Overholt Law - Spring 2016 Breakfast Seminar Presentation

600 – 889 West Pender Street Vancouver, BC V6C 3B2

Current Legal Issues and Trends in Human Resources Management

Carman J. Overholt, QC Preston I.A.D. Parsons Jennifer S. Kwok Cameron R. Wardell

Overholt Law Inaugural Firm Seminar

Overholt Law Inaugural Firm Seminar Terminal City Club, Vancouver, BC April 20, 2016

Main: (604) 568-5464 [email protected]

Our Firm

• About Us – Boutique Labour & Employment Law Firm:

• “Workplace Law” – Employment, Labour, OH&S, Privacy, Human Rights, and so forth

– Founded by Carman Overholt, QC in June 2012 – 4 Lawyers – 1 Articled Student – 2 Paralegals – 1 Legal Administrative Assistant

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Our Firm

• Practice Areas: – Employment Law – Labour Relations Law – Human Rights Law – Corporate Governance, Fiduciary Duties & Shareholder

Disputes – Workers Compensation / OH&S – Disability Management & Duty to Accommodate – Privacy and FOI – Workplace Investigations – Restrictive Covenants and Non-Competition Agreements – Pension & Benefits

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Three points to mind

Preston I.A.D. Parsons

Written Employment Contracts


Direct: (604) 676-4197 [email protected]

Introduction

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Written Contract

Oral Contract

Overview

1. Introducing New Employment Contracts to Existing Employees

2. Commissions and Bonuses Payable Upon Termination of Employment

3. Employee’s obligation to give notice

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1. Potential Problems Resulting from the Introduction of New

Written Employment Contracts

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Common Pitfalls

• When introducing new employment agreements for existing employees: 1. carefully consider any carry-over of boilerplate

language; and 2. anything other than a pure codification of

existing terms requires fresh consideration. 8

Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311

• Demonstrates the value in written employment contracts that are well-drafted

• Demonstrates the risk employers have in using boiler-plate terms in new written employment agreements for existing employees

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• Facts: o Mr. Miller began employment in September 2003

with a written agreement. o He received two promotions in 2006. o Each promotion required him to execute a new

written contract.

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• Facts: o Newest contract had (all boilerplate): a probationary term purporting to be able to

terminate Mr. Miller without notice during those 90 days; a termination clause permitting the employer to

terminate providing notice under the ESA; and a severability clause.

o Mr. Miller’s employment was terminated after the “probationary period”

o He sued for wrongful dismissal

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Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311 • Mr. Miller’s Arguments:

1. Convergys meant for the probationary period to apply to him;

2. Entitled to reasonable notice at common law as contract breached the ESA:

a) the probation clause “wiped out” his 3 weeks’ accrued notice under the ESA for the first 90 days of his employment;

b) probation clause was tied to the termination clause; c) this created ambiguity in the agreement; d) probation clause could not be severed using the

severability clause without severing the termination clause too; and

e) the breach of the ESA thus made the probationary clause (and the termination clause) unenforceable at the outset.

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Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311 • Decision on Appeal:

o The contract was unambiguous and on its face, merely outlined the same information as the ESA

o A reasonable person would be unlikely to “conclude the parties intended to place Mr. Miller in a worse… position for the first 90 days in his new position.”

o Unambiguous severance clause exists and it is appropriate to sever the probation clause without severing the termination clause

o Mr. Miller’s notice limited to the ESA

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2. Commissions and Bonuses Payable Upon Termination

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Commission/Bonuses

• Common theme = confusion around payment of commissions and bonuses at the time of termination

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Commission/Bonuses

• BC Employment Standards Act minimums o Contemplate payment of “wages” under formula

in s. 63(4) Wages includes commissions and money that is paid or

payable as an incentive and relates to hours of work, production or efficiency Does not include discretionary money not tied to hours

of work, production or efficiency

• Contract and common law often provide for more than these minimums

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Commission

• Claim may arise where employee claims: 1. in debt for outstanding commissions the

employee alleges were owed and not paid at the time of termination; or

2. in breach of contract for failure to pay commission the employee claims are due on an ongoing basis following termination of the contract

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Payment of Commissions “earned” • At what point has the employee “earned”

the commission? oconcluded a sale/deal before termination? owas the “Effective cause” of a sale before

termination?

