Home Hardware’s advertising speaks of “home owners helping home owners”. A decision of the Alberta Court of Appeal suggests that where Home Hardware could use some help is in the area of conducting workplace investigations.

Daniel Elgert had worked for Home Hardware at its Distribution Centre in Wetaskiwin, Alberta, for almost 17 years when the company was made aware of the possibility of a complaint of sexual harassment involving him. The Manager of the Distribution Centre, Norris Bernier, became involved in bringing the sexual harassment issue to the attention of head office in Ontario. However, Mr. Bernier was also the father of one of the alleged complainants. It was subsequently decided that Don Kirck, Mr. Bernier’s supervisor and long-time friend, would come to Alberta to conduct an investigation.

Mr. Kirck had no training in conducting sexual harassment investigations. When he met with Mr. Elgert to advise him of the investigation, Mr. Elgert asked what he was supposed to have done and Mr. Kirck responded, “you know what you did.” Mr. Elgert was suspended and escorted from the building. Mr. Elgert’s son also worked for the company and when he asked about the suspension, his evidence was that Mr. Kirck told him that he would not have suspended his father if he was not 100 per cent sure he was guilty.

Stew Gingrich, the VP of Human Resources and Mr. Bernier’s high school friend, told Mr. Elgert that he wanted to meet with him to discuss the allegations. Mr. Elgert asked to bring his lawyer and Mr. Gingrich refused, later admitting that this was because he was hoping to obtain a confession in this meeting. Mr. Elgert was also not provided with any particulars before being asked to meet. In addition, there was evidence at trial that employees had overheard the complainant say that she would “get even” with Mr. Elgert following his decision to have her transferred. Despite Mr. Elgert having advised the investigator that he thought someone might be out to get him, this allegation was never investigated, nor was any motive on the part of the complainants.

Mr. Elgert was terminated with cause. He sued for wrongful dismissal and his trial proceeded before a jury. The jury did not believe the evidence of either of the women who accused Mr. Elgert of sexual harassment. They awarded Mr. Elgert 24 months’ pay in lieu of notice in response to his wrongful dismissal claim. They also awarded aggravated and punitive damages in the amounts of $200,000 and $300,000 respectively and these awards flowed directly from the manner in which Home Hardware conducted its flawed investigation.

The Court of Appeal did not interfere with the 24 months’ severance awarded to Mr. Elgert, but did consider at length the aggravated and punitive damage awards. They found ample evidence of bad faith in the investigation in that (a) Mr. Bernier participated in an investigation involving his daughter, (b) his friends, Mr. Kirck and Mr. Gingrich, had carriage of the file, (c) Mr. Kirck was inexperienced, (d) there was a lack of neutrality on the part of the company, and (e) the decision to terminate Mr. Elgert was a fait accompli. However, the majority of the Court set aside the aggravated damages award because of a lack of actual evidence of damage to Mr. Elgert, and the punitive damages award was reduced to $75,000 to better reflect legal principles.

What does this case mean for employers?

You have heard us warn before of the dangers of conducting a poor workplace investigation. Perhaps the newest factor to add to this list is the risk that the case will be decided by a jury. Although Home Hardware was able to see its overall award reduced at the Court of Appeal, not all employers will have the resources to pursue an appeal. Employers wishing to avoid having to go to a trial at all, much less a jury trial, would be wise to adopt best practices in conducting workplace investigations, including the following:

1. Ensure that the workplace investigator is sufficiently trained.

2. Ensure that the process is not biased and does not give the appearance of bias, as was the case in Home Hardware in that the father of one of the complainants initiated the process, and the file was managed by two of his friends in the company.

3. Do not presume the guilt or innocence of either party. Rather, neutrality must be maintained.

4. All of the relevant evidence must be considered. When Mr. Elgert introduced the issue of improper motive, this was never considered, and many relevant witnesses were never even interviewed.