Canada: The Perils Of Conducting A Shoddy Workplace Investigation

Daniel Elgert worked at Home Hardware's Distribution Centre in Wetaskiwin, Alberta for approximately 17 years. In 2002, his employment was terminated for just cause after Home Hardware concluded that Elgert had sexually harassed a female employee under his supervision. He was 48 years old at the time of his dismissal and was earning an annual salary of about $60,000.

The female employee, Christa Bernier, was the daughter of the Distribution Centre's Manager, Norris Bernier. Elgert had received numerous complaints about Christa Bernier's job performance and had given her an unfavourable performance review. Ultimately, Elgert decided in early 2002 to relocate her to another area, away from her boyfriend at the time. She was heard by two co-workers to say that she would "get even" with Elgert and that he would pay for moving her.

Shortly after her transfer, Bernier reported an incident that she alleged happened approximately four months earlier. According to the report, Elgert had followed her to a storage room and had bumped her against a table, ending with his legs between hers.

On hearing of the alleged incident, Home Hardware dispatched a manager, Don Kirck, from its head office in Ontario to investigate.

At the time, Kirck had been with Home Hardware for approximately 26 years. He had no training in dealing with sexual harassment complaints, nor had he ever conducted such an investigation before. Moreover, Kirck was a long-term friend of Bernier's father, Norris Bernier.

On his arrival in Wetaskiwin, Kirck spoke with two employees who had no first-hand knowledge of the incident and another employee who allegedly witnessed the incident.

Kirck also spoke with Bernier but did not take a written statement from her. Immediately thereafter he met with Elgert and suspended him from his employment. During that meeting, Kirck told Elgert that he had been accused of sexual harassment, but he refused to disclose any particulars of the complaint. Elgert cried and begged Kirck to tell him what he was alleged to have done. In response Kirck simply repeated, "You know what you did."

Elgert was escorted out of the building and not allowed to collect his belongings, which included a daily log book and his negative review of Bernier, both of which could not be located after Elgert's suspension.

After Elgert's suspension, Kirck told Elgert's son, Trent Elgert, also an employee at the Distribution Centre, that Elgert had been suspended for sexual harassment. Kirck went on to tell Trent Elgert that he would not have suspended his father had he not been 100 per cent sure of his guilt.

Only after Elgert retained a lawyer did Home Hardware provide any particulars of the allegations against him. Home Hardware sought a further meeting with Elgert but would not allow Elgert to have his lawyer present. Accordingly, Elgert refused to meet. Instead, Elgert's counsel wrote to Home Hardware denying all of the allegations. At the same time, a petition was circulated around the Distribution Centre in support of Elgert. None of the signatories on the petition were interviewed.

On May 16, 2002, Home Hardware sent Elgert a letter advising of his termination for sexual harassment and for insubordination for refusing to attend the above-mentioned meeting. Elgert sued for wrongful dismissal and for defamation.

At trial a jury found, among other things that:

  • Elgert had not committed the alleged sexual harassment; and
  • Home Hardware's conduct during the course of the dismissal amounted to bad faith and was harsh, vindictive, reprehensible, malicious and extreme in nature.

As a result the jury awarded Elgert:

  • 24 months' salary in lieu of notice;
  • $60,000 for defamation;
  • $200,000 for aggravated damages; and
  • $300,000 for punitive damages.

The case was appealed to the Alberta Court of Appeal which found that Home Hardware's investigation of the sexual harassment allegations was flawed. Particularly, the court noted that the complainant's father had participated in the investigation and that Kirck was his friend. The Court also noted the failure of Home Hardware to consider the possibility that Bernier's motives for the complaint were improper. Accordingly, the Court of Appeal agreed that an award of punitive damages was appropriate, but reduced the damages to $75,000.

The Court of Appeal upheld the award of 24 months pay in lieu of notice on the basis that the allegation of sexual harassment might reasonably impede Elgert's ability to find another job and thus mitigate his damages.

The award of $200,000 aggravated damages was set aside because Elgert had not provided any evidence of mental distress at trial. However, the Court of Appeal noted that, had Elgert provided some evidence of mental distress, Home Hardware's conduct would have justified an award of aggravated damages.

The Court acknowledged the difficulty that an employer will face when forced to deal with an allegation of serious workplace misconduct. The Court also stated that there is no specific standard of investigation that employers must follow and that the requirements will vary depending on the employer's policies, sophistication, experience and the nature of the workplace. However, an employer who conducts an "inept or unfair" investigation and/or "falsely accuses an employee of serious misconduct" may be liable for punitive and aggravated damages.

As the Alberta Court of Appeal recognized, employers are placed in a difficult position when faced with allegations of workplace misconduct. In these cases, employers must often walk a fine line balancing the rights and interests of both the accused and accuser. Implementing these following recommendations will reduce the risk of being found to have unfairly or ineptly responded to allegations of workplace misconduct:

  • Implement appropriate workplace harassment policies that include procedures for lodging complaints and procedures for investigating complaints. These procedures must ensure a fair process for the accused individual to hear and fully respond to the allegations against him/her.
  • Designate and train internal individuals to conduct workplace investigations. If internal resources aren't available, consider retaining independent third parties to conduct workplace investigations. In either case the investigator must be impartial.
  • Once the necessary policies and procedures are in place, they must be diligently and consistently followed when a complaint arises. In this regard, front line managers need to be made fully aware of the necessary protocols to be followed when they are confronted with an issue.
  • Finally, employers must always resist the urge to take sides or predetermine fault when dealing with allegations of workplace misconduct.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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