• Consider: Why is the employee being paid the commission?

o Referring a sale? o Closing a sale? o Closing a sale and servicing the resulting client/customer

contract?

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Determining Commissions Payable • Look at:

o any express contractual language or policies regarding what happens to commissions where a termination occurs; or

o if no express contractual language or policies, examine: past practices; the sale process; and any role the employee has played in securing the sale

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Commission Calculation Summary • Different Approaches:

o Commissions payable for amounts “earned” already prior to termination

o Averaging past earnings to determine lost opportunity for commissions during notice period

o Clear, express contractual language which ousts payment obligations during notice period at common law (Sciancamerli v. Comtech (Communication Technologies) Ltd., 2014 BCSC 2140)

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Ongoing Commissions

• Claim in breach of contract for commissions argued to be accruing over time

• Typically occurs where contracts are

ambiguous or poorly drafted and imply some entitlement potentially beyond termination: o ie. “you will be paid on a commission basis and

shall receive commissions as long as we continue our supplier relationship that you secured during your employment with us”

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Ongoing Commissions Summary

• Need clear, express agreement to establish employer liability for ongoing commissions post-termination

• Default position = other than amounts owed at the time of termination (“Earned Commissions”) and those that may be payable during the notice period (part of severance pay), no obligation to pay beyond termination absent express contractual term

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Payment of Commissions “earned” - continued • Commission Contract Drafting Tips:

1. Clearly identify when the company considers a commission to be “earned” and what the employee’s responsibilities are oDefine “Earned Commission”

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Payment of Commissions “earned” - continued • Commission Contract Drafting Tips:

2. Clearly outline how commissions will be dealt with upon termination of employment

3. Seek to eliminate ambiguity: if it’s not clear to employees how their compensation is calculated, the business is asking for trouble o Goal: establish an understanding of how their

compensation is calculated early o Warning: contra proferentem

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Payment of Commissions “earned” - continued • Contracts Drafted:

o Seek legal advice on current contract terms and consider any modifications for new employee contracts

o Seek legal advice on proposed severance arrangements to minimize risk from any outstanding commissions that may be claimed

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Bonuses

• Bonuses during notice period: o If the employee would have worked throughout

the notice period, would they have received a bonus payment?

• Employee must establish: o they would have been entitled, by contract or past

conduct, to receive the bonus; and o how to calculate the amount of it

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3. Employees’ obligation to give

notice of termination at common law

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Notice upon resignation

• Scenarios: 1. Written employment contract

• No term included regarding notice to be given by employee upon resignation

2. Verbal employment contract • No term discussed regarding notice to be given by

employee upon resignation

Q: In the scenarios above, can the employee resign with no notice at all?

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• A: If the contract (written or oral) does not expressly stipulate the amount of notice an employee must give when resigning, the employee is obliged to give reasonable notice.

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• Calculating “reasonable notice” of resignation – Two Factors:

1. Nature of the employee’s position with the employer; and

2. Length of time it would reasonably take the employer to replace the employee or otherwise take steps to adjust to the loss.

• Gagnon & Associates Inc. et. al. v Jesso et. al. 2016 ONSC 209 – EE failed to give any notice; damages to ER set-off against amounts owing to EE.

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An Overview of Investigation “Dos” and “Don’ts”

Jennifer S. Kwok

Complaint Investigations



Introduction

• The proper conduct of workplace investigations by employers is coming under greater scrutiny by the Courts, tribunals and labour arbitrators

• Employers and Human Resources personnel are being held to a high standard of professionalism and fairness in handling of complaints and investigations

• The consequences of a flawed investigation may be significant in terms of liability (e.g. Human Rights Complaints) and employee morale

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Overview

1. The Legal Framework

2. Policies and Effective Communications

3. Managing the process of employee

complaints and investigations

4. Conducting complaint investigations 34

1. The Legal Framework

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Legal Framework

Collective Agreement?

