Ungovernable News: Employer Liability for Sexual Harassment in the Workplace
Employer Liability for Sexual Harassment
This recent Court of Appeal decision raises once again the issue of the test of employer liability for sexual harassment in the workplace.
The Human Rights Administrative Process
Ontario’s Human Rights Code contains a deeming provision holding an employer responsible for the conduct of its officer, official, employee or agent in the course of their employment.
This provision, however, does not apply to freedom from harassment in the workplace, sexual harassment in the workplace and sexual solicitation and freedom from reprisal connected to sexual solicitation.
There is hence is no deemed liability upon the employer for wrongdoings under these remedy sections.
Thus, under the Ontario Code, the complaint must be brought personally against the individual who is accused of the offensive conduct.
The Federal legislation, however, allows for a “due diligence” defence to be raised against the assertion of vicarious liability. The employer must show that (1) it did not consent to questioned conduct, (2) and it used all due diligence to prevent event and (3) did all it could to minimize or avoid the adverse consequences.
This does not, however, end the analysis of employer liability, again to a complaint of pure sexual harassment under the administrative process.
This concept of “organic liability” provides an argument that the employer company is responsible for the conduct of its principals. It is different from vicarious liability. The theory is that a legal entity can only act through its principals and hence the company will held liable for such conduct of its “principals” or “its directing mind” in a sexual harassment case, or a similar situation where the statute’s deeming provision of liability upon the employer does not apply.
The above review, however, does not end the analysis of employer liability.
Poisoned Work Environment
The remains a further means of establishing employer liability for a sexual harassment allegation due to the existence of a “poisoned work environment”. This liability is not exempted from the deeming provisions of the Ontario Code. Management employees who fail to take remedial action to eliminate such a work environment and the corporation may both be liable for a breach of this obligation. In essence, a company which has failed to deal with Code violations prevalent in the workplace will take on this liability due to its failure to assure a proper and safe workplace.
The word “reprisal” can lead to confusion as there are two types of such retaliatory conduct often described as “reprisal”. The first is such actions taken by the employer in response to the filing or threatened filing of any human rights complaint. To make the analysis clear, this is referenced as “General Reprisal”.
The second is conduct of the employer or an individual against a person who has not acceded to demands for sexual favours. This conduct is generally defined as a form of sexual harassment which for this purpose, it will be referenced as “Sexual Reprisal”.
Conduct which is retaliatory to the threat of or the commencement of a human rights complaint is actionable as reprisal. This is to be distinguished from adverse conduct due to the failure to reply to sexual solicitation.
The employer has direct liability for such a complaint.
A complainant for a General Reprisal remedy stands alone. Success in the substantive complaint is not required. The applicant must only show that rights were claimed or threatened to be claimed under the Code and she was the subject of adverse treatment or the threat of as a result. The applicant in such a case simply must show that rights under the code were claimed and she was then the subject of threats of, or actual adverse consequences.
Unlike a complaint of adverse discriminatory conduct which does not require proof of intent, a claim of General Reprisal requires proof that the action or threat was indeed intended as a retaliation to the claim to or enforcement of a right under the Code.
Such intent may be inferred from circumstantial evidence, but there must be evidence to support the proposition that the decision maker was aware of the steps being taken to enforce Code rights.
It is generally conceded that to prove General Reprisal, intent must be shown. The intent to reprise may be inferred from the facts and is a matter of credibility. To constitute reprisal, it is sufficient if the conduct is “at least in part” due to the complaint or threatened complaint.
To show General Reprisal, the complainant must show a link between the alleged retaliatory conduct and the threat of or the filing of the complaint, which is normally proven by inference as direct evidence is invariably non-existent. The second aspect of the test is to show that the offensive conduct is, at least in part, an intentional response to the complaint.
To succeed on such a General Reprisal claim, the substantive claim which has been threatened or actually brought, need not succeed. The applicant cannot threaten or bring a claim which she knows lacks merit. He must, however, have a genuine belief in its merits.
A General Reprisal claim may also lead to a lost income award, again independently of the merits of the substantive complaint.
In a common law civil action, the plaintiff will typically seek to make the employer responsible for the conduct of its employee.
There are two arguments possible. The first is the same organic theory of liability as discussed above. Such a plea puts liability on both the individuals and the company.
The second argument is the plea of vicarious liability. This leads to a finding of strict liability, without the need to prove negligence on the part of the employer. A finding of liability against the employee will then attach such liability upon the employer without fault on its part for the wrongdoing.
Interestingly, the Nova Scotia Court of Appeal found that a claim which is founded only on a breach of fiduciary duty, with no accompanying tort claim, will not support a claim for the vicarious liability of the employer. This is so as this obligation is a personal one and is not delegable. There may be liability as a co-fiduciary but this is a distinctive plea.
The most frequent relationship which creates vicarious liability is that of employee and employer.
It does not, however, follow that once such a relationship is established, that liability will follow. Conduct which is only coincidentally linked to the business of the employer and the duties of the employee cannot justify the imposition of vicarious liability. The conduct in these cases is independent of the employment situation and further the employer was not in a position to prevent this behaviour. The conduct must be closely and materially related to the risk introduced or enhanced by the employer for vicarious liability to be imposed.
For example, should a man assault his wife’s lover, a co-worker, in an employee’s lounge, the employer should not be seen as accountable. Equally, a security guard who decided to commit arson for his own amusement would not give rise to strict liability.
Conduct which is only coincidentally linked to the business of the employer and the duties of the employee cannot justify the imposition of vicarious liability. The conduct in these cases is independent of the employment situation and further the employer was not in a position to prevent this behaviour. The conduct must be closely and materially related to the risk introduced or enhanced by the employer for vicarious liability to be imposed.
