Friday 31 October 2014

Labour Arbitrators Uphold Discharge of Facebook Bullies


Two recent cases illustrate that labour arbitrators are more than willing to consider misconduct via social media a serious offence.  In both cases labour arbitrators upheld the terminations of employees for incidents of online bullying and harassment.

In CEP, Local 64 and Corner Brook Pulp and Paper Limited, the grievor worked at a pulp and paper operation for almost 13 years.  On one occasion, the grievor was asked to work a casual shift cleaning up pumps on one of the paper machines.  While cleaning the area around the pump with a pressure washer, water from the washer hit the motor and grounded it.  The motor sparked before coming to a halt, and the grievor was frightened by the incident.  She believed that the work was dangerous, although she was assured that it posed no risk of injury.

A couple of days later, the day that an investigatory meeting was scheduled to occur, the grievor posted comments on Facebook abusing certain named managers and threatening violence against management for failing to take safety seriously.  Two of the managers named in her post were concerned enough to contact police, although no charges were laid.  A co-worker mentioned the post to the grievor, and she immediately took it down.  However, by then it had been posted for several hours and would have been visible to a number of other employees who were the grievor’s Facebook “friends”.

During an investigatory meeting, the grievor acknowledged that she had made and posted the comments, but minimized the degree to which they were intended to be threatening.  She also seemed less than remorseful, and more focused on finding out who had ‘ratted her out’.  The employer discharged the grievor, relying on her Facebook comments and a prior one-day suspension that she received for abusing a supervisor about one year earlier.  Her discharge was grieved.

At arbitration, the grievor testified that she had been diagnosed with anxiety earlier in the year, and had been prescribed anti-depressants.  However, over time she decided to stop taking the medication (although she did not consult a doctor before doing so).  She alleged that, as she weaned herself off the anti-depressants, she had difficulty sleeping, especially following the “safety incident” that had just occurred.  She said in the circumstances, she was “not in her right mind” when she made the post in question.  She acknowledged that the comments were inappropriate and could be taken as threatening, and offered an apology to the company and the managers she had named.

The Arbitrator reviewed the evidence and found that the so-called safety incident did not constitute provocation, nor was the grievor justified in being frustrated with how the matter was being investigated by the employer.  The Arbitrator carefully analyzed the content of the grievor’s post and found that it contained seriously offensive and threatening statements.  The Arbitrator also reviewed the arbitral cases involving the appropriate penalty for abusive and threatening Facebook posts.  While many were distinguishable, the precedents did establish that a single inappropriate post, if egregious enough, could constitute just cause for discharge.  Moreover, even in those cases where adjudicators had found that dismissal was inappropriate, the claimants often weren’t reinstated due to the damage to the employment relationship.

In considering mitigating factors, the Arbitrator did not accept the grievor’s medical explanation for her behaviour.  While the Arbitrator believed that she may have been having difficulty sleeping, it appeared that she was able to perform her job and the post was logically constructed, suggesting that she was not “crazy and delusional”, as she alleged.  Her 13 years’ service was a consideration, but given the severity of the posting, her disciplinary record, and the lack of any indication that the employment relationship could be repaired, the employer was found to have just cause to discharge the grievor.

In United Steelworkers of America, Local 9548 v Tenaris Algoma Tubes Inc., another employee was terminated because of a Facebook posting.  After a dispute about how a co-worker was performing her job as signalperson, a crane operator went home and posted disparaging comments about the co-worker on Facebook.  Although he did not name her, the co-worker was identifiable to other employees by the manner in which the grievor described her.  A second employee chimed in suggesting that the grievor should commit a physically aggressive act to the co-worker, to which the grievor responded by suggesting that a “violent and humiliating sex act be inflicted upon” the co-worker (to quote the Arbitrator’s description of the comments which were omitted from the decision).  The co-worker was alerted to the comments by another employee, and approached Industrial Relations the following morning.

It was notable that the grievor’s last comment was posted two hours after the first.  After he was called to a meeting with Industrial Relations the next day, but before the meeting, he deleted the post.  Because the grievor was not utilizing any privacy settings, the post was open to anyone who came upon his Facebook page. 

In the investigative meeting, the grievor acknowledged his wrongdoing, and offered to apologize to the co-worker.  Management advised him that this would not be a good idea as the co-worker was still very upset.  The grievor expressed concern that he didn’t want to lose his job.  He was not asked about any events that preceded or may have influenced his behaviour, and the employer ultimately concluded that this act of harassment was inconsistent with continued employment.  The grievor was discharged, and the matter proceeded to arbitration.  The other employee who commented on his post received a 10-day suspension.

The Union argued that the employer was not compliant with the Occupational Health and Safety Act in that its policy was not recently updated and available to employees in a conspicuous location, and therefore could not rely on its Bill 168 obligations to discharge the grievor.  It further argued that the grievor was truly remorseful and was a good candidate for rehabilitation, despite some past discipline.  The Union also argued that the employer did not consider the safety issue that had arisen between the grievor and his co-worker on the evening preceding the offensive posts when it decided to terminate his employment. 

Arbitrator Trachuk considered the evidence and rejected the Union’s position, finding that the largest aggravating factor in the case was the “vicious and humiliating” nature of the comments that were made.  Moreover, the Union’s argument that the employer should have considered the dispute between the employees before deciding to discharge the grievor was misguided:  even if the grievor was frustrated with the way the employer responded to the issue, that could not in any way explain or excuse his behaviour.

With respect to the fact that the harassment policy was ‘inaccessible’, the Arbitrator did express mild concern that it should be more readily available.  However, she observed that the grievor had received training, and went on to state:
… Furthermore, sexual harassment has not just become unlawful or unacceptable with the inclusion of Bill 168 in OHSA. It has been in the Human Rights Code for many years. I did not hear from the grievor but it would be highly unreasonable for him to claim that he did not know that publicizing such comments about a co-worker was harassment and contrary to the company’s policies.

Although the employer’s policy did not mention social media activity, the grievor would have known that he was making public statements about a co-worker to other co-workers, and that the types of statements he was making could attract discipline.

