Court Awards $50,000 in Bad Faith Damages for Employer Conduct

In Rutledge v Markhaven Inc., 2022 ONSC 3183, the Ontario Superior Court reiterated the importance of employers acting in a good faith manner when conducting investigations. In this case Justice Dow awarded the plaintiff, Laura Rutledge, $50,000 in bad faith damages.

Background

Laura worked for Markhaven for nearly 21 years when she was dismissed. The company investigated a romantic relationship she had with a subordinate, Arjun Sathyaseelan, who was promoted around the time of their involvement.  The employer had concerns about a conflict of interest but took no action when it learned of it. 

Several months after receiving anonymous complaints about the nature of their relationship and the timing of Arjun’s promotion, the company began an investigation. Laura was advised by the Board of Directors to keep this matter as confidential as possible and that the investigation would be conducted by an independent third party.

Upon its conclusion Laura was suspended with pay due to a potential violation of the employer’s policy. Staff were told that Laura was “reassigned”. Notably, Laura went on disability leave prior to her dismissal because of the stress caused by the investigation. 

The Decision

The evidence suggested that Arjun was promoted for other reasons and that their relationship had developed after this event. Nor could the employer rely on a violation of its policy because it had condoned Laura’s conduct by failing to act sooner.

Justice Dow was particularly critical of the company’s investigation. Markhaven did not use an independent third party, instead they retained an investigation business associated with its defence counsel (which was also the counsel representing the employer in the litigation). It failed to conduct interviews in a confidential manner as they were held at local Tim Hortons where some 150 Markhaven employees took breaks and ate meals. It secured information from Laura without her prior knowledge. The investigation was overly broad for its intended purpose, for instance there were pictures of Laura’s house put to her at examinations which had no relevance to the litigation. Finally, portions of the investigation file were not produced under the guise of solicitor-client privilege. 

The employer was found to have made efforts to coerce and intimidate Laura (including the suspension) into providing different answers to its inquiry. Considering the conduct detailed above and the impact it had on Laura, Justice Dow saw fit to award $50,000 in bad faith damages. 

Takeaway

Employees undergoing a workplace investigation should co-operate, but also be aware of their rights. An investigation is not an opportunity for employers to unscrupulously delve into your life, embarrass you, or use the process to achieve a desired result. Likewise, employers must be mindful to conduct investigations as impartially and objectively as possible. This case is yet another reminder that although bad faith damages are not always awarded, they will be when employers violate their obligations to address workplace complaints and investigations in a consistent and above-board way.

Contact Us

If you are the subject of an investigation or are contemplating one in response to a complaint, contact JPak Employment Lawyers as soon as possible for legal advice.  Email us at info@jpakemploymentlawyers.com or contact us here.