Workplace investigations

Question: What are the minimum best practices and legal requirements for employers in conducting investigations into employee misconduct before issuing discipline?

Answer: The investigation of employee misconduct is often given short shrift in favour of a quick resolution. The loose ends and unexamined conclusions that sometimes result from this approach can come back to haunt an employer who leaps too quickly to judgment.

A non-existent or perfunctory investigation can lead to reinstatement of a dismissed employee or to an award of compensatory or punitive damages and may also have broader implications.

In a recent case, the Ontario Labour Relations Board relied primarily on a severely flawed investigation into an alleged incident of elder abuse to conclude the employer had an ulterior motive in terminating the employee. In Ontario Public Service Employees Union v. Heritage Heights Retirement Home Inc., the employer’s failure to provide the employee with particulars of the allegations and an opportunity to tell his side of the story, as well as its failure to follow its own policy allowing it to suspend an employee during an investigation into his conduct, undermined its case. Instead, it was inferred that it was the employee’s union organizing activities that led to the termination.

No single standard

Precisely what is required of an investigation in each case will be determined by a variety of factors. There is no single standard unless, as in the Heritage Heights case, the employer has agreed to or unilaterally implemented policies that govern all or particular allegations of misconduct. Many employers have established policies for dealing with sensitive areas such as substance abuse or harassment. In a unionized environment, disciplinary procedures are often dictated by a collective agreement and this may entitle an employee to certain protections during the investigation. A common one is the right of an accused employee to have a union steward present when being questioned.

Accordingly, the first step in any investigation should be to determine if there is an existing contractual obligation, procedure or policy governing the matter and, if so, what it dictates in terms of procedural steps. It should be followed carefully in relation to any suspected misconduct falling within its scope. Adjudicators have little sympathy for employers who have identified best practices in theory but fail to comply in practice.

Apart from this type of obligation, a proper and effective investigation is one that is impartial, fair and thorough, having regard to the context in which it is conducted.

The nature of alleged misconduct and the consequences to the employee of the contemplated discipline will affect the required scope of an investigation.

In cases of serious misconduct where an employee’s future employment or career is on the line, particular care may be required. This was noted in Interior Health Authority v. British Columbia Nurses’ Union, where the arbitrator stated:

“More than a minimum of due process is required when an employee’s security in that respect may squarely depend on the outcome of the investigation, and a heightened responsibility in such situations extends to the employer to ensure that a sufficient standard of procedural integrity is attained. To ignore this precondition to the assessment of discipline would undermine a substantive employee right, in some extreme circumstances justifying the voiding of the disciplinary measure… regardless of the merits of the employer’s case.”

Impartiality critical

Impartiality is an important feature of any investigation. This requirement is often honoured in the breach as investigators set out to gather evidence to substantiate allegations, rather than taking an objective approach to fact-finding. At its most extreme, the appearance of bias on the part of an investigator may lead to an allegation of bad faith in the manner of dismissal that may be compensable in damages.

The scope and existence of a duty of fairness in carrying out an investigation is more nebulous. The common law has never obligated a private employer making a decision on dismissal to provide a fair hearing to the employee or to otherwise take fairness into account: Leach v. Canadian Blood Services and van Woerkens v. Marriott Hotels of Canada Ltd. However, while no claim can be made by an employee the dismissal itself was unfair, unfairness in the process can also be indicative of bad faith.

In Clarke v. Syncrude, the dismissed employee claimed bad faith when he was denied access to witness statements given to the employer during the course of an investigation of sexual harassment allegations. The court rejected the claim, noting the employee had been advised of the substance of the complaints in sufficient detail to allow him to respond and was not entitled to the statements themselves.

Bad faith was found in Elgert v. Home Hardware Stores Limited, resulting in punitive damages of $75,000. The employer conduct that justified the award related, in large part, to the investigation into allegations of sexual harassment against the employee: inexperienced and biased investigators; predetermining the outcome of the investigation; providing no information on the allegations to the employee; refusing to hear his side of the story; and failing to consider the possibility the allegations were untrue.

The Alberta Court of Appeal in Elgert pointed out there was no specific standard of investigation employers must follow. What was required varied, depending on the facts surrounding the employer, its policies, sophistication, experience and the workplace. It also noted courts should not require such a high standard of investigation that it would have a chilling effect on employers’ manner of dealing with allegations of sexual harassment. That said, the employer’s investigation in the case before it fell well below an acceptable standard.

There was a similar result in Vernon v. British Columbia (Liquor Distribution Branch), where an employee was awarded substantial damages for wrongful dismissal after being terminated on the basis of a seriously flawed investigation. The employee began working for the defendant employer as a clerk at age 19. She was a senior store manager when she was terminated for cause some 30 years later, after the employer received a written complaint alleging a pattern of bullying, harassment and intimidation of subordinates.

In the ensuing wrongful dismissal action, the trial judge found that, while the employer did have an obligation to investigate the complaint, the investigation was adversarial and unfair and resulted in a factually inaccurate report. The employee was given no real opportunity to deal with the allegations in the complaint and no opportunity at all to deal with the allegations made in interviews of other employees.

A thorough and fair investigation would have revealed some room for improvement in the employee’s management techniques that could have been rectified with assistance from the employer. It would not have revealed grounds for summary dismissal. Accordingly, the employer was found liable for damages for wrongful dismissal and aggravated damages for conduct in the course of dismissal that was unfair and unduly insensitive, causing mental distress over and above the normal distress and hurt feelings resulting from the dismissal itself.

The cases suggest a minimal standard of fairness in the conduct of an investigation requires that an employee be given sufficient details of the allegations to know the case that will have to be met and that the employee’s own version of the circumstances be obtained. Somewhat surprisingly, it is not unusual for employers to hear an employee’s version of events for the first time at a hearing into the legitimacy of discipline or a dismissal. This not only presents an unfavourable impression to an adjudicator, it deprives the employer of the possibility of acquiring evidence to challenge the employee’s credibility at a hearing or to substantiate disciplinary action (or to reveal the lack of such evidence, thus reducing the possibility of an expensive mistake).

On a practical level, thoroughness requires that all those with information potentially related to the disciplinable event be interviewed; all steps in the investigation be carefully documented; and witness statements be written, reviewed and acknowledged in writing as accurate.

Where a proper investigation is conducted, the likelihood is much greater that any discipline will be appropriate to the circumstances and defensible if challenged.

For more information see:

• Heritage Heights Retirement Home Inc. v. OPSEU, 2013 CarswellOnt 16508 (Ont. L.R.B.).
• Interior Health Authority v. British Columbia Nurses’ Union (Sept. 18, 2013), T. Hodges — Arb. (B.C. Lab. Arb.).
• Leach v. Canadian Blood Services, 2001 CarswellAlta 173 (Alta. Q.B.).
• van Woerkens v. Marriott Hotels of Canada Ltd., 2009 CarswellBC 195 (B.C. S.C.).
• Clarke v. Syncrude Canada Ltd., 2013 CarswellAlta 913 (Alta. Q.B.).
• Elgert v. Home Hardware Stores Ltd., 2011 CarswellAlta 1263 (Alta. C.A.).
• Vernon v. British Columbia (Housing & Social Development, Liquor Distribution Branch), 2012 CarswellBC 239 (B.C. S.C.).