of litigation.  While dismissed employees will often want their day in court, the aggressive pursuit of an ill considered lawsuit can be quite costly for an unemployed plaintiff.

 

Are Employment Contracts Negotiable?

Are the terms of employment contracts negotiable?  More often than not, the answer is yes.  But it amazes me how many people tell me that they assumed that the proposed employment contract was simply a “standard form” agreement and just signed it – even when accepting fairly high level positions.

In other posts, I have looked at the types of clauses that can be used in employment contracts and what they really mean.  You can find the most recent discussion here.

But I wanted to consider some more practical points.  Some might seem obvious.  But people holding a new job offer in hand don’t always think of everything that should be considered.  While you may be anxious to sign the employment contract and start the new job, especially if you have been out of work for some period of time, you really do need to look at the contact closely.  Not all of the terms are written in stone.

What items can be negotiated?

1. Salary.  Well, of course this is not really a legal point.  But most people realize that salary is negotiable.  So I often have employees tell me that they negotiated up the salary level of a new position – but ignored everything else in the contract.  Don’t assume that the salary is fixed.  There may well be room to improve it.  Most of the time, it can’t hurt to try.

2. Vacation and Bonus.  In a sense, these benefits go hand in hand with salary.  They are tangible items that an employer might agree to increase.  Often, both items are subject to a grid or a plan.  But I regularly see employers making agreements to increase vacation time at the request of a new hire – especially from two to three weeks or from three to four.

3. Severance.  This is crucial.  Even though it might seem like the last thing on the mind of someone who is about to be hired, it can be incredibly significant.  Some employers will use clauses that drastically limit the amount of potential severance to be paid on a dismissal.  Any clauses that say “employment standards legislation” or something similar should be questioned and considered.  They might even be deal breaking clauses.  As a result, employers will often negotiate these clauses.  If they will not, you should get proper legal advice so that you understand the implications of signing away such important and monetarily valuable rights.

4. Non-Competition Agreements: People generally realize that these clauses are significant, even if they have not had legal advice.  But I often hear employees telling me that a friend or family member told them not to worry because these clauses are rarely enforced and may not even be enforceable.  While that advice might be true sometimes, it is not always the case.  Signing a non-competition agreement – or even a “non-solicitation” agreement can greatly impact your future opportunities after leaving this new employer.  These clauses are also often negotiable, particularly the proposed time period of the restrictions.

5. Probation and Benefits Clauses.  Believe it or not, these too are negotiable items.  If an employee is being recruited from another position, the potential employer may agree to waive a probationary period and/or start benefits right away.  Sometimes a signing bonus can even be negotiated.

These are just a few of the points to consider.  Competent legal counsel can often point out a number of different clauses in a proposed employment contract that are problematic or that should be considered very carefully.  It may well be much cheaper, in the long run, to go through an employment contract review process at the outset than a legal battle at the end of a relationship.  It is usually far worse to find out, after being dismissed, that a signed employment agreement has now left you with below-market severance, enforceable post-employment restriction and no real legal alternatives.

If the employer is reasonable and is genuinely interested in treating its employees fairly, it should be prepared to negotiate reasonable provisions in all of these areas and maybe some others as well.

 

 

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