McGraw v Southgate (Township), 2021 ONSC 7000 is a modern cautionary tale for employers, emphasizing the importance of procedurally fair investigations into allegations of inappropriate workplace behaviour.
The Plaintiff was an administrative assistant and volunteer fire captain with the Dundalk Fire Department, which fell under the jurisdiction of Southgate Township. The Township terminated the employee’s employment without cause. Although the Township terminated the Plaintiff’s employment without cause, the termination was the culmination of years of workplace gossip, accusations of inappropriate behaviour and morale issues allegedly stemming from the Plaintiff’s behaviour. The Plaintiff brought a claim for failure to provide reasonable notice, moral damages, damages under Human Rights Code, damages for defamation, and punitive damages.
At trial, the Judge characterized the Township’s defence as follows:
“We did not act with malice or in bad faith or discriminate against [the Plaintiff]. We fired her because she was the object of rumours that we believed were true. We could not prove they were true, so we fired her on a without cause basis and paid severance. The pervasive nature of the rumours shows that we did not act with malice, bad faith, or discrimination.”
The Judge unequivocally rejected this defence, and awarded the Plaintiff CA$190,000 in damages, consisting of CA$75,000 for moral damages, CA$35,000 for damages for discrimination under the Ontario Human Rights Code, CA$20,000 for damages for defamation, and CA$60,000 for punitive damages.
Where did it all go wrong?
Allegations of Inappropriate Behaviour
The Plaintiff was the subject of a number of rumours and accusations, largely based on hearsay and perpetuated by her colleagues and others in the small community in which she worked. The Plaintiff was accused of sending inappropriate photos of herself to colleagues, engaging in inappropriate workplace relationships of a sexual nature, and trading “sex for grades” while in the course of teaching at the local fire college. The Plaintiff was further accused of ruining morale, causing attrition at the fire station, and impacting the general reputation of the Dundalk Fire Department in the community.
In particular, the Plaintiff was accused of being the reason why two married volunteer firefighters retired, allegedly because she had an affair with the husband.
The Court found all of these accusations to be unsubstantiated hearsay, and based on dated stereotypes.
The Court also noted that there was no policy with respect to romantic relationships in the workplace, upon which the defendant could rely.
An inadequate investigation
The documentation put forward as proof of an investigation consisted of a single memo and some handwritten notes. No witness statements were provided. The Plaintiff was not interviewed in the course of the investigation. The Court found that the memo “came to incorrect conclusions because [the investigating employee] relied so extensively on inaccurate and dated second-hand information.”
Although the Township had engaged a human resources consultant to assist them with the termination of the employee’s employment, the Court noted that the Township misled the consultant, and exaggerated the urgency of the situation. For example, the Township had told the consultant that the fire station was in “crisis”, and soon would be unable to provide emergency fire services, such that the Plaintiff could not a) be interviewed during the investigation or b) receive progressive discipline. In the Township’s view, the only outcome was termination.
As a result, the Plaintiff’s employment was terminated on a without cause basis.
Extensive damages awarded
The Court awarded extensive damages in this case, namely:
a) Six months reasonable notice damages based on the standard Bardal factors;
b) Moral damages in the amount of CA$75,000 due to the “exceptional” unfairness of the defendant’s investigation, which “conflated gossip with facts”;
c) CA$35,000 in damages for gender-based discrimination, as the termination was founded on sexist allegations and the Plaintiff was subject to “a toxic, male-dominated workplace”;
d) CA$20,000 in damages for defamation, as a witness for the defendant admitted on the stand that he fabricated the “sex for grades” comment, a comment which the Court found to be both “appalling” and discriminatory; and
e) CA$60,000 in punitive damages because the defendant’s treatment of the plaintiff was “reprehensible and was a serious departure from ordinary standards,” which called to a mind “a different era.”
Takeaways for employers
This case sends a strong message to employers: ensure your workplace investigations are fair, based on facts and devoid of discrimination, or the consequences will be drastic.
Accordingly, employers should consider the following best practices:
- Ensure there is a legally compliant Workplace Violence and Harassment Policy in place, and training for employees with respect to this policy;
- If there is a policy regarding romantic relationships between supervisors and employees, ensure that this is available in writing for employees;
- Substantiate allegations, either through witness evidence, credibility assessments, or other means before acting on the allegations;
- Ensure investigations are procedurally fair and decisions are based on evidence, not hearsay or stereotypes;
- Ensure each step of the investigation is documented, along with any witness statements;
- Be candid with counsel and advisors, and do not needlessly rush an investigation.
Incorporating these types of practices into your day-to-day employee relations toolbox will help to minimize the risks and damages that could arise from a flawed investigation.