Deconstructing a dismissal: Where Home Depot went wrong

Just cause is a pretty high hurdle for employers to leap. As one Ontario court judge so aptly put it, just cause is the "capital punishment" of employment law. As a result, employers have to be very careful when relying on just cause to terminate an employee. A recent case involving a Toronto-area Home Depot store provides a textbook lesson for employers in how not to fire a worker for cause

Just cause is a pretty high hurdle for employers to clear. After all, as Justice Randall Echlin of the Ontario Superior Court of Justice so rightly put it, just cause is the “capital punishment of employment law.”

In dismissing a worker for cause, an employer is able to wash its hands of the situation, without giving the worker any notice or any compensation. As a result, a court won’t hesitate to hold the employer’s feet to the fire and make the employer prove it had a legitimate reason for terminating the employment relationship in such a manner.

An Ontario case involving Home Depot provides a textbook example of how not to fire a worker for just cause.

The case: Tong v. Home Depot Canada Inc.

Peter Tong, a 54-year-old sales associate, had enjoyed a relatively event-free working environment at a Toronto-area Home Depot store. For nearly five years, he went to work, did his job and went home. There was nothing apparent in his employment record to indicate any kind of problem.

But that changed in May 2003 when Bill MacDonald, a floor manager, was hired at the Leaside location where Tong worked. Within 24 hours of starting, MacDonald came to the conclusion Tong was taking longer breaks than he was allowed.

Shortly after coming to that conclusion, he shared it with Sandra Galucci, the store’s manager. He said: “Sandra, you’ll never believe it. This is what’s going on in your store. I can’t believe it.”

Based on this information, Galucci told MacDonald to keep an eye on Tong.

Under surveillance

During May 2003, MacDonald kept Tong under almost constant surveillance. He followed him into the lunchroom and made notes on his clipboard.

He kept track of when Tong left the floor, when he ate lunch and when he punched in and out of the computerized time clock system. MacDonald gave the information he collected to Galucci.

Based on the information from MacDonald, and reviews of the computerized summary of the time clock and Tong’s personnel file, Galucci consulted with human resources about the situation. A decision was made to fire Tong on June 5, 2003, for just cause, without notice or pay in lieu of notice. Tong filed an action for wrongful dismissal.

A ‘fatally flawed’ investigation

Justice Randall Echlin of the Ontario Superior Court of Justice said the burden of proof in proving just cause clearly lies with the employer.

While MacDonald’s heart was in the right place — he honestly believed he was acting in the best interests of his employer — his method was problematic.

“Regrettably, it appears that Mr. MacDonald, untrained in investigation methods, began his examination of Mr. Tong’s actions and movements with the firm belief that the plaintiff was a wrongdoer,” said Justice Echlin.

The court said MacDonald’s investigation was “fatally flawed.” MacDonald destroyed his original notes and presented only a summary prepared just prior to his meeting with Galucci when he came to the conclusion Tong was guilty of time fraud.

He completed a one-page “incident witness statement” at Galucci’s request on June 5, 2003. It contained inaccurate exaggerations of the evidence, the court said. In his written statement, MacDonald wrote that time theft happened “every day” that he watched Tong.

But in his evidence, he admitted that problems did not occur “every day. There were days not included in his written report during which Tong’s lunch hours were not an issue and “not noteworthy.”

During cross-examination, MacDonald admitted that his report contained exaggerated conclusions.

Evidence ‘too weak’

MacDonald failed to get corroborating evidence from other employees, and did not interview a single employee about Tong. He didn’t even speak to Tong’s supervisor.

At no time was Tong given an opportunity to respond to MacDonald’s concerns about time fraud.

“He never sought feedback, comments or an explanation from the alleged dishonest perpetrator,” said Justice Echlin.

MacDonald said concerns about Tong’s alleged time theft were widely held within the paint department. But when pressed at trial, he could only come up with two employees who had that view, and both of them had previously had a beef with Tong.

“Regrettably, Mr. MacDonald appeared to have become consumed with building a case against Mr. Tong,” said Justice Echlin.

The court found it notable that Tong’s immediate supervisor was not called as a witness during the trial, nor was there any evidence of complaints from his boss. Home Depot did not produce an employee file on Tong during the trial either. The court could only take one view of this lack of information — that Tong’s boss had nothing to say to support the termination nor did the employee file, said Justice Echlin.

“The evidence led at trial is too weak to sustain a finding of just cause,” the court said.

A ‘clear standard’

Justice Echlin said there is a “clear standard” the law expects of employers who choose to summarily dismiss employees for alleged workplace wrongdoings.

There were no previous complaints about Tong regarding the length of his lunch breaks, his arrival and departure times, his morning and afternoon breaks or how he punched into the timeclock, the court said.

“Mr. Tong was given no warnings,” said Justice Echlin. “The option of discipline short of termination was not utilized by Home Depot.”

Since there had been no prior record of similar conduct, Justice Echlin said a suspension or punishment short of dismissal might have been more appropriate if a proper investigation had been conducted and clear evidence of wrongdoing by Tong had been found.

An ‘unwise’ move by Home Depot

After being fired, it took Tong more than five months to find another job. He eventually accepted a position with The Building Box, one of Home Depot’s competitors, at a lower rate of pay.

But Home Depot took the position that Tong’s efforts to find another job were not sufficient and should be taken into account when awarding damages. Home Depot didn’t drop that position until the last day of the trial.

Justice Echlin said Tong’s job search was reasonable and he acted properly in attempting to find alternate employment. The court also offered a bit of advice to employers.

“It is generally unwise for employers to persist in challenging a plaintiff’s job search efforts where no concrete evidence exists,” said Justice Echlin. “This is particularly the case where serious allegations of wrongdoing are combined with a failure by the employer to provide job search assistance, relocation counselling or any other support towards the securing of alternate employment.”

The court awarded Tong $6,652.71, representing three months’ notice. It also awarded costs to Tong in the amount of $12,000.

For more information see:

Tong v. Home Depot Canada Inc., 2004 CarswellOnt 1399 (Ont. S.C.J.)



The right call: Not a case for Wallace damages

Justice Randall Echlin of the Ontario Superior Court of Justice was clearly of the opinion that Home Depot bungled the termination of Peter Tong’s employment.

But his decision not to extend the notice period by awarding Wallace damages gives employers a perfect example of when they should not be awarded.

Wallace damages are designed to punish employers who act in bad faith in the way they handle the dismissal. They are not meant to punish employers who simply make a bad decision and improperly terminate an employment relationship.

The simple message: If an employer terminates an employment relationship without cause, it will undoubtedly be on the hook for reasonable notice. But it won’t be punished with extra damages unless it acts in a bad-faith manner in the way it handles the dismissal.

In Tong v. Home Depot Canada Inc., Home Depot made the wrong decision in relying on the flawed surveillance tactics of a floor manager to dismiss Peter Tong for cause.

But it didn’t handle the termination in a manner that would attract special damages above and beyond reasonable notice.

Home Depot didn’t broadcast the results of the surveillance to other employees. It didn’t refuse to provide a letter of recommendation (though Tong never asked for one).

Home Depot took care not to create a lot of attention when Tong was let go. A company representative walked Tong to his locker but did not escort him from the store. He simply watched from afar as Tong exited the Leaside Home Depot for the last time.

“Far too often, employers treat dismissed employees as quasi-criminals and have been known to goose-step them off the premises and immediately change the locks,” said Justice Echlin. “This did not happen here. The Home Depot took care to treat Mr. Tong with dignity.”

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