Ontario decision could expand employer liability for workplace harassment: experts

A recent Ontario arbitration decision could expand employer liability for workplace harassment, experts warn – even when management is unaware of the conduct.

The August 2025 award in Iron Forming Inc. v. Labourers International Union of North America, Local 183 found the employer liable for a “poisoned work environment” after a male supervisor subjected a male employee to repeated sexualized insults and comments.

As Tiffany Thomas, employment lawyer at Spring Law, explains, the arbitrator’s decision involved bypassing the traditional legal test for harassment, instead focusing on whether a poisoned work environment existed.

“Basically, by finding a poisoned work environment, he was able to effectively say, ‘I don't have to comment or even look into whether there was a report, or whether [the employer] should have known, or whether he was a directing mind,’” Thomas says.

“Because this poisoned work environment is found, they're liable under the Code. So he sort of really creatively … really skirted this question of harassment by instead finding a poisoned work environment.”

How the arbitrator’s reasoning changes liability

The case centred on a grievance brought by a unionized construction worker on a Toronto job site, who said his supervisor subjected him to repeated sexualized insults including being called “bitch” daily for several weeks, and some other inappropriate comments.

After the employee objected to the treatment he was laid off, eventually leading to a complaint by the union that the employer had failed to prevent a poisoned work environment.

Even though management may not have known about the harassment, and the perpetrator was a superior, the arbitrator found the harassment amounted to a poisoned work environment and awarded the employee $10,000.

Under Ontario’s Human Rights Code, employers are generally only liable for harassment by an employee if the harasser is a “directing mind” (such as a supervisor) or if the employer knew or ought to have known about the harassment and failed to act.

This framework has traditionally provided employers with some protection, provided they have appropriate policies, training, and reporting mechanisms in place.

However, the arbitrator in Iron Forming Inc. found a way around this limitation, finding that the mere fact that the harassment occurred over an extended period of time (six weeks) constituted a poisoned work environment, regardless of whether the respondent employee was a superior or if the employer should have reasonably known about it.

Shana French, employment lawyer with Littler, explains how the arbitrator’s reasoning potentially creates a new path for claimants to establish employer liability in harassment or discrimination, sidestepping traditional defences. She describes the arbitrator’s logic as “almost like, ‘I am tall, a tree is tall, therefore I am a tree.’”

The decision also raises questions about how future cases may be argued and whether this approach will be adopted by other arbitrators or courts, she says, "by finding basically that … the harassment constituted a poisoned work environment, which means, effectively, that the harassment constituted discrimination, and then, therefore the company's liable.”

Sexualized power and same-gender harassment

The case is also notable for its treatment of sexual harassment between men, and the use of sexualized insults such as “bitch.” The arbitrator recognized that sexual harassment is not limited to interactions between men and women, observing, “I do not dispute that ‘bitch’ is commonly used to demean and disparage women as belligerent, dominant and so forth. But applied to a man, it suggests just the opposite, i.e., subordination and weakness.”

This reflects a broader, more inclusive understanding of harassment that is increasingly relevant in today’s diverse workplaces, says Thomas.

“It's not just about gender or sexual orientation,” she says.

“It's about this balance of power between the parties. But I also think that something we don't always acknowledge... in the modern workplace, that there can be these sexual statements, sexual gestures, that really would amount to a manifestation of sexual harassment.”

For Thomas, this means employers must be vigilant about all forms of sexualized conduct, regardless of the genders involved. She also highlights the importance of understanding the power dynamics at play, rather than focusing solely on the identities of those involved.

Train to be tougher on ‘shop talk’ and ‘locker room banter’

French notes that the arbitrator’s approach reflects an evolving understanding of sexual harassment; for this reason, she says, HR should be ensuring that all employees, including managers and supervisors, are trained to recognize and address inappropriate conduct, even if it’s disguised as “shop talk” or “locker room banter.”

“When we're talking about how employees in the workplace understand what constitutes sexual harassment, they understand how broad that is, and it doesn't have to be what was intended by the person saying it,” French says.

“There's a subjective element to that experience by the person hearing it, and so managers and supervisors need to be trained to spot and crack down on sexual harassment of all types, and to not tolerate an overly sexualized workplace, which can make it difficult to then identify and prevent sexual harassment.”

Clear communication about policies essential for HR

Thomas adds that simply having policies on paper is not enough; they must be actively communicated and reinforced. She recommends “candid conversation” with employees as a starting point, but with certain obstacles in mind.

“I think one barrier … raised in this case was this notion that there's an okay amount of this ‘shop talk’ or ‘locker room talk’. It's still a huge problem in workplaces today,” says Thomas.

“So I think beyond this sort of candid conversation, I think in training, and in policies, the employers can reference the fact that this notion of sexual statements, sexual gestures or sexual characteristics will not be tolerated and can constitute sexual harassment.”

This diligence also means proactive communication with employees about where to access policies and what procedures will be taken in the event of harassment or discrimination.

As French puts it, it all starts with employers and HR having a realistic awareness of their workplaces and environments, and culture.

“Know what's happening in your workplace,” she says.

“Because ignorance or not understanding won't be an answer for an employer turning away from what they're seeing in the workplace or what they ought to step in on. Just because there isn't a formal complaint file, that won't be an answer for an employer if they're defending one of these claims.”