ELGERT V. HOME HARDWARE: FALLOUT OF A FLAWED INVESTIGATION

Many employers understand the importance of conducting a proper workplace investigation in the context of a for cause dismissal. What may not always be apparent however, are the consequences that can arise when an investigation is not conducted in a thorough, objective and fair manner. A recent case that is a glaring example of the liability exposures for employers who conduct shoddy investigations is Elgert v. Home Hardware Stores Limited.

Elgert was a 17-year employee working as a supervisor at a Home Hardware Distribution Centre who was terminated following an investigation for allegedly harassing a female employee. The investigation was conducted by a Head Office manager at Home Hardware with no prior training on dealing with sexual harassment complaints and who was also known to be friends with the manager of the Distribution Centre who was the father of the female employee making the allegations.

Elgert responded to the termination of his employment with a lawsuit against Home Hardware for wrongful dismissal and defamation. During the trial considerable evidence was admitted that brought into question the validity of the female employees allegations against Elgert, including the testimony of two employees who had  heard the female employee comment, prior to making the sexual harassment allegations, that she would “get even” with Elgert after he had transferred her to a department away from her boyfriend.

The jury trial ended with the verdict that Elgert had not committed the alleged sexual assault. Home Hardware’s conduct during the course of the dismissal was deemed to have amounted to bad faith and was “harsh, vindictive, reprehensible, malicious and extreme in nature”.  Elgert was awarded 24 months’ salary in lieu of notice as well as damages in the amounts of $60,000 for defamation, $200,000 in aggravated damages and $300,000 in punitive damages. Following an appeal by Home Hardware the aggravated damages were set aside and the punitive damages were reduced to $75,000 however, the notice award and defamation damages in the amount of $60,000 were upheld.

Significance for Employers:

When it comes to workplace investigations there does not exist a specific standard employers must follow. As the court stated in the Home Hardware case, the requirements will vary depending on the employer’s policies, sophistication, experience and the nature of the workplace. However, employers must always ensure they respond with a requisite degree of objectivity and procedural rigor to ensure that they protect themselves against an investigation that could be seen as “inept or unfair” as in Home Hardware, ultimately resulting in excessive damage awards levied against the employer.