Yahoo Finance Howard Levitt: In a hot jobs market, turning down an offer can limit your severance, case shows
It is better to ask forgiveness than consent so, with a nod to Thomson Reuters, I am sharing some of its product with you, my readers.
Every month, for more decades than I care to admit, I have been editor-in-chief of Thomson Reuters’ Dismissal and Employment Law Digest, summarizing every significant employment law case from coast to coast to coast.
My two deadlines coinciding yesterday, here are some decisions, hot off the judicial tap, of interest to readers.
Gerling v Camrose Regional Exhibition and Agricultural Society
I have often commented that it is difficult to legally claim to be an independent contractor if you work regularly for your “client,” work primarily for one “client” and appear, to the outside world, to be just another employee. I have stated in these pages that 90 per cent of workers who claim to be “independent contractors” aren’t.
But the Alberta Court of Appeal just found otherwise.
Papa-T was a company incorporated by Thomas Gerling to contract with the Camrose Society, to keep the work he did for it separate from his shoe store company and to avoid the negative tax consequences of being an employee. Papa-T contracted with the society to provide it the services of Gerling as its CEO.
The trial judge found that Gerling was an employee, not a genuine contractor, as I would have expected. But the Court of Appeal disagreed.
“This was a deliberate choice made by the parties at the request of Mr. Gerling; Papa-T would be engaged as an independent contractor and would in turn provide Mr. Gerling’s services as Chief Executive Officer,” the court found.
The court looked at the fact that the society made no remittances to CRA, CPP, or EI for Gerling and Papa-T paid for its own office space and paid for its employees. Finally, the management services agreement between the society and Papa-T made clear that there was to be no employment relationship between the society and Gerling.
This case was very similar to many cases where the courts, tax courts or administrative bodies have always found employment relationships to be in effect regardless of the parties’ agreement to the contrary.
Given that this was a decision of a Court of Appeal, one wonders whether it will lead to a sea change in judicial preparedness to allow parties to structure their relationship as independent contractors without interference from courts or administrative tribunals going forward.
Another point which arose in this case was whether additional damages would be awarded because the society alleged cause in terminating the contract and the court found no cause existed. Courts will often award additional damages, called Honda damages, for unproven allegations of cause. On this point, the court noted that unproven allegations of cause will not normally give rise to such additional damages unless there is real bad faith on the employer’s part. “Otherwise, every case in which grounds for termination of employment remain unproven, would be subject to such damages,” the court found.
This is noteworthy because, since that Honda decision, employers have been reluctant to allege cause unless they have a virtually bulletproof case. This case might lead more employers to allege cause when there is a reasonable basis for that without fear of having to pay even more as result.
Humphrey v. Mene
The Ontario Court of Appeal reduced a trial judgement of 12-months’ severance to only six because the employee turned down a job seven months after being terminated.
Jacquelyn Humphrey had been COO of Mene Inc. and, during her job search after being fired, turned down a job as the vie-president of e-commerce at another company. The trial judge had not penalized Humphrey for this because the new job was not sufficiently similar to the position from which she was fired.
The appeal court disagreed, noting that comparable employment does not mean identical employment. It means “a comparable position reasonably adapted to (the plaintiff’s) abilities,” the court found. Since the job Mene was offered was a senior management job with equal or greater compensation, that was enough to end her claim for further severance when she turned it down.
This outcome is important to employers at a time when the market is so ebullient. I have my employer clients conduct parallel job searches and hire experts on the job market to argue that employees “could have” found comparable employment if they had only conducted a reasonable job search, in order to reduce their severance entitlement. This case will make that even easier to do.
The trial judge had also awarded punitive damages and this was upheld by the appeal court, in a judgement that serves as a cautionary tale for overzealous, litigating employers.
The court reviewed Mene’s litigation conduct and concluded that Mene had “dredged the waters looking for anything and everything it can say which will make Ms. Humphrey look bad — even things that its own case showed was irrelevant.”
Mene had also failed to comply with court orders related to document production, and gave “shifting explanations” for why it failed to produce documents. The judge found it “simply incredulous” that, in the face of letters from Humphrey’s counsel requesting the preservation of documents, Mene did not understand its obligations. Mene had also included on the record inappropriate and irrelevant references to Humphrey’s personal life.
The trial Judge concluded that Mene’s conduct was “consistent with a litigant who sees itself as above the rules” and the appeal court agreed.
No employer wants to be written about in a public court decision the way that Mene Inc. was here and should govern itself accordingly when in litigation, however emotional its executives are about the particular lawsuit.
Croke v VuPoint Systems
What happens when an employee whose job is to enter clients’ homes refuses to be vaccinated?
Alan Croke, worked as a systems technician for VuPoint Systems, a contractor that installed satellite television and smart home systems for Bell Canada.
Ontario labour law update gives remote, hybrid workers their due
Employees must do their part regarding accommodation of disabilities
Croke, who was terminated, argued that he had a right to refuse to be vaccinated and the requirement of vaccination was never a term of his employment agreement. VuPoint said that, while he assuredly had the right to refuse to be vaccinated, he did not have the right to refuse and continue to work for that company.
The court agreed. It noted that no one could have foreseen the pandemic when Croke’s contract was originally signed in 2014. The court then held that his employer’s policy and Croke’s refusal meant that he was incapable of performing his essential job duties. This was true even though the vaccine policy had been imposed by a third party onto the employer.
Howard Levitt is senior partner of Levitt Sheikh, employment and labour lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.
