Human Rights: Employer’s Defence: Due Diligence

Ontario’s Code has a provision which deems the employer liable for the acts of its employees which may attract liability under the Code. This subsection, 46.3(1), does not, however, apply to complaints of sexual harassment.

Other jurisdictions, however, have allowed by statute for vicarious liability to hold the employer responsible, but have permitted a defence when the employer has shown due diligence, amongst other tests, in its investigating the complaint.

Manitoba has enacted legislation which defines the concept of employer liability for the acts of its employees. Provided that the conduct was in the course of employment, the employer is deemed responsible.

However, the employer may show a defence by proving: (1) it did not consent to the conduct, (2) took all reasonable steps to prevent it, and (3) then took all reasonable steps to minimize or avoid the effect of the offensive actions. This is not limited to sexual harassment but rather applies to all Code violations. ¹

The substance of this provision is repeated in the legislation of the Yukon.

Essentially, the federal legislation now allows for a “due diligence” defence to be raised against the assertion of vicarious liability for all claims made under the Canadian Human Rights Act, not just sexual harassment claims, as allowed by subsections 65(1) and (2).

New Brunswick has similar legislation with respect to a complaint of sexual harassment, which deems the actions of the employee to be those of the employer, but then allows the employer a defence of showing it used due diligence to prevent such conduct. ²

This defence is not available where the questioned conduct is that of an officer or director of the employer, which basically incorporates the “organic theory” of employer liability described below.

The employer must show that: (1) it did not consent to the questionable conduct, (2) it used all due diligence to prevent event; and (3) did all it could to minimize or avoid the adverse consequences.

This statutory provisions allowing for a full or partial defence to the employer to the vicarious liability assertion allow for a defence to be shown, in essence, in line with the Wall test, namely that it took proper preparatory steps by a written policy, followed it, investigated the complaint and took steps to resolve it.

An additional merit of an investigation may lay in the usefulness of the investigator’s report, as was seen in the recent HRTO decision of Newton v Toronto (Hart). The complaint was one of a sexually poisoned work force, which was, for the most part, upheld by the internal investigator. In this circumstance, the Tribunal proceeded directly to remedy.

This was an unusual case as the respondent admitted the accuracy of the findings of the investigator, which, although not unique, may be asterisked as one not to be expected in every instance. In this context the Tribunal simply chose to rely upon the investigative factual conclusions and proceeded to argument as to legal consequences of these findings.

Had such an admission not been made, the report could not be used to support factual findings in controversy.

This issue is viewed presently as a human rights complaint. It need not be so limited. The failure to investigate, particularly in the context of a person suffering serious physical or emotion abuse could readily cause an allegation of constructive dismissal, ³both to support a lost income claim and aggravated damages.

This may require consideration to be given as the correct forum in which to proceed, whether such be this process or a civil court. There are advantages and disadvantages to each. A review of recent common law decisions will show that aggravated damages and punitive damages have been leaps and bounds outside of the range anticipated in human rights cases. There, of course, can be no punitive damages awarded in the Ontario human rights process. In addition, there are no legal costs awarded, nor is there exposure for the applicant to costs in this remedy.

The human rights process, however, allows for reinstatement and the potential of dramatic lost income awards. ⁴

Whichever process may be pursued may be of less interest to the employer. The significant point to be made is that liability may be enormous and the need to do an effective investigation must be of paramount concern to the company to limit its exposure to such lawsuits, provide comfort to the employee who has complained and to his peers who are aware of the controversy.

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1. Manitoba Human Rights Act, section 10
2. Human Rights Act, NB, 2011, section 10
3.   Such was the result in Disotell v Kraft.
4. For example Fair v Hamilton-Wentworth District School Board, (Joachim), affirmed by the Divisional Court in September 2014, in turn upheld by the Court of Appeal, in which approximately 12 years lost income was awarded, plus reinstatement.