Fired municipal CFO gets more than $600,000 for discrimination

Misconduct complaint alleging wrongdoing based in part on Black stereotypes: tribunal

Fired municipal CFO gets more than $600,000 for discrimination

“The test for discrimination is that [a protected characteristic] doesn't have to be the only reason or even the main reason for an action for it to be contrary to the BC Human Rights Code. If there's simply a taint of a discriminatory reason, then the entire action is discriminatory.”

So says Mike Hamata, partner at Roper Greyell in Vancouver, after a British Columbia municipality was ordered by a human rights tribunal to pay more than $600,000 to a former CFO because he was fired in part for being Black.

The large damage award is an example of how employers can face different liability in a human rights context versus a wrongful dismissal civil claim, says Hamata.

“In a wrongful dismissal claim, you're really only talking about how much notice the person ought to have been given and the maximum is 24 months,” he says. “You don't have the same cap for human rights damages and the tribunal will award back wages from the time of the adverse impact up to the time of decision.”

“That adds up to a really significant lost wages award as a result of increasing caseload and the delay in adjudicating cases,” adds Hamata.

Only Black employee

Victor Mema was hired by the City of Nanaimo, BC, as the Director of Finance in 2015. At the time of his hire, he was the only Black city employee.

In 2017, the city expanded Mema’s role and changed his title to Chief Financial Officer (CFO).

Mema had a corporate credit card called a P-card that was subject to a cardholder agreement that stipulated that it should not be used for personal purchases. However, it was regular practice for employees to use their P-cards for personal purchases, note them on their expenses, and repay the city.

Over the course of 2016 and 2017, Mema put a large number of personal purchases on his P-card. He initially repaid promptly, but in the summer of 2016 he started falling behind.

City accountants reminded him of his outstanding personal charges and Mema assured them he would send payment, but none was received while he continued to make more personal transactions.

In late 2016, Mema went on a medical leave and gave the city a post-dated cheque for the outstanding amount for personal purchases, but it bounced.

Finance staff brought the matter to the city’s Director of Human Resources, who informed the CAO. The CAO authorized a monthly “commuting allowance” of $300 for Mema.

However, by September, Mema’s outstanding P-card balance for personal purchases had increased. Given Mema’s position as CFO, the accounting department was concerned, although they didn’t speak to him about it.

On Oct. 6, the CAO met with Mema and told him that his card was being temporarily suspended. Mema was surprised, as he hadn’t been told to stop using the card for personal expenses.

Audit of personal transactions

The city hired an external auditor to review all personal transactions on P-cards.

On Jan. 2, 2018, Mema hired a deputy director of finance to replace one who had left. However, the new hire – who was Black – promptly heard a rumour circulating that Mema had hired him without a competitive process because they were friends. According to Mema, around this time he heard comments from staff that a Black person shouldn’t hire another Black person.

The auditor released three drafts of the audit report in January 2018 that indicated no fraud or crime and too many P-cards had been issued. City council resolved to direct the CAO to amend the P-card policy to clearly define prohibited uses and add disciplinary measures for non-compliance.

The final audit report was released on Feb. 21, finding that the city had a process for personal expenses on P-cards and therefore didn’t enforce its own policy, and there was no fraud or criminal activity. It also found that only two outlier employees didn’t reimburse the city within a reasonable time, with one being Mema. It recommended that the city clarify the P-card agreement as a solution.

Misconduct report

A staff member in the accounting department felt the audit report didn’t do enough and more was going on. She wanted consequences for Mema, so she filed a misconduct report against him alleging unauthorized or inappropriate use of city funds. She also alleged that Mema and the CAO used their “management override capabilities” to authorize payments and expenditures for each other.

On March 1, city council heard a presentation of the misconduct report and voted to suspend Mema with pay pending an investigation. Mema was not told what the misconduct report contained.

However, the city treated the P-card audit as an investigation and city council terminated Mema’s employment on May 11. The termination letter stated that he failed to challenge inappropriate practices with P-cards, approved expenditures for the CAO in excess of what council had approved, and engaged “in significant misconduct triggered by personal interest.”

After his dismissal, Mema was unable to find similar employment, as his “professional worth went from hundreds to zero.”

Mema filed a discrimination complaint alleging that the city treated his P-card use differently than that of other employees and the misconduct report “was informed by racial stereotypes.” As a result, the city’s reliance on it to suspend him and terminate his employment was discriminatory, he argued.

Protected characteristics

The tribunal found that Mema had the protected characteristics of race, colour, and place of origin under the BC Human Rights Act. There was also no dispute that his suspension and termination constituted an adverse impact, it said.

The tribunal noted that Mema made poor decisions regarding his use of the P-card, but the issue was whether his protected characteristics factored into the decisions to suspend and terminate his employment.

The tribunal found that the misconduct report did not solely arise from Mema’s P-card use. The audit report found no fraud or criminal activity, but the misconduct report arose from the suspicion of accounting staff that he was up to more, said the tribunal, noting the Mema had taken no steps to conceal his P-card use and made efforts to repay the amounts, so there was no reason to link his P-card use to “a broader risk of his engaging in some kind of financial malfeasance.”

The tribunal found that the timing of the misconduct report, months after Mema’s P-card had been cancelled and he had repaid the money led to the inference that it was “informed by the pernicious stereotypes” of Black men being less trustworthy.

There were two employees identified as outliers from the large group of people who made personal transactions on P-cards, but only one was singled out and terminated, says Hamata.

“Was the reason that Mema was singled out because he was Black and it was informed by systemic racism, or was he singled out because he was the CFO for reasons entirely unrelated to the fact that he is a Black man?” he says. “The tribunal found the former, the reason for this complaint was, subconsciously, in part because Mema was a Black man.”

Systemic racism

The rumours about the deputy director being hired because he was friends with Mema and they were both Black also showed the underlying systemic racism in the workplace, said the tribunal.

The tribunal determined that the misconduct report extrapolated Mema’s personal use of his P-card into “a propensity to misappropriate funds” that was infused with racial bias and stereotypes. The report was connected to Mema’s protected personal characteristics and, since the termination decision was based on that report, Mema’s dismissal was connected to his protected characteristics as well, the tribunal said.

The city was put in a difficult position because it was obligated to investigate a complaint about the CFO, says Hamata.

“Even if the complaint has a discriminatory aspect, they have to investigate the non-discriminatory aspects of that complaint,” he says. “The tribunal said the [misconduct report] ultimately poisoned whatever the city decided to do after it concluded its investigation - if that's the rule, that's a very troubling rule.”

The city was ordered to pay Mema $50,000 in damages for injury to dignity and $583,413.40 for lost wages during the three years since his dismissal – minus 25 per cent in recognition that Mema’s difficulties in finding re-employment did not arise solely from the discrimination.

“The only thing that I can see that the city could have done would have been to proactively eliminate the influence of systemic racism in the workplace, which is the thing that all employers should try to do,” says Hamata. “It’s a challenging goal that's going to take time and a lot of effort.”

“I question whether it's good policy to invalidate any investigation that is done, even if that investigation itself is free from discrimination but it occurs in a workplace where there's systemic racism or another kind of discrimination.”

See Mema v. City of Nanaimo (No. 2), 2023 BCHRT 91.

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