With respect to the employer’s decision to terminate rather than imposing further progressive discipline, the Arbitrator found:
… progressive discipline is not appropriate in every case. Some offences are so serious that they warrant discharge. An employee does not necessarily get one free sexual harassment before he loses his job. The grievor, in this case, posted hateful comments about X, one of which could reasonably be construed as a threat of sexual assault. When men “joke” about the sexual violence they should inflict on a woman she can reasonably be concerned that they may actually hurt her.

In the result, the Arbitrator concluded that the grievor's 3 1/2 years' service did not deserve significant weight, and that discharge was the appropriate penalty in the circumstances.

 While it is not expressly stated in either decision, it appears that labour arbitrators are reaching the point where harassment, whether in person or through social media platforms, is viewed as an offence akin to theft:  an employer hardly needs to have a policy in order for employees to understand that abusive and intimidating behaviour directed at co-workers and managers will not be tolerated.  While employers still have obligations under the Occupational Health and Safety Act to ensure that employees do not engage in harassment or threats of violence, these decisions give some comfort that severe penalties can be imposed where this behaviour occurs.  As these two grievors learned, discharge is a likely outcome in the absence of very compelling mitigating factors. 

 Do you have questions about workplace harassment and how to address it?  Need assistance with appropriate policies or investigations?  Contact Lance Ceaser for assistance.

 

Thursday 30 October 2014

Legal Strategy as PR Strategy - Jian Ghomeshi's Dubious Lawsuit

As of this morning, the number of women making allegations of sexual violence against Jian Ghomeshi has grown to eight, with at least one person, actress and RCAF Captain Lucy DeCoutere, coming out of anonymity.  While I am a strong believer in the presumption of innocence, there is no question that this story has ceased to be about whether Jian Ghomeshi was fired for liking kinky sex (the way he has framed it in his Facebook post on Sunday), and is now about the emerging portrait of someone serially engaging in violence against women.  No charges have been laid, as of yet, but it stretches the imagination to believe that eight different women have all concocted similar stories in a malicious attempt to scupper Mr. Ghomeshi's career.  Whether or not he may face criminal prosecution remains to be seen.
 
And it is in this changing light that one begins to wonder if Mr. Ghomeshi's legal strategy isn't all part of the PR strategy that was implemented with his careful casting of the "truth" on Facebook.  Obviously, he has received advice from his "high-stakes" handlers at Navigator to get "out in front of the story" by formulating and offering a friendlier version of events.  But the lustre is coming off that narrative with each passing day and the mounting number of alleged victims.  So, what about this lawsuit that he started?  He wouldn't have sued the CBC if he and his legal team didn't think he had a case, right? 
 
Sadly, people assume that the mere commencement of an action in the courts must signal that the defendant has "done something wrong".  The fact is anyone can "sue" (start an action against) anyone else at any given time without ever having to establish that their claims have any merit.  Although bringing a matter to litigation is generally quite costly, it is a relatively simple and inexpensive process to start a legal claim.  And you can rest assured that it does have the impact of suggesting to the broader world that you have been wronged.  But what leads me to believe that Mr. Ghomeshi's lawsuit is more a PR than a legal play?
 
Let me start by saying that Dentons is a well-respected law firm.  I suspect their lawyers are smart, efficient, careful, and they know what they're doing.  But in this case they have brought a claim that has very limited chances of success.  Ever since the decision of the Supreme Court of Canada in Weber v. Ontario Hydro, it has been the law of the land that matters arising out of an employment relationship that is governed by a collective agreement generally must be brought through the grievance and arbitration procedures, not the courts.  All such disputes fall within the exclusive jurisdiction of a labour arbitrator.  The decision in Weber was most recently upheld and applied in Ontario in George v. Anishinabek (Police Service).
 
And the decision in Weber is not limited to claims of unjust discipline or discharge.  It relates to any claim related to the employment and which can be said to fall within the 'four corners' of the collective agreement between union and employer. One of the earlier cases to consider Weber was the decision of the Ontario Superior Court of Justice in Ruscetta v. Graham.  In that case, an employee sued the CBC and its disability claims manager for their role in the denial of his claim for workers’ compensation benefits.  The disability claims manager had stated in correspondence to the Workers' Compensation Board (now the WSIB) that the employee was a “problem employee”, which was then picked up by the carrier of the CBC’s Long-Term Disability benefits (which were also denied).  The employee sued, alleging that the employer had made negligent misstatements and or defamatory comments, but also pursued a grievance with respect to the denial of LTD benefits.  On the basis of Weber, the Court found that the essential character of the dispute did arise out of the collective bargaining relationship and that the dispute was therefore within the exclusive jurisdiction of a labour arbitrator.  At paragraph 9 of the decision, the Court stated:

In short, [the] defamation complained of arises out of a communication from an employee of the CBC whose precise job was to communicate with the WCB regarding the claims of employees who are bound by the collective agreement and that communication was about the plaintiff solely in his capacity as an employee. As the collective agreement does govern issues such as injuries and LTD benefits, and the dispute arises in an employee-employer context, this court lacks jurisdiction to hear the matter.
 The motion to dismiss the action was granted.
 
With very few exceptions, defendants have been successful in arguing this jurisdictional issue to have actions in the courts dismissed.  Here are but a few examples:
 
Giorno v. Pappas – An employee brought a defamation action based on a memorandum that was circulated by another employee criticizing her work performance.  The plaintiff was a member of the bargaining unit represented by OPSEU, and also filed a grievance related to the issue, which was settled.  The Court determined that the subject matter of the action fell within the collective agreement and was subject to the exclusive jurisdiction of a labour arbitrator appointed under the agreement.  Therefore, the Court granted the defendants' motion to dismiss, which decision was upheld by the Court of Appeal.
 
Bujold v. Taylor – An employee brought a defamation action against his former supervisor on the basis that the supervisor leaked information provided by the employee to the effect that several named co-workers were using alcohol and drugs on the job.  The Court found that, as a unionized employee, the plaintiff was required to bring his dispute forward through the grievance and arbitration procedure, especially since part of his claim related to “loss of income” and was tantamount to a constructive dismissal claim.  The Court granted the defendants' motion to dismiss the action.

