A trial judge awarded $60,000 in moral damages to an employee who was repeatedly sexually harassed by her co-worker. In Doyle v. Zochem Inc. (PDF), the Ontario Court of Appeal recently upheld this award and dismissed the employer's appeal. This decision is a stark reminder of the importance of properly investigating employee complaints. It also confirms that moral damages and damages under human rights laws may both be awarded to an employee, without being characterized as "double dipping".
MD worked with Zochem Inc. ("Zochem") for nine years, supervising an all-male group of refinery workers. She was the only woman working there. BR was the plant maintenance manager. Zochem considered him to be irreplaceable. In the course of their work, BR sexually harassed MD, making frequent inappropriate and belittling comments.
Prior to a July 14, 2011 meeting, BR and another co-worker had been informed that MD was to be terminated. During the July 14 meeting, BR and the co-worker ignored the harassment issues raised by MD and demeaned and belittled her. MD left the meeting in tears. Still unaware that she would soon be terminated, she made a complaint of sexual harassment. Zochem did a cursory investigation and heard from BR, but did not give MD an opportunity to respond.
Five days later MD was terminated without cause. She had to go on medication for anxiety.
MD filed a wrongful dismissal claim seeking, among other things, moral damages for the manner of her dismissal. She also sought general damages for breach of the Ontario Human Rights Code arising from the poisonous work environment and retaliatory termination following her complaint. Zochem defended itself by arguing that it had discovered just cause for her termination after the fact.
The trial judge found no evidence of just cause and determined that MD was wrongfully dismissed. She was awarded damages in respect of a 10-month notice period. Further, after finding no documented concerns with her performance, the trial judge held that the manner of her dismissal warranted an additional $60,000 in moral damages. Factoring into this decision was that Zochem knew MD suffered from depression prior to her dismissal, the response to her sexual harassment complaint was inadequate, the self-serving investigation of her complaint was unfair, the termination itself was "cold and brusque", and she was pressured to sign a release upon her departure.
Finally, the trial judge awarded a further $25,000 for damages under the human rights statute. Zochem had an obligation to investigate MD's complaint properly and the hurried, biased investigation was insufficient.
Zochem appealed only the amount of damages awarded. It argued that $20,000 was a more appropriate amount for moral damages. Zochem also argued that the amount of damages awarded pursuant to the Human Rights Code should be deducted from the award of moral damages. Their rationale was that the same conduct was the basis for both awards.
The Court of Appeal disagreed and dismissed Zochem's appeal. The amount of damages awarded to MD was not high enough to warrant intervention on appeal. Further, the awards of moral damages and Code damages served distinct legal purposes. Moral damages are awarded as a result of the manner of dismissal, where the employer engages in conduct that is unfair or in bad faith. By contrast, Code damages are remedial, and not punitive, in nature.
Costs were awarded against Zochem on a "substantial indemnity scale" (that is, recovery of most of her legal costs). This was done on the basis that Zochem's appeal was a continuation of its oppressive conduct towards MD.
Takeaway For Employers
This decision highlights the importance of properly investigating employee complaints. Both the trial and appeal judgments were critical of the employer's response to the sexual harassment allegations. To avoid these issues, employers should adhere to the following best practices:
- A safe, confidential manner for an employee to lodge a complaint should be established;
- The complainant should be removed from the environment while the investigation proceeds;
- If possible, an external firm or trained human resources staff should conduct the investigation;
- If the investigation is conducted internally, it should proceed in as thorough, uniform, and unbiased a manner as possible. Notes of the interviews should be recorded in an impartial manner; and
- The complainant should be informed of the outcome of the investigation as soon as possible.
This decision is also an important reminder of the fact that employees may be awarded amounts under various heads of damages, even if the underlying conduct overlaps. Employers that do not follow these best practices could wind up with a steep payday.