It is a rare and risky move for any employer to sue a former worker for defamation. While there are circumstances in which protecting a company’s reputation may require legal action — think blatantly false accusations of criminal conduct or carefully orchestrated smear campaigns that severely impact a company’s standing in the community — these situations tend to be exceptional.
Most of the time, disputes over wages, workplace conditions, or even harsh criticism from a disgruntled employee do not rise to the level that merits a full-blown defamation lawsuit.
A recent decision from Ontario’s Superior Court of Justice, Contrans Tank Group GP Inc. v. Chen, provides a textbook illustration of why defamation suits against former employees can backfire. The plaintiff, Contrans Tank Group, alleged that Zhuo Chen, a former truck driver, defamed the company by emailing co-workers about what he believed to be “improper pay reductions.”
Contrans contended that, by circulating these statements, Chen harmed the company’s reputation. In response, Chen brought what is known as an anti-SLAPP motion — a legal tool designed to protect individuals from “Strategic Lawsuits Against Public Participation,” or cases filed primarily to silence critics.
Justice Raikes, the judge presiding over the matter, had to determine whether the essence of Chen’s statements amounted to an “expression on a matter of public interest.” If a communication addresses an issue that even a segment of the public would find important — such as how a business pays its workforce — it may fall under public interest. The judge concluded that Chen’s emails likely did concern a matter of genuine interest to fellow drivers and possibly to other potential employees.
The legal framework under Ontario’s Courts of Justice Act then requires the employer (the “responding party” to the anti-SLAPP motion) to show there is “substantial merit” to their defamation claim and that the worker being sued has “no valid defence.” It was here that the court found Contrans came up short.
Chen argued that his statements were substantially true: he testified that he was frequently underpaid, especially on layovers and hourly calculations, and that he believed this might have affected other employees — particularly those from immigrant or minority backgrounds.
Although Contrans flatly denied those claims, it did so only in a broad statement that the allegations were “false.” The court noted that Contrans did not produce detailed evidence countering Chen’s assertions or clarifying whether other employees had raised similar concerns.
Because of this thin record, the judge decided that Chen had at least a plausible defence of justification (truth). Without strong, specific rebuttal evidence from Contrans, the claim that Chen’s emails were defamatory could not meet the “substantial merit” threshold. In simpler terms, the court did not find enough to justify proceeding to trial. As a result, Contrans’s defamation action was dismissed under the anti-SLAPP law.
Silence and intimidation
But the ruling went further. Justice Raikes found that the employer’s lawsuit appeared designed primarily to silence or intimidate Chen rather than to address a real reputational crisis. Early on, Chen had threatened to go public with his pay-related complaints, but there was little indication that he actually carried out any widespread publication until the summer of 2022.
Within days of Chen emailing co-workers to check their own paystubs, Contrans filed its lawsuit and sought injunctions to stop him from discussing what he believed was systemic underpayment. When Chen tried to dismiss the lawsuit using the anti-SLAPP motion, Contrans pushed forward with the case until a few weeks before the scheduled court date — at which point it abruptly served a notice of discontinuance.
In the court’s view, withdrawing the claim at the eleventh hour, after forcing Chen to invest significant time and money, was an unfair tactic aimed at leaving him with no remedy for his expenses or stress.
Because the judge concluded the lawsuit was primarily a method to chill Chen’s speech, Contrans was ordered to pay his legal costs on a full indemnity basis. Additionally, the court awarded him $5,000 in damages for the stress and anxiety caused by the company’s approach — an acknowledgment that even after his actual legal fees are covered, Chen deserved some compensation for the ordeal he endured.
What would justify a lawsuit?
There are certainly circumstances in which an employer may have no choice but to bring a lawsuit for defamation. If a former employee were to fabricate serious allegations of, say, illegal conduct or widespread criminal fraud, and those allegations went viral on social media with a demonstrable, near-immediate effect on the company’s revenue or partnerships, then a defamation suit might be warranted.
Courts will still likely want to see solid evidence of genuine harm — lost clients, canceled contracts, or irreparable damage to the company’s name. They would also expect that the accusations have no credible basis.
Yet in the Contrans case, the judge did not find sufficient evidence of that kind of reputational collapse or malicious falsehood. Instead, the central message from the ruling is that employers must proceed with caution before rushing into court to stifle criticism. Accusations of wrongdoing in the workplace — especially those that may resonate with other employees — often involve matters that, to some degree, are of legitimate public interest. Suing to silence an individual under these conditions can run afoul of anti-SLAPP legislation, opening the door to a swift dismissal and considerable cost penalties.
The lesson here is simple: defamation suits are blunt instruments. Used improperly, they can misfire, further damaging the employer’s credibility and exposing it to legal and financial consequences.
Litigation should generally be a last resort, reserved for truly egregious instances where an employee’s allegations are baseless, the reputational injury is severe, and no other avenue for resolution exists. Otherwise, as this case shows, the lawsuit might do far more harm than good — and a worker with a credible story is unlikely to be deterred simply because a legal claim has been filed against them.