(Unionized or Non-Unionized

Workplace)

Workplace Policies

Terms of Contract of

Employment

Case & Statute Law

(Provincial or Federal

Undertaking)

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Legal Framework

Relevant legislation:

Labour Relations Code

Human Rights Code

Workers’ Compensation Act • Occupational Health and Safety

Regulation Privacy legislation: PIPA, PIPEDA, FOIPA

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2. Policies & Effective Communications

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Policies & Effective Communications

• What policies does your organization have? • Have employees been advised of the policies? • Do they clearly set out the process whereby

employees can bring complaints of improper conduct forward to management?

• Does management support and follow the policies in practice? 39

3. Managing the Complaint Process

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Managing the Complaint Process

• Is the complaint process fair?

oTimeliness

oWho receives the complaint? (In writing?)

oAbility and time for the respondent to

respond

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Managing the Complaint Process o Informal dispute resolution (e.g. mediation)

process available?

oParties have access to independent legal

advice / legal (or union) representation?

oDistinction between confidentiality and

privacy

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Managing the Investigation Process

• Privacy issues:

o The complaint cannot be kept confidential once

formally submitted; duty to investigate and act

o Try to confine the investigation to only those

affected by it and those who have relevant evidence

o Create separate file for investigation apart from

employee personnel file

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Managing the Investigation Process Other considerations:

• Determine whether the investigation should be conducted by an internal or external party

• Suspension of respondent pending outcome of investigation? (Threats of violence or harm to others?)

• Discipline post-investigation must be appropriate in the context

• Has the complaint been addressed to the satisfaction of the complainant?

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3. Conducting complaint investigations

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The Case Law

• Provide illustrations of what “to do” and “not

to do”

• Case Types:

oFailure to Investigate

oNegligent Investigations

oUnfair Investigations 46

The Case Law: Failure to Investigate #1

Chandran v. National Bank of Canada, 2011

ONSC 777, [appeal of damage award affirmed in

2012 ONCA 205]

oFailure to Investigate Case

o*Don’t Jump to Conclusions*

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• 9 out of 11 employees interviewed made

“unsolicited” comments regarding Mr. Chandran

• Allegations: - condescending remarks - volatile behaviour - embarrassed employees - bullying behaviour

• HR Manager reported to supervisor the allegations but not the names of those who had made the complaints

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• Supervisor and HR director met with Mr. Chandran

• Mr. Chandran denied allegations; asked for more detail

• Bank refused further detail, conducted no investigation, issued a disciplinary letter and transferred Mr. Chandran to a new position with no supervisory duties.

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• Failure to investigate: • Bank said “We had no obligation to investigate as

there was no formal complaint filed under our Human Rights Policy.”

• Court found Mr. Chandran was not given an opportunity to defend himself and that he had no opportunity to present a possible “evidential challenge to the complaint”

• The Bank did not engage in an inquiry to determine if the allegations were true

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The Case Law: Negligent Investigations

Correia v. Canac Kitchens, 2008 ONCA 506

• Investigation of illegal activity in the workplace

• Canac retained a private investigation firm • Mr. Correia, 62 year old, long-term employee,

terminated and arrested as a result of the investigation - theft

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The Case Law: Negligent Investigations • After Mr. Correia was terminated and file

passed to the police = wrong employee • Mr. Correia was confused for another

employee who was younger with a similar name

• Criminal charges against Mr. Correia were ultimately dropped

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The Case Law: Negligent Investigations • Claims:

• Wrongful dismissal • Negligent investigation • Intentional infliction of mental distress • Intentional interference with economic relations and

inducing breach of contract • False arrest and false imprisonment • Malicious prosecution • Vicarious liability