Soulos v. Leitch – The owner of a construction company brought defamation claims against members of the union, claiming that they had made untrue and disparaging comments about the company’s practices, and that the union had failed to live up to certain representations it made to the employer.  The Court granted the defendants' motion to dismiss the action as the allegations should have been addressed through the grievance and arbitration procedures under the Provincial collective agreement between the company and the union.

Byrne v. Ontario – An OPP Constable brought a claim for harassment, intimidation, and other tortious conduct against a number of fellow officers and management based on issues arising in the course of his employment, including the issuance of discipline and the imposition of performance management measures.  The Court found that grievance arbitration and/or the legislated scheme for disciplinary matters (under the Police Services Act) provided the exclusive means by which such disputes should be adjudicated.  Accordingly, the Court granted the motion to dismiss.

Walters v. Toronto Transit Commission – A bus driver brought a claim for malicious prosecution after the TTC instigated charges under the Highway Traffic Act following an accident the driver had in the course of his duties.  The Court found that framing the dispute as “malicious prosecution” did not take it outside the bounds of the collective agreement.  The employee had the ability to challenge any discipline that was imposed or otherwise grieve the issue of the TTC pursuing charges, and the issue should be dealt with through labour arbitration.  The Court granted the defendants' motion to dismiss the action.

Paonessa v. Lifemark Health Management Inc. – An employee who was terminated due to physical inability to perform the essential functions of his job brought a claim against the company that performed the Functional Abilities Evaluation that found him unfit.  The plaintiff's discharge was grieved and arbitrated, resulting in a settlement.  He was ultimately terminated a second time, due to an alleged breach of the settlement, and that termination was also grieved and the grievance settled.  The Court granted the defendants' motion to dismiss the action on the basis that the issue arose under the collective agreement and the arbitration process provided an “adequate remedy” to the plaintiff.
However, it must be noted that the defendant does not always succeed.  In one of the earliest post-Weber decisions, the Ontario Court of Appeal found that certain claims by a unionized employee could be brought in the courts.  In Piko v. Hudson's Bay Company, the employee had been found to have committed fraud, and her employer initiated criminal charges.  The Crown eventually withdrew the charges.  The employee brought a grievance challenging her discharge as being without just cause, but she also commenced a claim for malicious prosecution against the employer.  The Hudson's Bay Company brought a motion to dismiss the action on the basis that the subject matter of the dispute arose under a collective agreement and should be dealt with through arbitration.  The motions judge agreed, and dismissed the action.  However, Piko appealed.  At the Ontario Court of Appeal, the Court had to consider the impact of Weber, and observed:
Nonetheless, Weber also recognizes that the collective agreement does not govern every dispute between an employer and an employee. Some disputes between employers and employees may not arise under the collective agreement; others may call for a remedy that the arbitrator has no power to grant. The courts may legitimately take jurisdiction over these disputes.
The Court considered the relevant provisions of the collective agreement, and found that the essential character of the dispute did not relate to the agreement because of the employer's actions:
But her claim that the Bay maliciously prosecuted her in the criminal courts lies outside the scope of the collective agreement. The Bay itself went outside the collective bargaining regime when it resorted to the criminal process. Once it took its dispute with Piko to the criminal courts, the dispute was no longer just a labour relations dispute. Having gone outside the collective bargaining regime, the Bay cannot turn around and take refuge in the collective agreement when it is sued for maliciously instituting criminal proceedings against Piko.

In the result, the Court of Appeal allowed Piko to pursue her tort claims against her former employer.

Although relatively rare, the Piko decision has been relied on in other similar cases.  See for example, O’Loan v. Risinger, in which the actions of the defendants were found to be "personal" and unrelated to the plaintiff's employment, even though they all worked together in the same workplace.

So, does Mr. Ghomeshi's team really think it can shoe-horn its case into the exception created by Piko?  Can it point to some way in which the CBC has stepped "outside the collective bargaining regime" and brought itself under the 'general law' applied by the courts?  On the pleadings, there doesn't appear to be a suggestion that the CBC went beyond its responsibility and authority as Mr. Ghomeshi's employer in obtaining and acting on the personal information he provided.  The CBC had to make an assessment of whether the allegations, which had been bubbling for months, represented a real risk of damage to the broadcaster's reputation and brand.  As an employee, and one who was a very public face of the CBC, Mr. Ghomeshi had a responsibility to not engage in conduct (whether in the workplace or outside of it) that could damage his employer's business interests.  In short, the alleged tortious conduct is all part and parcel of the CBC managing the employment relationship with one of its "stars".  This undoubtedly would fall within the CBC's management rights under its collective agreement, including its authority to impose discipline for misconduct.  The fact that Mr. Ghomeshi has stated an intention to challenge his dismissal under the collective agreement bolsters this conclusion.  Characterizing the disclosure of personal information as being an incident of "common interest privilege" is just one way of reframing a very common workplace issue as a legal one - the situation is no different than a million other cases where an employee advises his/her employer of work-related issues before they come to the employer's attention in an effort to mitigate the negative consequences.  If "privilege" attached to these types of disclosures, employers would never be able to rely on statements made by an employee in the course of an investigation into alleged bad behaviour.  I doubt very much the courts want to set that precedent.

In short, I don't see how Piko could apply to this fact pattern, and I anticipate that the CBC will make the argument that it does not, in an effort to have the action dismissed.  Mr. Ghomeshi's legal team undoubtedly knows this, too.  That being said, it's entirely possible that commencing the court action really was part of the PR strategy to start with, and has already served its desired purpose.

Do you have questions about a legal dispute arising in the workplace?  Want to know whether it belongs in the courts?  If you have any questions about workplace law, don't hesitate to contact Lance Ceaser for assistance.




Monday 27 October 2014

When is your personal life your employer's business?

 When news broke this weekend that Jian Ghomeshi had been terminated by the CBC, a lot of people were surprised and dismayed. When the reasons for his dismissal started to leak out (in large part due to Mr. Ghomeshi's post on Facebook), surprise turned to shock and indignation. How could the CBC come to the conclusion that Mr. Ghomeshi's personal sexual habits (which are, by most accounts, entirely consensual) have any bearing on his ability to perform the role of media personality? Since when is an individual's personal life their employer's business?
 