The basic premise of the cases finding strict liability is that the conduct of the employee falls within the ambit of the risk created by the business, or enhanced by it. The policy arises where the wrong is so connected with the employment that it can be said that the employer has introduced the risk itself.
Hence where the risk is closely associated with the wrongful conduct, the employer should bear the risk and internalize the full cost of operation, including such liability. But where the wrongful act does not have a meaningful connection to the business, liability should not flow. The “mere opportunity” to commit a tort does not suffice. The business and employment must not only provide “the locale or the bare opportunity for the employee to commit his or her wrong, it must materially enhance the risk, in the sense of significantly contributing to it, before it is fair to hold the employer vicariously liable.”
In determining the application of vicarious liability on a policy basis, courts should be guided by the following principles, where precedent cases are inconclusive, to determine liability in cases of unauthorized intentional wrong.
- The question of liability should be openly confronted and not disguised under the rubric of “scope of employment” and “mode of conduct”;
- The basic issue is whether the maligned conduct is sufficiently related to the authorized conduct. There should be a significant connection between the creation or enhancement of a risk and the resultant wrong that so accrues, even where this is unrelated to the employer’s objectives.
To assess the sufficiency of the connection between the employer’s creation or enhancement of the risk, and the conduct in question, the following factors should be considered, in determining liability for intentional conduct:
- the opportunity that the business gave the employee to abuse his power;
- the extent to which the wrongful conduct may have furthered the employer’s aims;
- the extent to which the acts in question were related to friction, confrontation or intimacy inherent in the business;
- the extent of power conferred on the employee in relation to the victim;
- the vulnerability of potential victims to the wrongful exercise of the employee’s power.
In an Alberta civil action for sexual harassment, the factors considered were that (1) the personal defendant was her boss and consistently one of the only other persons in the office, (2) he was her direct boss, (3) she was led to believe that he was the only person in charge, (4) the two were often alone and (4) there was no corporate policy on sexual harassment. These factors, as noted by the Court of Appeal, materially enhanced the risk of tortious actions.
An exception was taken to this decision by a B.C. decision firstly noting that the above case did not fully apply the first step by asking the question of “whether there are any precedents which unambiguously determine whether vicarious liability should apply in the circumstances”.
More significantly, the court did not refer to other decisions where courts have looked carefully at the policy considerations which are significant in the second step of the analysis.
In the application of the connection between the creation of the risk and the wrong, “incidental connections to the employment enterprise, like time and place (without more), will not suffice”.
The court found against the imposition of vicarious liability as (1) the opportunity given to the personal defendant to abuse his power was not significant, (2) the assignment of work was done openly, (3) there was ample opportunity for employees to raise issues about work or work assignments to senior management, (4) the wrongdoing did not further the employer’s aims, (5) there was no friction, confrontation or intimacy inherent in the business, (6) there was nothing in the business of residential plumbing service which created situations of intimacy between employees, (7) the power given to the wrongdoer was supervisory with respect to the plaintiff, but limited and such power was not one which could be readily abused.
The very fact of supervision of one employee of another, the court stated, should not give rise to vicarious liability.
From a broad policy overview, a contrary finding, the court stated, would create economic hardship to the business community.
The Ontario Court of Appeal recently considered the above tests in a case involving a taxi cab driver who had committed a sexual assault in the course of his job responsibilities. The Court noted that the application of the above test becomes more difficult in the case of an authorized intentional wrongdoing such as sexual assault.
The trial judge had found in favour of the employer but had not specifically set out his analysis of the five factors above. The Court of Appeal did so, based on the evidentiary record.
First Factor Opportunity – Opportunity for Abuse
The Court saw this issue as “not negligible” as intoxicated passengers, as in this case, must be trusting of the driver. The cab driver has a form of power and has the ability to create chances for abusive conduct. The Court saw, however, the opportunity for misconduct as “not as intimately connected to his functions”, not comparable to the child caregiver in Bazley and closer to the groundskeeper in Jacobi.
Second and Third Factors – Does Wrongdoing Extend the Employer’s Business; Extent to which the Business Purpose related to friction, confrontation or intimacy inherent in the business;
The assault did not promote the employer’s business purpose and was “not related to friction, confrontation or intimacy inherent in the employer’s aims”. The Court found that the fact that the employer did not require or permit physical contact between the driver and the passenger “in any intimate body zones” was influential. In fact the company’s written directions were to avoid physical contact and dating requests.
Fourth Factor - Extent of Power Conferred on the Employee in Relation to the Victim;
To this issue, the Court noted that the employer delegated no power on the driver with respect to the plaintiff. It did not know that it as sending its driver to pick up a lone, intoxicated woman. The Court stated:
The relationship between the driver and the appellant was that of adult driver and adult fee-paying passenger. Arguably, what power the driver had, he arrogated to himself through his own decisions.
Fifth Factor Vulnerability
Clearly a lone drunk woman was vulnerable. However, as the Court stated, while this is an important factor, the power of the driver is not predicated on his employment. In any event, vulnerability does not, per se, provide the “strong link”:
Moreover, as Binnie J. wrote for the majority in Jacobi, “vulnerability does not itself provide the “strong link” between the enterprise and the sexual assault that imposition of no-fault liability would require” (para. 86).
The strong connection required for the finding of vicarious liability failed. Further from a policy prospective, the Court was not moved by the need to find “deep pockets”;
Further, the appellant has not demonstrated, in this case, that imposition of vicarious liability would further the broader policy rationales of fair compensation and deterrence used to justify it.
This decision illustrates the reluctance of the Court to attach employer liability in a context of employment, even in a context where there was clearly sympathy for the victim’s circumstance. The “closely and materially” test is clearly one which is difficult to reach.
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