In McCharles v Jaco Line Contractors Ltd., 2022 AHRC 115, an employee alleged that her employer discriminated against her on the basis of gender contrary to the Alberta Human Rights Act (AHRA) when it terminated her employment after she alleged that the sole director and shareholder of the employer (Owner) sexually harassed her. The Human Rights Tribunal of Alberta (Tribunal) found in favour of the employee and awarded general damages of $50,000 for injury to dignity and $13,150 for loss of income.

Background

The employee was hired as Director of Quality, Health, Safety and Equipment in September 2014 at a salary of $130,000 but was promised she would receive an increase if work went well. In January 2015, her salary was increased to $160,000.

The employee alleged the Owner called her an offensive name of a sexual nature in the workplace, booked a single hotel suite over her objections for the two of them to share on a work trip to Vancouver, and touched her inappropriately while she slept during the trip. The employee told the Owner she wanted to leave, but the Owner denied her request and the accusation that he touched her. The employee noted that the audit did not go well because of her mental state and issues with equipment provided by the client for the audit. The Owner ordered the employee to stop the audit because it was not going well but blamed this on her lack of ability. The Owner and the employee did not return directly to Alberta but drove through Washington, Idaho and Montana. Upon returning home, the employee took some scheduled time off.

When she returned to work, the employee was informed by the Owner’s brother that she was terminated. The employee asked the Owner why and the Owner wrote back, “I wish to exercise the 30 days’ notice clause in your contract.” Following her termination, the employee filed an assault complaint with the police. After terminating the employee, the employer discovered a wrongful payment she authorized for herself as a vacation payout. A few days later, a lawyer for the employer provided the employee with a letter stating that she had been terminated for cause, namely her false accusations against the Owner, poor performance, and theft of $9,360 in a wrongful vacation payout.

Tribunal’s Decision

The Tribunal noted that for the employee to satisfy the burden of proving a prima face case of discrimination she must prove, on a balance of probabilities, that:

• She had a protected characteristic;
• She suffered an adverse impact; and
• Her protected characteristic was a factor in the adverse impact.

The Tribunal found the employee did prove that she had a protected characteristic because she was a woman, and her gender is a protected characteristic under the AHRA. It then noted that sexual harassment is a form of gender discrimination as defined in the seminal the Supreme Court of Canada decision Janzen v. Platy Enterprises Ltd., [1989] 1 SCR 1252:

… sexual harassment in the workplace may be broadly defined as unwelcome conduct of a sexual nature that detrimentally affects the work environment or leads to adverse job-related consequences for the victims of the harassment. It is … an abuse of power. …Sexual harassment is a demeaning practice, one that constitutes a profound affront to the dignity of the employees forced to endure it. … [S]exual harassment in the workplace attacks the dignity and self-respect of the victim both as an employee and as a human being.

The Tribunal then stressed that for a finding of sexual harassment, the employee must demonstrate that she suffered an adverse impact, i.e., unwelcome conduct of a sexual nature that affected the environment or led to adverse job-related consequences.

While the Tribunal found the employee’s testimony “open, honest and credible, but not reliable on all of the details,” it found the Owner “did not provide credible testimony to support his position that no actual touching happened.”

For the following reasons, the Tribunal found on the balance of probabilities that the Owner touched the employee as alleged, and repeatedly used demeaning language to refer to her in the workplace:

…both parties admit that the complainant, an employee who reports to the Owner, who was in a position of power over her, was asked to sleep in an open-concept den without door or lock. There is credible evidence that there was a poisoned environment in the workplace, including referring to female employees as “gals” and the use of the Offensive Term specifically in reference to the complainant. The owner was made aware of the complainant’s allegations before the trip ended, and the accusations were reported to the Vancouver Police. And finally, evidence of the complete disregard by the respondent for taking appropriate investigative or other action when the complainant came forward to the Owner with her accusation.

The Tribunal found the test in Janzen was met because, “there was conduct that was unwelcome, of a sexual nature, that affected the work environment”; the employee, “was sexually harassed by the Owner at work in general, and physically in the hotel during the June trip.” Noting that the Owner’s “demeaning and cavalier” treatment of the employee was “worthy of strong sanction,” the Tribunal stated:

Women should not be forced to make a choice between career advancement and a safe workplace. Company owners especially owe a duty to their staff to create and maintain a safe work environment. The poisoned work environment where the complainant was exposed to demeaning names, the Owner’s gossip about wanting to sleep with her, and then finally being attacked physically is appalling. No person should have to work in these conditions.

Next, the Tribunal considered whether the fact that the employee “is a woman, and specifically a woman who had taken offence at having her breast and hip touched by the Owner, was a factor in the respondent’s decision to terminate her employment.” In that regard, the Tribunal made the following observations:

The decision of the respondent to increase her salary by $30,000 (a 19% increase) just a few months earlier and the testimony of the respondent that he wanted to take the complainant to the United States to introduce her to an executive in the United States suggests an organization satisfied with her performance. The change in opinion of her performance was abrupt and the timing coincided with the allegation of harassment. 

Although the Tribunal acknowledged that there may have been other causes for the employee’s termination (poor performance and theft of $9,360), it noted that the termination came “on the heels of” the employee’s accusation of sexual harassment and that her termination “was also due, at least in part, to a protected ground, that being her gender and the sexual harassment.” Notably, the Tribunal indicated that it would have been more appropriate for the Owner to “take the complainant’s concern seriously and launch an investigation in accordance with appropriate policy and procedures when the accusations were brought to his attention.”

Noting the profound distress the employee experienced as a result of the sexual harassment and that “unwanted touching of a woman’s breasts by her boss is far along the seriousness scale of possible sexual harassment,” the Tribunal awarded general damages of $50,000 for injury to dignity. This substantial award appears to have also been influenced by the absence of an investigation into the employee’s claim that she had been sexually harassed, and the fact that her claim was followed by “the extreme action of terminating employment.”  As well, the Tribunal awarded $13,150 for loss of income. 

Bottom Line for Employers

McCharles v Jaco Line Contractors puts employers on notice that termination of employment after an employee makes a claim of sexually harassment by a co-worker may be viewed as discrimination due to the protected ground of gender. Such discrimination may leave the employer vulnerable to substantial liability for injury to the employee’s dignity. When a sexual harassment claim is brought to an employer’s attention, the employer should take the claim seriously and launch an investigation in accordance with appropriate policies, procedures, and applicable law. Employers should remember that they owe a duty to their employees to create and maintain a safe work environment.