A few caveats are in order: I don't know any more about Mr. Ghomeshi's situation than I've read on-line. I have no idea what information CBC had received that drove its decision, nor can I comment on the veracity of the allegations that have been levelled at him in certain quarters. And I’m not passing moral judgment, positive or negative, on any sexual activities that he may have been involved in, provided they were lawful and consensual. 
 
But from a purely professional angle, this situation does raise very interesting, and potentially troubling, issues of personal freedom, privacy and autonomy, and the extent to which those values intersect with the employment relationship. How far can an employer reach into the dark corners of an employee's existence to assess whether they are involved in things that are (or may be perceived) as inconsistent with the duties for which they receive a pay cheque?
 
In terms of the legal concepts, older cases, dating back to the 19th Century, are very clear on the issue:
 
“The rule of law is, that where a person has entered into the position of servant, if he does anything compatible with the due or faithful discharge of his duty to his master, the latter has a right to dismiss him. The relation of master and servant implies necessarily that the servant shall be in a position to perform his duty duly and faithfully, and if by his own act he prevents himself from doing so, the master may dismiss him. ... But if a servant is guilty of such a crime outside his service as to make it unsafe for a master to keep him in his employ, the servant may be dismissed by his master; and if the servant’s conduct is so grossly immoral that all reasonable men would say that he cannot be trusted, the master may dismiss him.”
 
...
 
“If a servant conducts himself in a way inconsistent with the faithful discharge of his duty in the service, it is misconduct which justifies immediate dismissal. That misconduct, according to my view, need not be misconduct in the carrying on of the service of the business. It is sufficient if it is conduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, not only if he discovers it at the time, but also if he discovers it afterwards, in dismissing that servant.”
 
Pearce v. Foster et al. (1886), 17 Q.B.D. 536

 
While the language in the decision may be quaint, the underlying principle has continued to be applied by the courts, generally in cases involving alleged criminal conduct or acts involving dishonesty (fraud, theft, etc.) that occur outside the workplace. While an employer has a right to take action to defend its reputation, the courts will look to the quality of the evidence, and whether the conduct in question is truly at odds with the employer's business and/or the employee's duties. Unless the employer can establish actual or potential "prejudice" to its reputation or business, without necessarily proving any monetary loss, or that the employee was essentially disqualified from performing his or her job, then it will not have cause to dismiss the employee.
 
The courts have had to consider whether sexual 'impropriety', in various forms, amounts to cause for summary dismissal in a number of cases. One of the most widely publicized recent decisions was Kelly v. Linamar Corporation, in which the plaintiff was dismissed after being charged with possession of child pornography. At the time of dismissal, the employee was the materials manager for one of the company's subsidiaries. The company was a major employer in the local economy, and had a history of contributing to charities that supported youth and community programs. Although the employee had not been convicted of the offence at the time of termination, it appears that he also did not deny his culpability when questioned by the employer. The Court paid particular attention to the decision in Harrop v. Markham Stouffville Hospital, in which the dismissal of a nurse was upheld where the employer established that she had a relationship (outside of work) with a recently discharged psychiatric patient. After considering the facts and the law, the Court concluded (at paras. 30-31):
 
The defendant argues that an employee in the position of Philip Kelly, who is required to work with the general public both acquiring product from suppliers and supplying product to customers, who is required to manage, instruct and discipline people working under him, and who is required to interact collegially with many peers at the management level, has a duty to ensure that his conduct does not adversely impact on any of those activities. It is argued that permitting himself to be placed in the position where he would be charged with possession of child pornography, which fact became almost immediately known to his management peers, co-workers and people who reported to him, and which ultimately became known to the general public when at a later stage the identity of his employer was disclosed, he has failed to discharge the duty that he has to his employer.
 
I agree. Linamar has over a long period of time built up a good reputation which it jealously protects. That reputation includes the promotion of its activities with young people outlined earlier. A company is entitled to take reasonable steps to protect such a reputation and the termination of Philip Kelly was just such a step. The employer has demonstrated just cause on far more than the balance of probabilities.
Where a bank teller was involved in a common-law relationship with a man who had been charged with robbing the bank she worked for, the Federal Court of Appeal upheld the dismissal of the teller. In Canadian Imperial Bank of Commerce v. Boisvert, [1986] 2 F.C. 431, the Court considered the principles cited above in order to determine whether cohabitation with a particular person could amount to cause for dismissal. When considering the employee's duties (i.e., to safeguard the money held by the bank) and her knowledge of her fiancé's activities, the Court held that her continuing cohabitation was relevant to her employment, as her involvement with a robber had the potential to prejudice the bank's interests. Given that she had inside information about the Bank's security arrangements, her relationship with a bank robber was directly incompatible with her duties to her employer.
 
Where a social worker began dating a person who was convicted of a sexual offence and had been ordered to take sexual abuse counselling provided by her employer, the employer was found to have cause to terminate the employment. In Smith v. Kamloops & District Elizabeth Fry Society (1995), 9 C.C.E.L. (2d) 306 (B.C. S.C.), the employer brought its concerns to the employee, and advised her that she would have to choose between her intimate relationship and her job. When the plaintiff did not immediately end the relationship (because it was a private matter separate from her job), the employer terminated her employment citing a lack of judgment and the perception that others might have of how her involvement could impact the performance of her job and the agency's mandate. The British Columbia Supreme Court found that the employer did have cause to end her employment, taking note of the "higher degree of sensitivity and acumen" required in the plaintiff's position. Her failure to bring the issue forward or to see the potential incompatibility between her duties and her relationship reflected seriously flawed judgment, and posed significant risk for the agency's reputation.
 
In Reilly v. Steelcase Canada Ltd., however, an employer was found to not have cause for dismissal where an employee had an extramarital affair with the wife of a colleague. The plaintiff was a district manager, and was responsible for three of the most lucrative customer relationships of the employer. During a convention in Florida, the employee began the affair with his co-worker's wife, which then grew into a steady relationship. Surprisingly, when the co-worker learned of the affair, there was no acrimony. However, whenever the employer found out, through a complaint from one of its customers, it decided that the plaintiff's behaviour was incompatible with his role representing the company. Justice Keith of the Ontario High Court of Justice looked at the handful of decisions that had dealt with similar 'indecorous' conduct, and made the following observation about changing moral standards:
 
This becomes very important because between 1886, for example, when Pearce v. Foster was decided and 1918, for example, when McPherson v. City of Toronto was decided and 1979 when the present case must be decided, there has been a social revolution of enormous proportions. One need only to look at the Divorce Act, 1968 (Can.), c. 24, and the Family Law Reform Act, 1978 (Ont.), c. 2, to realize the gulf that separates current thinking with respect to personal and social relationships that are acceptable today with those that were acceptable in the society of 60 to 100 years ago.
 
