Taunted and harassed: Why an employee subjected to horrific cruelty can’t sue her abusers under Ontario’s new law

Until Jan. 1, 2018, Ontario’s workers’ compensation barred claims for mental stress not caused by a physical injury. The legislation was then amended to add claims for “mental stress arising out of and in the course of the worker’s employment,” e.g., caused by harassment and other culpable behaviour.

Workers believed these amendments were a victory. They should have watched what they wished for. Ontario’s Workplace Safety and Insurance Appeals Tribunal’s decision to bar Morningstar from suing her abusers shows how this legislative scheme has gone horribly wrong and can now strip harassed employees of their right to sue.

Morningstar, a 60-year-old cancer survivor and housekeeper at the Hilton Niagara Falls/Fallsview Hotel in Niagara Falls, Ont., was ridiculed by her coworkers for her cancer symptoms. They told her she had an unpleasant scent, sprayed her with Lysol, asked her about her use of feminine hygiene products and reportedly left towels and bathmats on her chair to suggest incontinence — outrageous conduct. Her employer apparently did little to stop this.

Morningstar suffered this blatantly demeaning conduct, being a single parent in need of her employment income, for as long as she could, but eventually quit.

Employees who have been harassed have historically been able to sue their employer for having created or permitted a toxic environment that caused mental distress and effectively cost them their job. The remedy for this is a constructive dismissal claim with a severance package and possibly additional damages for mental distress and even punitive and other damages. These damages are paid by the employer and/or the harassers and a concordant message sent that this is unacceptable and costly behaviour to indulge or permit in the workplace. A lesson to abusers.

However, that lesson is lost if workers’ compensation simply pays out mental distress benefits and the employee is barred from suing in court for dramatically greater damages. Worse, the benefits are paid not by the harasser or employer, but by the government. At most, the employer’s workers’ compensation premiums may go up.

Happily, decisions out of the WSIAT have generally still allowed employees to sue in court when they have been terminated to obtain a severance package and if applicable, punitive damages to punish offenders. But the key is that the employee has to have been terminated already or that something other than mental distress caused them to resign.

When the hotel argued that Morningstar should apply for workers’ compensation rather than sue, the WSIAT agreed and ruled that her claim for constructive dismissal was barred. It ruled that she could only pursue comparatively low-value chronic mental distress benefits through the workers’ compensation regime. In other words: no severance package, no punitive damages and no consequence for the hotel’s condonation of its employees’ horrific cruelty.

WSIAT’s decision deviated from prior decisions because Morningstar was pursuing a claim for constructive dismissal (a termination resulting from mental distress/toxic work environment) rather than a more typical wrongful dismissal action in which an employee is terminated rather than deciding to leave herself due to mental distress.

The critical finding was that her suit for constructive dismissal was “inextricably linked to the workplace injury,” i.e., mental distress caused by her coworkers which led her to quit. The WSIAT stated that “her employment was effectively terminated by the harassing and bullying conduct of co-workers and management which caused her mental distress to such a degree that she was forced to take sick leave and ultimately resign.”

The decision is not wrong in this respect — Morningstar quit because of mental distress caused in the workplace. But the result could be the death knell of any constructive dismissal action based on mental distress in the workplace.

This WSIAT decision also presents danger from a policy perspective. If this reasoning becomes the norm, employers will have a license to intentionally cause employees traumatic or chronic mental distress in order to drive them from their job, force them into the workers’ compensation scheme and bar them from more effective recourse in the courts. Surely this is not the intended result of adding the ability to claim mental distress benefits — to allow harassers off the hook.

For now, if you suffer workplace caused mental distress, seek legal advice before applying for workers’ compensation benefits as a constructive dismissal would likely result in higher damages. Note, however, that your suit could now be barred.

Employers who are sued by an employee for causing mental distress, should consider applying to have any claim barred in favour of a workers’ compensation application. First, however, remember your duty to protect employees from harassment. If an employee complains, and your investigative process (it’s best if it is internal) confirms it occurs, take swift action to hold the harassers accountable. Doing so can avoid the suit altogether or give you a strong defence.

And now on to questions I received recently.

Q: Can I be sued if I don’t give my two weeks’ notice?

A: You appear to be under the misapprehension that you can resign and only provide two weeks notice. Unless that’s specified in an employment contract, most employees have to provide far more than that.

The law is that an employee must provide the employer sufficient notice to employ a suitably trained replacement. That would generally take more than two weeks before such a person can be recruited and commence. If less notice is provided, the employer can sue for its damages, which is called a wrongful resignation action — the flip side of wrongful dismissal.

Damages could include recruitment fees, the overtime of other employees or items such as loss sales if the employee is in sales. From that would be subtracted the employees’ salary. Sometimes when I act for employers and employees resign immediately and sue for constructive dismissal, I respond with a wrongful resignation case.

Q: I received my severance. If I take up part-time work, will that mean I have to pay some of the money back to my ex-employer?

A: That would depend entirely on the terms of the severance settlement. Some require payments to be reduced or refunded if the employee obtains other employment. Other settlements do not.

Q: I am accused of breaching the confidentiality of my severance settlement and the employer wishes my severance back. Am I obliged to pay it?

A: There are two types of confidentiality agreements, one in which you agree to pay all the money back and another in which the damages for breach are unspecified. In the former case, pursuant to a decision of the Ontario Court of Appeal by Jan Wong against the Globe and Mail, Wong had to pay all of the money back for breaching the confidentiality of the settlement. If there is no specific penalty ascribed for the breach, the employer would have to prove its damages, if any.

Got a question about employment law during COVID-19? Write to me at levitt@levittllp.com.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.