An Ontario employer has been ordered to pay nearly two years’ salary plus $55,000 in additional damages to a long-term employee who was fired after she reduced her hours and took medical leave for cancer treatment.
Shelley Altman, 59, first joined Montreal-based musical instrument retailer Steve’s Music Store in 1978. At the time, her husband was the assistant manager at a Steve’s in Toronto and she helped out by doing unpaid work. She soon worked the front counter and advanced through various positions, becoming store manager in 1998.
Steve’s was a family-run business and Altman was close to many of the family members. She often worked from home on her days off and was rarely out of contact with the store. She represented Steve’s on an advisory board for the Music Industries Association of Canada and was well-known in the industry.
In December 2007, Altman was diagnosed with lung cancer. She had part of her lung removed in February 2008 and took one month off work. She began chemotherapy two months later, followed by radiotherapy, which lasted until September. During this period, Altman worked reduced hours and occasionally had to take time off when the physical effects of the treatment were too much to handle.
Steve’s agreed to pay her full salary when she worked reduced hours during her treatment. Altman wanted to continue working because she felt loyal to the business and wanted to maintain a normal life.
However, on Oct. 15, 2008, Altman received a letter from a law firm representing Steve’s that accused her of being “remiss in your duties and obligations towards Steve’s Music in failing to work a minimum number of hours required by your employer.”
The letter outlined Altman’s tendency to arrive late and leave early or be absent for several days without providing prior notice. It warned that a failure to work regular hours would result in termination of her employment.
Altman was shocked, not just because of the nature of her relationship with Steve’s and its owners but because nobody had told her the company considered her remiss in fulfilling her duties or her job was in danger. Fearful about losing her job, she went to work the next day but began a medical leave the following day. The leave was originally for three months but was extended by her doctor for another three months in January 2009.
On April 1, 2009, Altman told her employer she would be able to come back to work on April 8. A few days later, she revised her return date to April 20 because she hurt her back.
Altman received a response from Steve’s lawyers shortly thereafter that referred to the previous letter. It stated her position had been abolished and “Steve’s Music has no obligation to reinstate you.” In addition, Steve’s was entitled to deduct amounts from her remaining pay to offset her absences, late arrivals and early departures from work, said the letter. As a result, Altman received no compensation upon termination.
Altman sued for wrongful dismissal, claiming pay in lieu of reasonable notice, statutory severance pay, damages for mental distress and punitive damages for bad faith. However, Steve’s argued the employment contract was frustrated because Altman couldn’t fulfill her job duties and wouldn’t be coming back to work. The company pointed to the fact Altman’s doctor indicated she was permanently disabled and was eligible for disability payments after cancer was found in her bones and brain in the fall of 2009.
Altman initially won a summary judgment that ordered Steve’s to pay her the statutory minimum eight weeks’ termination pay and $46,551.06 for proceeds from a deferred profit-sharing plan the company had contributed to on her behalf.
At trial, the court found Steve’s was not entitled to withhold any of Altman’s pay to cover for any overpayments due to her reduced hours and absences. Steve’s originally decided to pay her full salary and not deduct her vacation entitlement while she underwent treatment, so any overpayment was a company decision not an administrative error, said the court. As a result, Steve’s owed her any outstanding salary and bonus payments that were due in her final paycheque, as well as vacation pay.
Steve’s didn’t have to pay any statutory severance pay, as this was only required of employers with a payroll of $2.5 million or more under Ontario’s Employment Standards Act, 2000, Steve’s total payroll in Ontario was $2.1 million, said the court.
There was also no indication Altman was permanently disabled at the time of her termination. Her inability to work and application for long-term disability came months later and Altman had indicated she would return to work in April 2009. As a result, there was no frustration of the employment contract and Altman was entitled to 22 months’ pay in lieu of notice, said the court.
In addition, the court supported Altman’s claim for additional damages. The October 2008 warning letter was inappropriate given her service record and the fact she had no previous warning, said the court. The letter exacerbated the stress she was feeling from her cancer treatment and played a role in the medical leave she took two days later.
“Steve’s treatment of Ms. Altman was callous and insensitive. She deserved to be treated better than twice having a bailiff deliver a letter replete with mistruths from Steve’s lawyers — especially when Steve’s knew she was recovering from cancer treatment,” said the court. “These letters devastated Ms. Altman and caused her significant mental distress to the point of clinical depression.”
Steve’s was ordered to pay Altman $35,000 for breaching its duty to deal with her in good faith and fairness in the manner of dismissal. The court also felt an additional $20,000 in punitive damages was necessary to “express the court’s repugnance at the conduct” and avoid a repeat of the circumstances.
For more information see:
•Altman v. Steve’s Music Store Inc., 2011 CarswellOnt 1703 (Ont. S.C.J.).
Jeffrey R. Smith is the editor of Canadian Employment Law Today. For more information, visit employmentlawtoday.com.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.