Editor’s note: This is a case from 2011 but was added to our database because of its importance.
An Alberta employee who was fired after a sexual harassment complaint has won his wrongful dismissal case, with a jury awarding him significant damages after finding the employer’s investigation was biased and conducted in bad faith.
D.J.E., a supervisor at Home Hardware Stores Limited’s distribution centre in Wetaskiwin, was terminated without notice in 2002 after being accused of sexual harassment by two female co-workers. The Alberta Court of Appeal upheld most of the jury’s findings but reduced some damage awards.
The case highlights the importance of conducting fair and impartial workplace investigations, particularly when serious allegations like sexual harassment are involved.
The allegations and investigation
The trouble began when C.B., who worked under E.’s supervision, complained to her father about an alleged incident from several months earlier. Her father, N.B., was the distribution centre manager and E.’s boss.
C.B. claimed E. had followed her into a storage room and “belly bumped” her against a table. A second employee, D.S., later alleged a similar incident in which E. allegedly turned off lights in a first aid room and fell on top of her after belly bumping her.
Evidence at trial showed “belly bumping” was described as “a silly thing Elgert did when he was in a hyper sort of silly mood” and was something male employees did “when they were in a good mood.”
The investigation was led by D.K., who had no training in handling sexual harassment complaints and limited experience with such matters. The court noted several concerning aspects of how the investigation was conducted.
Flawed investigation process
The court found multiple problems with the employer’s investigation:
K. had already decided E. was guilty before speaking with him. When E. was suspended, K. told E.’s son that the company “would not have suspended his dad if he was not 100 percent positive” of his guilt.
During the suspension meeting, E. repeatedly asked what he was supposed to have done, but K. kept saying “You know what you did.” E. was not provided with particulars of the allegations for 10 days.
The investigation failed to examine the relationship between C.B. and E. or consider possible motives for fabrication. Evidence showed C.B. had been unhappy about being moved away from a male co-worker she was romantically interested in, and she had told colleagues she would “get even” with E.
E. had completed a negative performance review of C.B. shortly before the allegations, but this review mysteriously disappeared and could not be located during litigation.
Bad faith conduct
The court found sufficient evidence that Home Hardware acted in bad faith during the dismissal process. Key factors included:
- The bias created by having C.B.’s father involved in the early stages of the matter
- K.’s predetermined conclusion of guilt before speaking with E.
- The accusatory manner of the suspension meeting where E. was denied information about the allegations
- The immediate suspension without proper justification
- The failure to conduct a thorough and impartial investigation
The court noted that while employers must take sexual harassment allegations seriously, “how the employer reacts is subject to judicial scrutiny. Its responsibilities do not give it licence to conduct an inept or unfair investigation or behave in malicious, vindictive, or outrageous ways.”
Jury findings and damages
The jury found that E. did not commit the alleged acts of sexual harassment and that both accusers had defamed him. The jury concluded Home Hardware’s conduct during the dismissal “constituted bad faith such that aggravated damages were appropriate” and that the company’s conduct was “harsh, vindictive, reprehensible, malicious, extreme in nature and deserving full condemnation and punishment.”
The original jury award included:
- 24 months’ pay in lieu of notice
- $200,000 in aggravated damages
- $300,000 in punitive damages
- $60,000 total in defamation damages against the two accusers
Appeal court’s decision
The Alberta Court of Appeal upheld most findings but made some adjustments to the damage awards:
The court set aside the $200,000 aggravated damages award, finding insufficient evidence that E. suffered actual damages specifically from the manner of dismissal rather than the fact of dismissal itself.
The punitive damages award was reduced from $300,000 to $75,000. While the court agreed punitive damages were justified given Home Hardware’s conduct, it found the original amount “inordinately high and unnecessary to convey the message intended.”
The wrongful dismissal award of 24 months’ notice was upheld, with the court noting E.’s long service, supervisory position, age, and the impact the sexual harassment allegations would have had on his ability to find new employment.
The defamation awards against the individual accusers were maintained at $50,000 and $10,000 respectively.
Key takeaways for employers
The case demonstrates that employers face significant legal risks when workplace investigations are not conducted fairly and impartially. The court emphasized that while employers must take sexual harassment allegations seriously, they cannot use this responsibility as “licence to conduct an inept or unfair investigation.”
Critical elements of a fair investigation include:
- Ensuring investigators are neutral and unbiased
- Providing accused employees with adequate particulars of allegations
- Conducting thorough interviews with all relevant parties
- Considering possible motives for false allegations
- Avoiding predetermined conclusions
- Following proper procedural fairness
The substantial damage awards in this case serve as a warning that employers who fail to meet these standards may face significant financial consequences, including punitive damages designed to punish and deter such conduct.
For more information, see Elgert v. Home Hardware Stores Limited, 2011 ABCA 112 (CanLII).
