Employer Duty to Investigate Alive and Well

Lawyers representing employers have jumped on a narrow reading of the Court of Appeal's decision in Canac (supra)to suggest that an employer does not owe a duty of care in negligence to conduct a fair and thorough investigation of allegations of discriminaton, harassment or other employee misconduct in their workplaces. In Correia v. Canac Kitchens 2008 ONCA 506 the Court of Appeal refused to recognize a duty of care in negligence on the employer with respect to damages suffered by an employee they terminated based on a negligently conducted criminal investigation. The investigation in Canac (supra) was a criminal investigation and it was not conducted by the employer but by an investigation firm hired by the employer to investigate criminal activity in its warehouse. In coming to the conclusion that a duty of care was not appropriate on policy grounds in Canac supra the Court of Appeal relied upoon the following salient facts: 1. the conduct to be investigated was outside of the employer's business expertise; 2. the employer in fact hired a company with expertiese in the area to conduct the investigation; 3. the employee named the investigation company and the police in the action; 4. the employer acknowledged that in the circumstances they had no cause for dismissal and in fact offered the employee reinstatement. Accordingly, the Court of Appeal's holding in Canadc supra with respect to a duty of care on the employer for negligent investigation is arguably limited to the narrow facts of that case. An employer with published anti-harassment policies who receives a complaint and carries out an investigation of such complaint using their own managerial staff would clearly seem to be outside of the Canac holding. The fact that the prohibited behaviour is regulated by the employer in that their policy prohibits it, defines it and provides a vehicle to employees to complain along with a procedure for investigation and prescribed penalties for the violation of the policy makes it part and parcel of the employer's business and arguably a term of the contract of employment. Indeed, there are compelling public policy reasons to support a duty of care in negligence on employers with respect to investigations of this nature. Since human rights legislation is remedial in nature and has been recognized by the Supreme Court of Canada as being "quasi-constitutional" the absence of a duty of care in negligence on the employer with respect to such investigations would render the right of employees to be free from discriminaiton and harrassment in employment illusory. In Robichaud v. Canada(Treasury Board) 2 S.C.R. 84 the Supreme Court of Canada held that an employer is liable for the acts of discriminaiton and hasrrament of its employee. The court reasoned that the remedial objectives of the Act, in that case the Canadian Human Rights Act, could not be acoomplished in the absence of such liability on the employer since only they can remedy the undesirable effects of discrimination and only they can provide a healthy work environment. In this remedial context the employer is for all intents and purposes the "gate-keeper" of the enforcement of human rights in the workplace. At the same time an employer can cause serious and lasting harm to an employee's reputation by improperly branding them as a sexual harasser or racially intollerant and therby adversely impacting the employee's future employability. On the other hand a proprly conducted investigation can be used by an employer to defend itself against false claims by employees. A duty of care on an employer to conduct a fair and thorough investigation in this context would tend to be supported by public policy and is distinguishable from the Canac supra scenario. Totally aside from allegations involving conduct prohibited by human rights legislation, Ontario courts have recognized an obligatin on employers to conduct a fair and thorough investigation in circumstances where they embark on such investigations to justify cause for dismissal involving fraud or other moral terpitude. Two cases involving the Canadian Imperial Bank of Commerce come to mind on this point, namely, Ribero v. CIBC (1989) 24 C.C.E.L. 225 and Francis v. CIBC. 1994 CanLii 1578 (ON CA) In both of those cases the court was highly critical of the "shoddy investigation" carried out by the bank's investigator where they relied upon the improprly conducted investigation to support allegations of moral terpitude against the employee. While those cases were not advanced on theories of negligent investigaiton, the court clearly reviewed the substance of the investigation and in both cases punitive damages were awarded against the employer. In Francis supra the Court of Appeal for Ontario increased the punitive award from $20,000 to $40,000.