Sexual harassment outside the workplace

Despite lack of company policy, supervisor held responsible for after-hours, off-premises shenanigans

Can a supervisor who sexually harasses a subordinate employee outside the physical confines of the workplace be terminated for just cause?

The Ontario Court of Appeal recently decided in Simpson v. Consumers’ Association of Canada (2002), 13 C.C.E.L. (3d) 234 (Ont. C.A.), that after-hour interaction between a supervisor and a subordinate could constitute “the workplace” for purposes of employment-related sexual harassment. This ruling reinforces the court’s tough stance on sexual harassment and clarifies the “context of the work environment” as it relates to the law of wrongful dismissal.

David Simpson was the executive director of Consumers’ Association of Canada (CAC), a small non-profit consumer-based organization. Simpson was fired after four years of service following a number of sexual incidents involving female staff members.

The incidents included: offering to advance a young woman’s career in exchange for sex; tricking CAC’s in-house legal counsel into attending a strip club; having an affair with a secretary which resulted in her quitting; inviting employees to his cottage to discuss business and then going skinny-dipping with them; going into a hot-tub naked with his employees after a board meeting; and squeezing the buttocks of a female employee while at an annual general meeting.

Based on the allegations against Simpson, and without conducting an independent investigation, CAC terminated his employment for cause, relying on sexual harassment as the ground for termination. Simpson sued for wrongful dismissal.

The trial judge allowed Simpson’s claim against CAC. In deciding that CAC did not have sufficient grounds to terminate Simpson’s employment for cause, the trial judge placed significant weight on the fact that all of the sexual conduct complained of took place outside the workplace, that most of the sexual conduct was consensual, that CAC did not have a sexual harassment policy in place, and that CAC’s workplace culture tolerated the kind of sexual conduct in which Simpson had engaged.

The appeal court reversed the trial judge’s judgment in a strongly worded decision. In doing so, the court clarified the parameters of the “workplace,” considered the power imbalance between supervisors and subordinates, looked at whether sexual harassment policies were a precondition to just-cause terminations and discussed the circumstances in which independent investigations are not necessary.

Definition of workplace

In reviewing the allegations against Simpson, the appeal court found that, while each sexual incident occurred outside the physical confines of the office, the incidents occurred “in the context of the workplace.” The court came to that conclusion because the incidents occurred after conducting official business or while the employees were socializing following a job-related function. In none of these situations were female employees in a position to control the conduct of Simpson, who was, after all, their supervisor.

The court stated that: “It would be artificial and contrary to the purpose of controlling sexual harassment in the workplace to say that after-hour interaction between a supervisor and other employees cannot constitute the workplace for the purpose of the application of the law regarding employment-related sexual harassment.”

Consensual versus unwelcome

Unlike the trial judge, the appeal court drew a distinction between consensual and unwelcome sexual conduct. In considering the inherent power imbalance between a supervisor and a subordinate employee, the court concluded conduct that may appear to be consensual may nevertheless be unwelcome. The appeal court noted the potential adverse consequences employees face if they reject or rebuff their supervisor’s inappropriate sexual conduct.

No sexual harassment policy

The appeal court found that Simpson was the person who created the sexually charged atmosphere at CAC. Despite that fact, Simpson was not found to be accountable for his conduct by the trial judge because CAC did not have a sexual harassment policy in place. The appeal court held that, as executive director of CAC, Simpson could have implemented a company sexual harassment policy and he could not, therefore, benefit from the absence of such a policy.

Incidents amounted to just cause

The appeal court held that Simpson’s conduct amounted to a pattern of sexually harassing behaviour which justified the decision to terminate his employment. The court stated that Simpson had a responsibility to CAC and its employees to set the standard for workplace conduct and to protect its employees from the very conduct in which he engaged.

CAC did not conduct an independent investigation concerning the allegations of sexual misconduct levied against Simpson. Was Simpson entitled to an independent investigation before CAC terminated his employment? The appeal court didn’t think so. Simpson was given a fair opportunity to respond to the allegations. His failure to acknowledge, rather than to justify, his actions, coupled with the fact he was running a small office where he had lost the confidence of the female staff, were sufficient grounds for his immediate discharge.

The decision in Simpson is important for employers for a number of reasons: it opens the door to controlling the conduct of employees outside the physical confines of the workplace; it establishes that a sexual harassment policy is not always a necessary precondition to terminating an employee for cause when the employee engages in such harassment in the workplace; and it makes it clear that an employer is not obliged to conduct an independent investigation in all cases where sexual harassment is alleged.

On Aug. 13, 2002, the Supreme Court of Canada dismissed an application for leave to appeal that had been brought on behalf of Simpson.

Mark Mason is a lawyer practising employment law and litigation with the firm of Goodman and Carr LLP in Toronto.

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