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The Case Law: Unfair Investigation #2 Vernon v. BC Liquor Distribution Branch, 2012 BCSC 133,

add’nal reasons 2012 BCSC 445

• Ms. Vernon, a 49 year old employee with 30 years of

service and exemplary performance reviews was

terminated. Employer alleged cause

• A particularly sensitive employee made a complaint

against Ms. Vernon alleging various harassing behaviour

• Employer conducted investigation into the complaint

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The Case Law: Unfair Investigation #2

• Ms. Vernon told of the complaint: onot told job in jeopardy onot provided with a copy of the complaint

• Interview of Ms. Vernon was really an interrogation, biased, one-sided

• Interviews of complainant, Ms. Vernon and other employee witnesses were conducted by different people and they did not all have the complaint or other interview notes

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The Case Law: Unfair Investigation #2

• Ms. Vernon given copy of complaint in an interview and asked to immediately respond

• Investigation concluded gross workplace misconduct – recommended her termination

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The Case Law: Unfair Investigation #2 • Decision:

o Witnesses who spoke favorably of Ms. Vernon were accused of lying, chided and yelled at by investigator

o 30 year employee with zero complaints before this time and glowing reviews “should have given them cause to stop and reflect”

o Suspension of 1.5 months while employer delayed investigation was egregious

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The Case Law: Unfair Investigation #2 • The Court found that the investigation was “flawed from the

beginning to end”

• Investigation process was “neither objective nor fair”

• Award:

o 18 months notice

o damages for loss of pension

o $35,000.00 aggravated damages

o $50,000.00 punitive damages

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Summary & Conclusions

• The legal standards for workplace investigations are not easily satisfied

• Education and training of management is necessary to meet the legal requirements for conducting investigations

• The law is developing to make an employer liable for the consequences of an investigation that is not properly conducted

• It is important to seek assistance outside your organization to ensure your investigation of workplace matters satisfies the expected standards.

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Common Trends and Organization Pitfalls

Cameron R. Wardell

Privacy & Technology in the Workplace



Privacy Laws in the Workplace

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Privacy Laws in BC

• BC Privacy laws: – Privacy Act, R.S.B.C. 1996, c 373

• Statute of general application, tort of breach of privacy

– Personal Information Protection Act, S.B.C. 2003, c. 63 (PIPA)

• Private sector businesses in the province

– Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996, c. 165 (FOIPPA)

• Public bodies in the province

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Privacy Laws in Canada • Federal privacy laws:

– Privacy Act, R.S.C. , 1985, c. P-21 • Public bodies as set out in Schedule

– Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 (PIPEDA)

• Private sector organizations • Federal Works, Undertakings, and Businesses (FWUBs) • Now includes “authorized foreign bank”

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Collection/Use/Disclosure

• Common features of both federal and provincial privacy laws concern the collection, use and disclosure of personal information

• Legislation provides the legal framework for the gathering and handling of personal information of individuals – Context of Employment

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• Collection: • How an employer/organization gathers

information on its employees/individuals • Broadly defined • Generally restricted by what is “reasonable” • Statutes contain exemptions for when consent is

needed in a variety of situations

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• Use: • Once information has been collected about an

individual, how is it being used?

• Typically, there must be a reasonable purpose for the information that was collected; relates to whether the collection is reasonable

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• Disclosure: – Occurs where the employer/organization

disseminates the collected information, for a reasonable use

– Where the largest liability may lie – Mistakes can be aggravated by technology, leading

to mass disclosure

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Privacy and Technology in the Modern Workplace

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Privacy and Technology in the Modern Workplace • Topics

– Background Checks – BYOD – Technology

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Background and Security Checks of Potential Employees • To consider:

– What are you collecting? – Do you have consent? – Is it public? – Why are you collecting it? – What will you do with it? – Is there a risk you’ll collect something you don’t

want to?

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Background and Security Checks of Potential Employees

• Social media background checks

• Are you aware of extent of your online

presence? • Google yourself!

