Just Cause: Dismissal After Sexual Harassment?

Interesting new case out of BC: Cho v. Cafe La Foret. (Hat tip to Jennifer Chan.) An employee sexually harassed his subordinate, refused to sign an affidavit admitting to misconduct, and was dismissed for cause. The Court awarded him damages for wrongful dismissal.

There were some disagreements on the facts, but I'm going to cut through them and go straight to a few of the court's findings.

• Cho had touched his subordinate inappropriately, in a sexual manner
• It was a gross error of judgment, not for sexual gratification or with mal fide intentions
• The touching was unwelcome, and Cho realized it was unwelcome
• Though the complainant alleged it, the court did not find that a prior history of harassing conduct was proven
• The Employer decided that it could keep Cho employed if he signed a 'written apology'
• Cho agreed to provide a written apology
• Instead of an apology letter, the Employer put to Cho an 'affidavit' which was materially different from the apology he had agreed to provide, factually inaccurate, not consistent with him continuing to be employed, designed for use in future legal proceedings, and cast him in a particularly unfavourable light
• Cho refused to sign the affidavit, and was dismissed due to that refusal

Justice Shergill concluded that the conduct, in the scheme of workplace sexual harassment, was relatively minor, and altogether not serious enough to warrant summary dismissal. The reporting relationship was aggravating, though less so because the employee felt comfortable immediately reporting the incident to Cho's supervisor. The fact that the employer was willing to continue employing him, and the complainant indicated she'd be able to work with him again once the apology letter was signed, spoke to the relatively minor severity.

This has caused a bit of controversy on Twitter, with Avnish Nanda in particular objecting to how the seriousness of the conduct is treated.

And I'll start by acknowledging that Avnish is right on a critical point: This is a sexual battery issue, not merely sexual harassment. The fact that it's unwanted touching of a sexual nature puts it into a different category from other types of harassment.

However, I'm not entirely convinced that this isn't just a terminological issue. Let's face it: When you get a singular incident at the relatively low end of sexual harassment (e.g. an isolated incident of a person referring to a female peer by an unwelcome gender-based diminutive term), there's almost no argument to be made that it's cause at first instance. Disciplinable, probably, but not cause. It's not even a close case.

This one is a close case, and the decision reads in a way that suggests it is.

Sexual battery is one of those categories that will usually justify summary dismissal at first instance, like theft or other forms of violence. And yet, just cause is an inherently contextual analysis, and I can point to cases where employers were found NOT to have just cause in scenarios that, at first blush, would surprise people, like theft, punching a co-worker, impaired driving, etc.

And within the spectrum of sexual battery, Justice Shergill's analysis is largely reasonable. Does the victim's ease of access to the plaintiff's supervisor mitigate the imbalance of power? It doesn't erase it, surely, but let's flip the question and ask, "Would a case where the victim could not access higher management be aggravating?" Things like 'imbalance of power' simply aren't one-size-fits-all.

Questions of the impact of intent, maybe. (It's a weird one, to find that the touching was sexual in nature but that there wasn't a sexual intent. I'm not sure those factual findings are reconcilable in this case. That's not a distinction that arises in most cases, and the fact that we can have that conversation here highlights where on the spectrum this case lies.)

But I want to focus on two areas where I think we need to do a better job of understanding wrongful dismissal law: The role of the victim, and the effect of the employer's response.

The Employer's Response

One of the points that really seems to have guided Justice Shergill's assessment was that the employer did not treat the incident as a firing offence.

The decision not to terminate Mr. Cho following the completion of its investigation of Ms. Lee’s allegations, reflects the Employer’s view that the employment relationship had not irretrievably broken down. By maintaining that Mr. Cho could keep his job if he provided the Affidavit admitting his guilt, the Employer did not consider his misconduct against Ms. Lee to be sufficiently serious to justify termination.

This analysis is incorrect. It gets to the right place, but through an incorrect analysis.

It's a pet peeve of mine that courts sometimes treat 'just cause' as a subjective question for the employer in the sense of looking to the employer's perspective of whether the relationship was irreparably damaged.

I've taken issue with this before, such as in the (later-overturned) Caskanette decision. Whether or not the employer feels that they can continue to work with the person is not indicative of the objective severity of the misconduct.

Employer communications prior to the misconduct can absolutely inform its seriousness. But how the employer chooses to regard it after the fact...isn't determinative or particularly relevant to how the courts should view it.

But here, there's a different analysis that flows from the employer's decision not to terminate: Condonation.

Whether or not the employer had just cause based on the misconduct itself, they elected not to terminate for the misconduct itself. They offered to continue to employing him subject to requiring a written apology, which he agreed to provide.

That is a binding election upon the employer. Assuming that just cause exists (and it may have in this case), they could not decide to take some disciplinary action other than termination for cause, and then later circle back to rely on this event as just cause. (If he reneged on the agreement to apologize, sure. That's not what happened.)