The principles of law set out in the cases I have quoted from are indeed as sound as when they were enunciated, but when applied, they must be relevant to present society. ...
 
Bearing in mind the analysis in Pearce v. Foster, the Judge held that "each case must be looked at objectively, in the light of all the facts, and as related to the test of current social acceptability". The employer had acted precipitously in not investigating the matter and determining that the employee's manager was already aware and viewed the matter as a "private affair [that] would have no adverse effect on the operation of his department". Because of its failure to give the employee a chance to be heard, the employer did not have the full story before deciding to dismiss. The plaintiff also adduced evidence that two of his primary customers were very happy with his performance, and were not concerned about the adulterous relationship. In the result, the Court held that the affair did not constitute cause for dismissal as it "was neither prejudicial, nor likely to be prejudicial to the interests or to the reputation of the defendant".
 
In a somewhat similar case, an employee was found to have given cause for dismissal where he had a brief affair with the wife of his employer. In Olsen v. Ritchie Bros. Construction Ltd., [1994] A.J. No. 701 (AB Q.B.), the employee was dismissed after a period of 4 months after his boss learned of the relationship, during which interval he was actively at work for one month before being placed on a 3-month layoff. Given that the wife was also the company's bookkeeper, and the business was a small family-run business in a small community, Justice Hunt found that the employee's conduct was prejudicial or potentially prejudicial to the employer's operation. However, given that the employee was retained for a few months after the employer learned of the affair, the Court concluded that the employer had condoned the behaviour and could not rely on it to support termination.
 
In Dooley v. C.N. Weber Ltd., [1994] O.J. No. 712 (O.C.J., Gen. Div.), an executive was terminated after having consensual relationships with some of his female colleagues. After a previous incident, the employer had warned the employee that he should not have any further relationships with female subordinates, but he persisted and was dismissed. The employer did not have a written sexual harassment policy, and the Court heard evidence that there had been other instances of employees having relationships with co-workers for which they were not punished or dismissed. After reviewing and adopting the reasoning in Reilly v. Steelcase Canada Ltd., Justice Yates held that the employer did not have cause to dismiss Dooley. The Court found:
 
The Company failed to satisfy this onus because the order given by [the President of the Company] to Dooley was not reasonable in today's world particularly where there is no evidence before me that the Company suffered in any manner whatsoever, either financially or otherwise, arising out of the conduct of Dooley while employed at the Toronto location. In addition, the circumstances of this case clearly indicates that the order given by [the Company President] to Dooley relating to his association with women subordinates in Toronto, was not within the scope of his employment with the Company.
 
In the result, the action was allowed.
 
So what are the principles that can be distilled from the case law? Here are a few takeaways:

  • Activities by an employee outside the workplace that negatively impact the employer’s reputation in some significant or potentially significant way may be cause for summary dismissal;
  • Conduct that is criminal in nature, and which has some direct connection to the employer’s business or reputation is more likely to be cause;
  • Acts of dishonesty that reflect poorly on an employee’s integrity are likely to be cause where the performance of the employee’s job depends on trust; 
  • Where the employee is a representative of the employer’s “brand” or serves as the public faceof the business, the standards for “decorum” may be higher; and
  • Issues of so-called “moral turpitude” are subject to society’s evolving mores and ‘community standards’ in terms of whether particular actions are likely to prejudice an employer’s business or reputation. 
 
Where that leaves Jian Ghomeshi and the CBC remains to be seen, but the limited information that’s currently available paints a picture in shades of grey (50 shades, to be metaphorical). The CBC is a public broadcaster, with a mandate to deliver the news and other required programming throughout Canada. As a public body, it's subject (naturally) to the scrutiny of taxpayers, many of whom are not its biggest supporters.  Mr. Ghomeshi is one of the CBC's stars and regularly delivers strong ratings (albeit not on the order of Hockey Night in Canada). However, the demographic for his former program, Q with Jian Ghomeshi, has typically skewed toward folks in their 20’s. So, who’s moral values does the CBC have to consider? All Canadians? Canadians in their 20s? CBC viewers and listeners?  To what extent should Mr. Ghomeshi expect his private activities to be measured on the yardstick of communal morals and values? And what impact does the popularity of the Fifty Shades of Grey books have on this debate? Does this suggest a shift in societal judgment such that engaging in a BDSM lifestyle or practices does not meet the threshold of moral outrage necessary to constitute cause for dismissal? 
 
While I have my doubts that this matter will ever make it to trial (I doubt that CBC or Mr. Ghomeshi really want all of the dirty laundry aired), it could prove fascinating. If nothing else, it would provide some key insight to others whose careers are in the spotlight as to just how much of their privacy is open to scrutiny by their employers.
 
Do you have questions about employment law? Wonder what constitutes just cause nowadays? Contact Lance Ceaser for guidance and advice.
 
  

Friday 24 October 2014

Forfeiture and Repayment Clauses - Do they have to be justified as being in "restraint of trade"?


Typically, employers have encountered difficulty in enforcing covenants restricting employees from competing with the employer after their employment ends. Restrictive covenants, which typically deal with post-termination confidentiality, solicitation of employees and clients, and competition with the former employer.  Such restrictions are viewed by the courts as unenforceable, as they constitute a "restraint on trade", that is, an unfair impediment to an individual being able to ply his or her trade and earn a living. 

However, if the covenants can pass a number of tests for reasonableness, the courts will find them enforceable.  First, the employer must be able to establish that the restrictions are reasonably necessary to protect its legitimate business interests, and that the measures imposed are the least restrictive that would meet that objective.  If a non-solicitation provision would provide adequate protection, the courts will not uphold a non-competition agreement.  If the employer can establish the necessity of the restriction, it must still prove that the limitations imposed are reasonable, in terms of the temporal and geographic scope of the covenant, as well as the nature of the activity that it captures.  Again, less is more - a covenant that is not tailored bearing in mind the employee's job duties, their level of responsibility vis-a-vis the employer's business, and the risk posed by their competition with the former employer, it is unlikely to be enforced.

