Court Finds that Re-Hiring an Employee in Spite of Sexual Harassment Allegations Against Him can Result in Constructive Dismissal of Another Employee, Provides a Stinging Rebuke and a Significant Damage Award. 2020-01-27T14:52:29+00:00

Background

In 1996, Steve Benoit’s employment with the City of Thunder Bay (the “City”) was terminated following complaints of sexual harassment by City employees, including Linda Colistro. At the time, Mr. Benoit had been Ms. Colistro’s immediate supervisor in the City’s telephone department.

Eleven years later, in January 2007, Tbaytel – who had assumed management and provision of the City’s telecommunication services – hired the same Steve Benoit as Vice-President of Business Consumer Markets. After the announcement, Ms. Colistro spoke to Tbaytel’s Vice-President of Human Resources about Mr. Benoit’s past harassment and subsequent termination. Ms. Colistro also advised that Mr. Benoit’s imminent return has pushed her to the “verge of a nervous breakdown”, and, ultimately, she went on stress leave.

Tbaytel made inquiries, confirming that Mr. Benoit had not been interviewed by the City when it conducted its investigation and that he had not been terminated for cause, but that the complaints of sexual harassment were part of the reason for his termination. Despite this and despite the fact that Mr. Benoit’s employment was effective February 16, 2007 and was subject to a 12-month probationary period, Tbaytel decided to proceed with the hiring. In a letter dated February 6, 2007, the Tbaytel’s President and CEO advised Ms. Colistro that he took her “accusations of 11 odd years ago seriously and [would] discuss appropriate behaviour with Mr. Benoit”. Tbaytel also offered to accommodate Ms. Colistro by transferring her to an equivalent position in an adjacent building, which she did not accept. Instead, Ms. Colistro was unable to return to work, was diagnosed with PTSD and depression.

Trial Decision

Ms. Colistro brought a suit against Tbaytel for, amongst other things, constructive dismissal and intentional infliction of mental stress, claiming over three million in damages.

The trial judge dismissed Ms. Colistro’s claim for intentional infliction of mental suffering but did find that she had been constructively dismissed. The trial judge appeared to accept, as fact, that Mr. Benoit had sexually assaulted Ms. Colistro. The court ordered Tbaytel and the City to jointly and severally pay her damages equal to pay in lieu of 12 months’ notice (less the short-term salary continuance and long-term disability benefits she had received, leaving a net award of $14,082) plus Honda damages in the amount of $100,000 because the employer’s treatment of her was “grossly unfair [and] unduly insensitive.” Notably, the trial judge held that Tbaytel and the City were substantially successful parties and litigation and therefore ordered Ms. Colistro to pay costs of $150,000 to Tbaytel and of $50,000 to the City.

Ms. Colistro appealed. The Ontario Court of Appeal (“ONCA”) dismissed both her appeal and Tbaytel’s cross-appeal, as well as also denied Ms. Colistro leave to appeal the costs awards.

Intentional Infliction of Mental Suffering

The ONCA dismissed Ms. Colistro’s appeal of the dismissal of her claim for intentional infliction of mental suffering because it was not proven that the employer had re-hired Mr. Benoit in order to harm Ms. Colistro, nor was her psychological injury reasonably foreseeable.

Constructive Dismissal

The ONCA upheld the trial judge’s declaration that Ms. Colistro had been constructively dismissed and provided an overview of the guiding principles of constructive dismissal decisions. Constructive dismissal can arise in two different ways:

  • An express or implied employment term is breached and that breach substantially alters an essential term of the contract; or,
  • The conduct of the employer would lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the employment contract.

The appellate court agreed with the trial judge’s flexible approach to applying the second branch and, namely, that a single egregious incident can satisfy that branch. An objective assessment of the evidence led to a conclusion that the single incident of hiring Mr. Benoit in light of Ms. Calistro’s harassment complaint was particularly egregious, as it re-victimized the plaintiff and minimized the past conduct of Mr. Benoit.

Comment

This decision provides many lessons for employers, including on the consequences of placing business interests over the harassment concerns of a long-term employee. The plaintiff’s successful constructive dismissal claim is significant as this decision stands for the principle that an employee in a workplace that tolerates or abets sexual harassment has the right to quit and still claim for damages for dismissal. Further, the Court affirmed that where an employer tolerates sexual harassment in the workplace, it may be liable for damages for constructive dismissal.