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In 2019, workplace harassment and sexual harassment are receiving considerably more attention than ever before. Public awareness about workplace harassment has been on the rise due to prominent movements like the #MeToo movement and high-profile harassment cases which have made headlines. Employers are increasingly becoming aware that failing to adequately address harassment in the workplace can be very costly, and result in potential liabilities for constructive dismissal, violations of the Human Rights Code and the Occupational Health and Safety Act, and in tort. Accordingly, it is timely that the Ontario Court of Appeal (“ONCA” or the “Court”) recently released a decision that clarified the relationship between workplace harassment and the concepts of constructive dismissal and the tort of intentional infliction of mental suffering (“IIMS”).

In Colistro v Tbaytel [Colistro] an employee of the Thunder Bay telephone service provider (“Tbaytel” or the “Company”) sued the Company for constructive/wrongful dismissal and IIMS after it hired her former supervisor, Mr. Benoit, who was found to have sexually harassed her while they both worked for the city’s telecommunications service several years earlier, which eventually became Tbaytel. Mr. Benoit had been dismissed by the city without cause, partially because he was found to have sexually harassed multiple employees during his employment. When the employee, who had 20 years of unblemished service with the city/Tbaytel, learned that the Company intended to rehire Mr. Benoit, her former harasser, she informed the Company of the sexual harassment she had suffered and vehemently opposed his hiring. Tbaytel offered to accommodate the employee by transferring her to an equivalent position in an adjacent building, but this accommodation was unacceptable to the employee because she could not tolerate any contact with her former harasser. The employee also advised the Company that she was “not eating or sleeping, was vomiting, and was on the verge of a nervous breakdown” because of its announcement that Mr. Benoit was being hired. Nonetheless, the Company advised the employee that it was going to hire Mr. Benoit. Consequently, the employee did not return to work and was diagnosed with PTSD and depression.

The employee sued the Company, seeking damages for wrongful dismissal arising out of her constructive dismissal, aggravated damages, and damages for IIMS. The trial judge found that the Company had constructively dismissed the employee by hiring her former harasser against her express wishes, and that she was entitled to damages for wrongful dismissal and bad faith in the manner of dismissal. The trial judge dismissed the employee’s IIMS claim. The employee appealed the ruling on the issue of IIMS while the Company appealed the findings regarding constructive dismissal and manner of termination. The ONCA considered two primary issues:

  1. Was the employee constructively dismissed when the Company hired her former harasser?
  2. Was the Company guilty of IIMS by virtue of having hired the employee’s former harasser?

Constructive Dismissal

The ONCA confirmed that Tbaytel had constructively dismissed the employee by knowingly hiring someone who had sexually harassed her, because doing so created a poisoned work environment in which her continued employment would become intolerable. Tbaytel had argued that it had not constructively dismissed the appellant because it offered to accommodate her, but the Court noted that the employee had made it clear she could not tolerate any exposure to her former harasser, even if infrequent. The Company also argued that one event, in this case the hiring of Mr. Benoit, was incapable of meeting the threshold for constructive dismissal by making their continued employment intolerable. However, the Court disagreed, finding that a constructive dismissal occurs when an employer’s conduct has evinced an intention to no longer be bound by the employment contract, and that a flexible approach must be taken in making this determination. The Court went on to hold that a stand-alone incident can render an employee’s continued employment to be intolerable such that they can consider themselves to be constructively dismissed, though noting that a single instance of employer conduct would rarely result in a poisoned work environment. The Court held that stand-alone incidents will only create a poisoned or intolerable work environment where the conduct in question is particularly egregious. The ONCA stated that regardless of how the employee’s claim of constructive dismissal was framed, the trial judge did not commit a palpable and overriding error by concluding that the employee’s continued employment had become intolerable as a result of Tbaytel hiring Mr. Benoit.

The Court also upheld the trial judge’s award of $100,000 in aggravated damages, after finding that the Company had dismissed the employee in bad faith when it refused to consider her objections in making its hiring decision and informed her of its decision in an unduly insensitive manner.

Intentional Infliction of Mental Suffering

The ONCA also refused to disturb the trial judge’s findings respecting IIMS. The Court started by setting out the three elements of the test for IIMS:

  1. the conduct was flagrant or outrageous;
  2. the conduct was calculated to produced harm; and
  3. the conduct resulted in a visible and provable illness.

The Court held that the first and third elements of the test were met in this case because a reasonable person would view the hiring of the sexual harasser as outrageous conduct, and the employee did, in fact, experience PTSD and depression as a result of the Company’s hiring of Mr. Benoit. The key area of contention was around the second element of the test, whether Tbaytel’s conduct was calculated to cause the psychological harm, or that Tbaytel knew that the psychological harm was substantially certain to follow.

The employee argued, and the Court agreed, that the trial judge had erred in requiring her to prove that the Company knew that its actions would result in the exact kind of harm that the employee experienced, namely PTSD and depression. The ONCA held that the second element does not require a finding that the defendant intended to produce a particular recognized psychiatric illness, rather it is sufficient that the defendant knew or intended that its actions would result in a psychological injury.

Nevertheless, the ONCA ultimately upheld the trial judge’s finding that the Company had not intended to cause mental suffering, nor had the Company known that mental suffering was substantially certain to follow from its actions. The ONCA found that the second element of the test for IIMS had not been met because the Company did not intend to cause psychological harm to the employee, and did not know that harm was substantially certain to result from its conduct. In coming to this decision, the ONCA clearly identified a high threshold for establishing the tort of IIMS, particularly with respect to the second element of the test.

Takeaway

The decision in Colistro confirms that a single egregious act by an employer can create a poisoned work environment in which continued employment is intolerable such that the employee can bring a legal claim for constructive dismissal. Although constructive dismissals based on poisoned work environments will typically arise only after a series of incidents or a course of behaviour or conduct, in certain circumstances one act can be so egregious as to meet the threshold. This has serious implications for employers because, in addition to termination entitlements arising from constructive dismissal, such egregious conduct can give rise to additional damages such as for bad faith in the manner of dismissal, or human rights damages. Accordingly, employers should be aware of these risks when contemplating decisions that may have significant impacts on the work life of their employees and make all reasonable efforts to ensure that its decisions will not cause an employee’s continued employment to become intolerable.

Another important lesson from Colistro is that courts will not easily make a finding of intentional infliction of mental suffering, even where an employer treats an employee in an unduly insensitive manner. The second element of the test for IIMS will only be met where an employer actually intended for their conduct to cause mental distress or knew that such harm was substantially certain to result from their conduct. Nonetheless, as a best practice, employers should certainly be mindful of their harassment-related legal obligations and exposures and be proactive in creating and implementing policies that make it clear that all employees are to be treated with dignity and respect, and are entitled to a workplace free from harassment, sexual or otherwise.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.