The courts have taken varying views on other types of clauses that are triggered upon termination and which may impact an employee's post-termination activities and entitlements.  Two recent decisions illustrate how some of these clauses work, and what the courts think of them.

In Levinsky v. The Toronto-Dominion Bank, the employee was a Vice President in the securities trading area for several years, before resigning to start up his own hedge fund.  For several years, he participated in the Bank's Long-Term Compensation Plan (the "Plan"), which provided grants of Restricted Share Units ("RSUs") each year.  Each grant of RSUs would vest three years from the date of grant, but any unvested RSUs were forfeited in the event that an employee resigned prior to their vesting date.  The plaintiff claimed that the RSU awards were a form of “earned compensation” for past services, and that the forfeiture provision in the Plan amounted to an unreasonable restrictive covenant, as it was actually designed to discourage employees of the Bank from leaving and going to work for a competitor.  His claim was for approximately $1.6 million in unvested RSUs.  Although the plaintiff was subject to a non-competition agreement, the Bank waived any restriction on his activities and did not challenge his starting a potentially competitive business after he left.

In the Ontario Superior Court of Justice, Justice Brown considered the law on restrictive covenants, including the fact that whether a provision amounts to a restraint of trade is to be determined “by the effect of the clause in practice”, not just its form.  After reviewing those cases in which an employee was denied future compensation in the event of his/her resigning and taking on employment with a competitor, the Court summarized the case law as follows (at para. 80):
 
From this review of the jurisprudence placed before me at the trial, the following legal principles emerge:
(i)      No binding decision was put before me which dealt with facts substantially similar to those raised by the present case;
(ii)   However, the decision of the Court of Appeal in Inglis, which does bind me, held that a clause in an employment contract under which the entitlement to post-termination future commissions would be forfeit in the event the employee engaged in a competing business was not in restraint of trade because it did not preclude the employee “from going anywhere and doing anything he chose to do”. The Court of Appeal viewed the clause as attaching a contingency to the entitlement to future income, but not the forfeiture of a vested right;  

(iii)   This Court, in Nortel Networks v. Jervis, did not regard as a restraint of trade a clause in an employment contract which required an employee to reimburse the employer benefits he had received from the exercise of stock options prior to leaving the company in the event that after leaving he went to work for a competitor, again on the basis that it did not preclude the employee “from going elsewhere or from doing whatever he chose to do”;
(iv)   The weight of authority from other jurisdictions regarding the treatment of clauses which defer compensation for a period of time and require an employee to remain in service at the time of maturity in order to receive the compensation suggests two principles:

a. If the entitlement depends upon the continuation in service and does not tie eligibility to the nature of the employee’s commercial activity after he leaves his employer, the clause is not viewed as a restraint of trade, but simply a condition for entitlement to part of the employee’s compensation package and a reasonable condition designed to secure the employee’s loyalty through continued service; but,

b. If the deferred compensation has already vested in the employee prior to his termination, a forfeiture provision might be regarded as a restraint of trade if forfeiture was tied to post-termination commercial activity, not simply to the employee’s continuation in service.

Because the Plan in Levinsky did not tie post-termination entitlement to the RSU grant to refraining from taking up employment with a competitor, but was tied solely to his continued employment with the Bank for a specified period of time, the Court viewed it as a retention scheme rather than a restraint of trade.  Moreover, it was clear from the terms of the Plan that the compensation at issue had not yet been earned, and was not a vested right that the employee could demand after resigning.  In the result, the claim was dismissed.

Similar issues were more recently litigated in Rhebergen v. Creston Veterinary Clinic Ltd., at the British Columbia Court of Appeal.  In that case, a veterinary practice retained the plaintiff under an “Associate Agreement” immediately after she completed her veterinary schooling.  It was agreed that the plaintiff would work for the clinic for three years, during which time she would receive further hands-on training and mentoring.  Under the contract, the plaintiff was subject to a repayment obligation if she “set up” a veterinary practice in the town where the clinic was located or within 25 km of the town.  After 14 months of employment, the plaintiff advised the clinic that she intended to leave, and her employment was terminated for cause.  She then applied to the court for a declaration that she was not obligated to make any repayment to the clinic if she started her own mobile vet practice, as the provision of the contract was alleged to be in restraint of trade and unenforceable.

In the B.C. Supreme Court, the plaintiff was successful.  The Court was of the opinion that the terms of the repayment provision were vague and ambiguous, and that the repayment amounts set out therein were a penalty, rendering the provision unenforceable.  The employer appealed.

At the B.C. Court of Appeal, the majority of the Court (Justice Lowry dissenting) found that the trial judge had erred in finding that the repayment provision was ambiguous as to when compensation would be triggered.  Given that the former employee had brought her application for a declaration on the basis that she intended to “set up a veterinary practice” in the prescribed area, it was clear that the parties had a mutual understanding of what the clause meant.  The Court was unanimous in finding that the repayment obligation did not constitute a “penalty”, and that whether or not it was a penalty was not per se determinative of whether it was unreasonable, where the employee had agreed to the amounts to be repaid. 

Perhaps most interestingly, however, the B.C. Court of Appeal was also unanimous in finding that its responsibility in reviewing a clause of this nature was to look at the functional or practical effect, rather than focusing on the form of the provision (as was the case in many of the Ontario cases cited). The Court also observed that the decision in Levinsky supported taking a functional approach, where the courts must focus on whether the clause creates a disincentive for the employee to compete post-termination, even if there is no express prohibition of competition.  The Court had no hesitation in finding, on the basis of this functional analysis, that the repayment obligation in the Agreement amounted to a restrictive covenant.  However, in the end, it was found that its terms were reasonable and, therefore, enforceable.

