Swift Termination: Is Protecting A Company's Reputation At All Costs The Endgame In The #MeToo Era?

Harassment is unacceptable. In fact, an employer has a duty to ensure that employees have a harassment-free workplace under section 3(1)(c) of the Occupational Health and Safety Act. So, when a high-profile employee is alleged, especially publicly, to have committed harassment, an employer may be tempted to terminate the employee immediately before conducting a proper investigation to signal to the public its zero-tolerance policy towards harassment, and thus protect its reputation. This decision, however, may create tremendous risk for employers beyond a wrongful dismissal lawsuit.

Statutory Requirements

An employer is required to have a harassment prevention plan, and conduct investigations into harassment incidents.1 Although failing to conduct an investigation may not always attract the maximum penalty, failing to comply with the Occupational Health and Safety Act for the first time can result in a fine of not more than $500,000 and/or imprisonment not exceeding six months.2

Aggravated Damages

An employer may also face aggravated damages for failing to conduct an adequate investigation. Although the court has emphasized that an employer should not be punished simply because an investigation was clumsy,3 the court has also stated that the consequences of false allegations can have potentially devastating consequences for the person accused of such conduct.4 As a result, flawed investigations may attract aggravated damages.

In Lalonde v. Sena Solid Waste Holdings Inc., Lalonde was terminated for failing to follow safety procedures and failing to follow his supervisor's instructions. An investigation was done, but it was flawed in many ways:

Employer made the decision to terminate Lalonde's employment two days after his suspension, despite not having any response from Lalonde; Lalonde was not given an opportunity to fully explain the alleged misconduct; and Employer ignored a letter from an employee, which supported Lalonde's contention that he had done nothing wrong. The court described the case as a situation where the employer decided to "shoot first and ask questions later," and concluded that the internal investigation was essentially a sham. These actions caused Lalonde significant mental distress, and the court awarded him $75,000 of aggravated damages.5

With faulty investigations attracting significant damages, not conducting any investigations may potentially attract an even higher amount.

Derivative Actions

Although some...