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Known Online Presence

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Unknown Online Presence

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Background and Security Checks of Potential Employees • Social media background checks

• Risks inherent to the internet:

– Accuracy – The collection of irrelevant material – Overreaching or unreasonably seeking

information – Human rights protections

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Social Media Background Checks • What if you discover:

– Pictures suggesting religious faith?

– Pictures suggesting political belief?

– Pictures depicting sexual orientation?

– Pictures depicting a disability? • Addictions!

– Pictures/information depicting marital/family status?

• Pregnant? • Children!

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Social Media Background Checks • May need to preserve what you find

– Requirement to preserve records used to “make a decision” or in custody of employer for one year

• May need to prove a negative – If you didn’t rely on it in your decision, why did

you look for it?

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Social Media Background Checks

• Tips to avoid risks: – Find more reliable sources to gather info – Verify troubling information through individual – Do not use deception to gather – Use a third party – Carefully consider what you’ve found – Be prepared to provide what you’ve found

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Background and Security Checks of Potential Employees • Criminal record checks • Not offered by municipal/RCM Police • “Police Information Check” available:

– Vulnerable sector – Non-vulnerable sector

• Changes in 2014: – No mental health information – “adverse contact” only reported to vulnerable

sector

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Background and Security Checks of Potential Employees • Reference checks

– Consent usually required – Listing references implies consent – Listing previous employers does not imply consent – Language of PIPA suggests that some reference

checks might be permitted without consent (but still need notification)

– Breach of FIPPA where no consent obtained

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Background and Security Checks of Potential Employees • Credit checks/other more extensive checks

– Generally not allowed – Must be related to requirement of a position – Rare

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BYOD Policies

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BYOD Policies

• Advantages to a BYOD Policy: – Increased employee satisfaction and

productivity (they get to use the devices they want, how they want to)

– Shifts the hardware cost burden from the employer to employees

– Clarification of rules and expectations where employees are already using their own devices for business purposes

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BYOD Policies

• Disadvantages to a BYOD Policy:

–Privacy law concerns –Data security concerns –Legal discovery concerns –Privacy or Security Breach could be

immensely costly to an organization

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Whose email is it anyway?

• With or without BYOD – Legal questions of employee privacy in workplace

devices, phones and email – Decision makers will do in depth analysis

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Employee Monitoring and the Potential Misuse of Technology

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Employee Monitoring

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Overt Video Surveillance

Employee Monitoring and the Potential Misuse of Technology

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Employee Metrics

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Employee Metrics

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Employee Metrics

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Collection and (Mis)Use

• Employee metrics and monitoring:

– Need a (reasonable) purpose – Notify – Need a policy – Need consent in most instances – Re-evaluate – Are there alternatives?

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Potential Liabilities - What could possibly go wrong?

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Potential Liabilities

• Investigations/Audits • Prosecutions • Civil Claims and damages • Other kinds of proceedings • Intangibles

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Three new decisions to note

Carman J. Overholt, Q.C.

Recent Trends in Terminations & Case Law Update



Overview

Three 2015 decisions in BC that are significant for employers: • Roe v British Columbia Ferry Services Ltd.

– What conduct will warrant a just cause dismissal?

• Fredrickson v Newtech Dental Laboratory Inc. – When has a terminated employee mitigated their damages

from their wrongful dismissal?

• Hall v Quicksilver Resources Canada Inc. – How is notice affected when a company undergoes a sale?

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Just Cause – McKinley v BC Tel

• An employee is entitled to reasonable notice or pay in lieu of notice upon dismissal, unless just cause existed for the termination of their employment

• The test is whether the conduct is “behaviour that, viewed in all the circumstances, is seriously incompatible with the employee’s duties, conduct which goes to the root of the contract, and fundamentally strikes at the employment relationship” – Adams v Fairmont Hotels & Resorts