These recent cases highlight the variety of approaches that are possible, but also provide some clarity on what types of provisions will be enforceable and which won’t.  In most instances, ‘retention’ schemes that tie entitlement to an employee continuing in employment for some period of time, and which do not disentitle the employee on the basis of competitive activity post-termination, will not be found to be in restraint of trade.  Accordingly, an employer will not have to justify these provisions on the basis of the ‘reasonableness’ test referred to above.  However, if the program provides a vested right, which is then taken away at termination, this may offer another basis for challenging the refusal to pay.  Where an employee is required to repay or will lose a significant piece of compensation as a result of post-termination competition, such measures will likely be viewed as a disguised restrictive covenant on the basis of the functional analysis, and will have to be justified as reasonable.  In looking at a repayment obligation, it will be necessary to establish that it is not unduly onerous or punitive, and it would be advisable to be able to connect the amount to any costs involved in the loss of the employee, such as foregone training and equipment costs and/or the loss of clients to the employee’s competition (as was the case in Rhebergen).  In all cases, however, care must be taken to ensure that the language used is clear and unambiguous – any clause that takes away some component of the employment bargain or which imposes financial obligations will likely fail if it is vague or open to multiple interpretations.

Do you have questions about forfeiture or ‘penalty’ clauses in an employment agreement or other employment-related compensation scheme?  Contact Lance Ceaser for professional guidance.

Monday 20 October 2014

Arbitrators Have Exclusive Jurisdiction Over ALL Matters Covered by the Collective Agreement

A recent decision of the Ontario Court of Appeal highlights the importance of the decision in Weber v. Ontario Hydro almost 20 years later.  In Weber, the Supreme Court of Canada had to determine whether legislatures had granted exclusive jurisdiction to labour arbitrators to deal with all issues of interpretation, application or alleged violation of a collective agreement, or if they shared concurrent jurisdiction with the courts.  Under the former model, unionized employers and employees would have virtually no recourse to the courts if their disputes could be said to arise under the collective agreement.  The Supreme Court ultimately rejected concurrent jurisdiction, and stated very clearly that all issues arising in the unionized workplace that fell within the four corners of the collective agreement had to go to arbitration.

The employee in George v. Anishinabek (Police Service) was a member of the Anishinabek Police Service (the "APS") who was facing discipline.  Under a tri-partite agreement among the federal and provincial governments and several First Nations, the APS was retained to provide policing services within certain APS territories. Oversight of APS policing was granted to the Police Governing Authority ("PGA"), which was also responsible for decision-making under APS' Code of Conduct for its employees.  The PGA was also the "employer" of all APS staff, and was bound to a collective agreement with the Public Service Alliance of Canada, which provided a grievance procedure for all issues falling under the collective agreement.  Under the APS Code, decisions on discipline were to be made within 6 months of an incident, but with some discretion for the PGA to extend those timelines.  Mr. George was advised of a disciplinary hearing more than 12 months after an incident on the job, but was not given notice that APS had sought an extension of the time to commence a proceeding under the Code.  As a result, he brought an application for judicial review in the Divisional Court to quash the notice of disciplinary hearing (on the basis of a lack of procedural fairness), and was successful.  The APS appealed that decision.

At the Divisional Court, the APS did not challenge the court's jurisdiction to judicially review the decision of PGA, but this was the central issue in its appeal to the Ontario Court of Appeal.  While appellate courts will usually not allow parties to argue points that were not argued in the courts below, they did permit APS to pursue this argument as it might be determinative of the matter, could be argued on the existing record without further evidence, and would not be overly prejudicial to the respondent.  On the question of whether the Divisional Court had jurisdiction to engage in judicial review, the Court of Appeal relied on Weber to find that the answer was "no".  Under Weber, a court must consider the nature of the dispute, and whether that dispute falls within the ambit of the collective agreement in question. In applying the test to the circumstances of the case, Justice Doherty (writing for a unanimous court) found that the issue revolved around discipline.  While discipline was a matter covered by the Code, the Code was simply the mechanism by which the employer exercised its management rights under the collective agreement.  Accordingly, the dispute in question was one that fell within a labour arbitrator's exclusive jurisdiction, and the issue of procedural fairness should not have been addressed by the Divisional Court.

The Court of Appeal's decision serves as a good reminder of the extent to which a collective bargaining relationship changes the dynamics of a workplace.  Not only are typical employee relations issues barred from the courts, but any dispute or matter of interpretation, including those that arise under employment-related statutes, should be brought before an arbitrator for determination.  It is therefore important for employers to ensure that they are mindful of Weber when confronted with a claim (or the threat of a claim) in the courts, and to argue that the issue should be resolved in grievance arbitration.

Do you have questions about labour relations or other employment-related litigation?  Contact Lance Ceaser for assistance.
 

Thursday 16 October 2014

Overtime Class Actions - The Certification Saga Continues

With more and more overtime class action cases coming before the courts, there is starting to be some useful guidance for parties on which types of claims will be certified (i.e., allowed to proceed as class actions) and which will not be. 

Recently, the Ontario Court of Appeal released its decision in Brown v. Canadian Imperial Bank of Commerce ("Brown"), in which the Court upheld the decisions of the lower courts to deny certification of the claim. In Brown, the plaintiffs were employees in various job titles who claimed that they had been misclassified as 'managerial', leading the employer to not pay them overtime.  The Ontario Court of Appeal ruled that the Divisional Court had not erred in finding that a determination of whether an employee in a particular role was 'managerial' or not was fact-specific, and required a review of job responsibilities on an individual basis.  Given the need to look at each individual's circumstances, there was not enough commonality to deal with the proposed class as a group.  Therefore, a class action was not the most appropriate means of adjudicating the claims.

This decision follows closely in the footsteps of the Court's previous decision in McCracken v. Canadian National Railway Co., and distinguished the case of Rosen v. BMO Nesbitt Burns Inc., in which a class action was certified.

What Brown demonstrates is that there are essentially two types of overtime claims that may be brought forward as class actions:  so-called 'misclassification' claims; and 'policy' claims.  In the former, employees are ineligible based on the alleged managerial nature of their roles.  Unless there is significant commonality of functions and responsibilities among employees with the same job title, an analysis of whether these employees are properly classified will turn on individual circumstances.  Accordingly, these cases generally have not met the test of "common issues" necessary to be certified as a class action.  Where on the other hand, the claim turns on an employer policy that denies employees overtime pay, irrespective of particular job duties (e.g., based on the fact that they are paid on a commission basis, as in Rosen), the question will turn on the application of the policy across positions and titles, and its compliance with the Employment Standards Act, issues which are much more amenable to determination under the Class Proceedings Act.