Just cause is a form of contractual repudiation: The employee, through his conduct, is said to have evinced an intention to no longer be bound by the contract of employment. Repudiation puts the non-breaching party into a position of being entitled to elect to 'accept' the repudation and treat the contract as at an end (i.e. dismiss for cause) or affirm the continued existence of the contract despite the prior repudiation. There is a duty upon the non-breaching party to make a timely election, and once that election is made, it is final.

So even on the assumption that the employee's conduct constituted just cause at first instance, by the time the employer later turned around and fired him for refusing to execute the affidavit it prepared (which refusal was reasonable, in the court's view), the employer could no longer reach back and rely upon the earlier misconduct which it had already declined to dismiss on the basis of.

On that basis, I think the outcome here is right.

The Role of the Victim

There's a temptation to look at the core dispute, in a case like this, as being between the plaintiff and the victim.

It isn't.

It's a contractual dispute between the plaintiff and the employer about whether or not the conduct toward the victim constituted a repudiatory breach of the employer's contractual rights.

Employers have high obligations to maintain a safe and healthy work environment, and have every right to expect and insist that their employees cooperate in creating and maintaining that environment; as such, misconduct directed toward somebody else in the environment can run very much awry of the employer's expectations and entitlements.

But that's not true of every case. Particularly in cases where the employer has permitted a toxic work environment to arise, and/or has condoned similar conduct in the past, the employer loses the ability to say that the employee knew or ought to have known that the conduct was incompatible with his obligations under the employment contract.

So you CAN get a scenario where an employee engages in drastically inappropriate conduct toward a co-worker, such that the co-worker is perfectly reasonable in saying that they can't work in the same environment as that person, but where the employer's own management of the environment nonetheless precludes them from asserting just cause.

That puts the employer in the position of either firing the offender, and having to provide them pay in lieu of notice, OR of keeping the offender and giving the victim a solid constructive dismissal claim (probably also seeking moral damages).

That's why it's important for employers to take seriously their obligations in respect of maintaining proper decorum in the workplace, and ensuring that all employees understand the expectations on them. As much as we might chafe at the idea of paying out a bad actor who crosses the line in a poorly-managed work environment, the first responsibility for managing that environment lies with the employer, and they shouldn't get a pass either.

So while the impact upon the victim can inform the severity of the misconduct, we should be very careful not to make too much about whether the victim would or wouldn't be prepared to work with the offender again, because that's largely beside the point.

One Final Note About the Affidavit

In many ways, this case turns on the affidavit. Cho's compensatory damages were $15,600; he got moral damages of $25,000 due to their conduct in relation to the affidavit.

The victim wanted the apology/affidavit to bolster a police report she intended to make, and the employer had the affidavit prepared in a way that maximized his legal jeopardy. The Court was satisfied that the point of the affidavit wasn't to repair the relationship, but for use against him in subsequent court proceedings.

It also contained a promise not to interact with any female employees of the employer - i.e. his co-workers in the job that the employer was saying he'd get to keep if he just signed it.

The bona fides of 'you get to keep your job if you sign this' seem pretty sketchy on these facts, and it seems very much that they're leveraging their power as employer to try to coerce him into incriminating himself for criminal proceedings. The member of management who prepared it was a former lawyer. Chances are that the way they intended this to play out was something along these lines: Cho swears the affidavit; they tell him "Sure, you can keep working"; the victim files the police report (with a ready-sworn confession); the police charge; and as a release condition he is required to not attend the victim's workplace - i.e. HIS workplace - forcing him to resign. (Or, who knows, maybe they just figured that having the affidavit in hand would make it easier to justify firing for cause.)

It's coercive, it's oppressive, it's bad faith, and an award of punitive damages was absolutely warranted for it.

But beyond that, it's also a pretty good illustration of why we want to hold employers to their election in respect of just cause: Employers have a heavy enough cudgel to wield in the entitlement to fire without cause; being able to hold a threat of termination for cause over an employee's head, threatening termination if the employee doesn't act against his own interests, is a toxic dynamic.

Bottom line: You can reasonably think that the employer should have fired immediately upon conclusion of its investigation, and you can reasonably think that the court should have upheld it if they did. But the course of conduct they actually took, holding his continued employment hostage for him signing a document they intended to provide to the police to incriminate him, and firing him when he refused, was a very serious breach of their implied obligations as an employer.

And think what you will of how Justice Shergill treated the substantive misconduct; I don't think the outcome here was incorrect.

*****

Dennis Buchanan is a lawyer practicing labour and employment law and civil litigation in Edmonton, Alberta.

This post does not contain legal advice, but only general legal information.  It does not create a solicitor-client relationship with any readers.  If you have a legal issue or potential issue, please consult a lawyer.