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Roe v British Columbia Ferry Services Ltd, 2015 BCCA 1 • A senior employee was caught violating company

policy by giving food vouchers to his daughter’s volleyball team

• The employee was dismissed for cause

• At trial the judge found the behaviour was relatively minor and did trifling

• The alleged misconduct did not constitute just cause

• The employer appealed

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Roe v British Columbia Ferry Services Ltd, 2015 BCCA 1 “BCF [the Employer] personnel have the responsibility to understand and conduct themselves in accordance with this code, and to report conduct or proposed conduct that is in violation of this code. … Employees who breach the code may be subject to disciplinary action, up to and including dismissal. If a violation of law is involved, the matter may also be referred to the appropriate law enforcement agency. Any Supervisor or Manager who directs or approves of conduct in violation of this code, or who fails to report a violation of which he or she has knowledge, is also in violation of the code and subject to disciplinary action”

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Roe v British Columbia Ferry Services Ltd, 2015 BCCA 1 • On appeal: it wasn’t the dollar value of the

vouchers that indicated serious or significant misconduct

• The judge erred by not looking at all the circumstances of the incident before determining the behaviour was “bordering on trifling”

• A new trial was ordered

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Roe v British Columbia Ferry Services Ltd, 2015 BCCA 1 • The significance of the Roe decision is that it

highlights the need for clear policies and training in the workplace

• Given that the Court upheld the policy of the Employer, consideration needs to be given to any representations

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Employee Mitigation

• Employees who have been wrongfully dismissed are entitled to notice of their termination or payment in lieu.

• An employee must, however, take steps to mitigate any loss arising from their termination of employment

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Fredrickson v Newtech Dental Laboratory Inc., 2015 BCCA 357 • Employee was dismissed after 8.5 years and launched a

claim for damages for wrongful dismissal

• Employer gave her several offers of reemployment, which she declined

• At trial the judge found that the employee failed to mitigate her damages by not accepting these offers

• The employee appealed

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Fredrickson v Newtech Dental Laboratory Inc., 2015 BCCA 357 • The Court of Appeal reviewed the law of

reemployment offers as set out in Evans v Teamsters Local Union No. 31

• The Court in Fredrickson made two findings: – The return to work offers were “incomplete”

– There was a breakdown of trust in the working

relationship such that it would be unreasonable for the employee to have returned to her old job

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Fredrickson v Newtech Dental Laboratory Inc., 2015 BCCA 357 • It’s not enough that an offer of reemployment

be similar in character to the original employment contract

• There must be a preservation of trust between the employee and employer in order to maintain the integrity of the employment relationship

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Notice and Length of Service

• An employee dismissed without cause is entitled to notice of their termination

• Absent a contractual or statutory clause, the employee is entitled to reasonable notice

• Reasonable notice is assessed based on the employee’s age, length of service, character of employment, and availability of similar employment

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Hall v Quicksilver Resources Canada Inc., 2015 BCCA 291 • An employee was dismissed without cause

and given pay in lieu of one week’s notice

• The employee argued he was entitled to notice based on 24 years of service

• At issue was whether the employee was entitled to notice based on his service with his previous employer

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Hall v Quicksilver Resources Canada Inc., 2015 BCCA 291 • The employee began work with Company A in

1989

• Company A was purchased by Company B in 2013, at which point Company A paid the employee $125,345

• The employee argued this was recognition of his service, not severance pay

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Hall v Quicksilver Resources Canada Inc., 2015 BCCA 291 • The Court of Appeal found that the substance

of the agreement and the surrounding circumstances indicated the lump sum was in fact a severance payment

• The trial judge erred in giving notice based on continuous employment since 1989. The employee was only entitled to notice from 2013 onward

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Hall v Quicksilver Resources Canada Inc., 2015 BCCA 291 • The question of successorship and prior

service being considered in determining severance was considered by the Court of Appeal in Sorel v Tomenson Saunders Whitehead Ltd.

• This decision demonstrated the importance of defining the terms of employment in the event of a sale or a transfer

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Carman J. Overholt, QC Preston I.A.D. Parsons Jennifer S. Kwok Cameron R. Wardell

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Main: (604) 568-5464 [email protected]