It must be noted that the Court of Appeal in Brown expressly found that not all misclassification cases were necessarily doomed, and that not all policy-type claims will necessarily be certified.  The Courts will still be called upon to analyze whether there are sufficient "common issues" to try the claim as a class action.  That being said, it is becoming increasingly clear that the misclassification type claims will generally be harder to certify.

Do you have questions about overtime policies?  Feel free to contact Lance Ceaser for help. 


 





 

Tuesday 14 October 2014

Alleging Employer "Paid Off" MOL Inspector Part of Successful 'Cause' Case

As any employer will tell you, establishing that an employee has provided cause (or "just cause") for dismissal can be extremely challenging.  But in a recent decision of the Ontario Superior Court of Justice, an employer prevailed where an accumulation of performance and behavioral issues led to the termination of a Shift Supervisor. 

In Chopra v. Easy Plastic Containers Limited, the employee had a checkered past.  Over the course of his employment there had been several incidents of performance or behavioral issues, including the following:
  • Allowing an unauthorized person to access the tool room and use tools;
  • Permitting employees under his supervision to leave the plant for approximately an hour without requiring them to punch out;
  • Approving a skid of product without ensuring that necessary labels were affixed;
  • Winking at and touching the hand of a co-worker; and
  • Falling asleep during a midnight shift.
The incidents were all documented with written or verbal warnings, and following the last event, the employee was placed on the day shift.  Shortly thereafter, the employee made a complaint to the Ministry of Labour ("MOL") regarding safety concerns with two of the machines on the line, and refused to work on either machine.  Following a first visit from a MOL inspector, no significant issues were found, but the employee continued to refuse to work on the machines in question. A short time later, he received yet another performance-related written warning from the employer.  He then made further complaints to the MOL, which were denied without any orders being issued.

The employer moved the plaintiff to the maintenance department, and only a few days later he was given a 3-day suspension for refusing to wear required Personal Protection Equipment ("PPE").  The employee raised claims that he was being harassed, but the employer did not take any action. Over a short span of time, the employer learned that the employee was trying to get another employee to support his claims of harassment, had told other employees that the company was going to close, and that the employee was spreading rumours among his co-workers that the company had paid off the MOL inspector (whom he referred to as a "rat") so that he would not uphold the employee's safety complaints.  After finding out about the latter issue, the employer met with the plaintiff and terminated his employment for cause.  The employee sued for wrongful dismissal, claiming that he had been dismissed in retaliation for raising safety concerns with the MOL.

Justice Sanderson reviewed the evidence regarding the various disciplinary issues that the company had brought to the plaintiff's attention, and found that the incidents had been established and that the employee had not challenged the basis for the discipline. Moreover, in documenting these issues, the employer had brought serious problems to the plaintiff's attention and had given him ample opportunity to correct his behaviour.  After reviewing the law on 'cumulative just cause', the Judge ruled that the employee's performance, together with his "insubordination and conduct specifically designed to harm Easy", amounted to just cause for dismissal.  The Judge also rejected the employee's claims that the workplace was unsafe or that his complaints to the MOL played any part in the employer's decision to terminate his employment.  Accordingly, his claim was dismissed.

The Court's decision gives some helpful guidance to employees dealing with employees with a history of unsatisfactory performance and behaviour.
  • Document, document, document! - all disciplinary incidents must be clearly documented, indicating expectations for improvement and the potential for further corrective action.
  • Corrective action should be progressive - where unacceptable behaviour persists, ensure that the employer's response is measured and progressive, providing for escalating penalties, and ultimately warning that employment is in jeopardy.
  • Avoid extraneous considerations - ensure that disciplinary decisions do not reference or rely on irrelevant (and dangerous) factors, such as non-culpable concerns or complaints (even if those complaints are unfounded).
While making the case that an employee has given cause for termination can be time-consuming and difficult, following a few basic rules can improve the odds that the employer will prevail.

Do you have questions about "just cause"?  Wonder if and when an employment relationship is irrevocably damaged?  Contact Lance Ceaser for expert guidance.



 

Friday 3 October 2014

The Results Are In - Outcome of the Ministry of Labour's "Blitz" on Unpaid Internships Announced

As discussed in an April blog post, the Ministry of Labour has turned up the heat on unpaid internships, in an effort to ensure that employers are not mischaracterizing employees as 'trainees'.  The Ministry's efforts included a spring "blitz", during which a number of employers' intern programs were scrutinized.  The Ministry of Labour has now released the results of the blitz on its website, and it appears that the news for employers is not all bad.
  •  Out of 56 inspections (in the advertising, public relations, computer systems design, consulting services and information services sectors), 25 employers had no internship program or no 'active' program.  5 employers had programs that did not contravene the Employment Standards Act, 2000.
  • 13 employers had programs that were entirely exempt from the Act.
  • 13 employers had programs that contravened the Act in some manner, resulting in the Ministry issuing 36 Compliance Orders and 1 Order to Pay Wages.
  • The Ministry identified the most common violations as relating to:
    • Minimum wage
    • Vacation pay
    • Public holiday pay  
    • Wage Statements
    • Record keeping
    • Hours of work
However, based on the release of this information, it is clear that there are still issues in this area.  When you remove the employers with no active internship programs, contraventions were identified in relation to 13 out of 31 programs (over 40%).  The fact that a large number of employers also did not have 'active' programs at the time of the blitz (17 employers) suggests that other non-compliant programs may have been shuttered before the Ministry started its campaign.

It is unlikely that this issue is going away, or that the Ministry will now cease its enforcement activities.  Employers contemplating running an internship program would be well advised to obtain some advice before heading down this treacherous path.  A good starting point is the Ministry's publication, "Are Unpaid Internships Legal in Ontario?" which explains the narrow circumstances in which an unpaid training opportunity can be offered.

Do you need guidance on whether to implement an internship program and how to navigate the requirements of the ESA?  Feel free to contact Lance Ceaser for more information.