No Tort of Harassment in Ontario: Ontario Court of Appeal

The Ontario Court of Appeal has concluded that there is no the tort of harassment in Ontario.

By way of background, the employee was a junior RCMP constable when he began and had been promoted to sergeant. The relationship between management and the employee became tense when the employee ran for a nomination for a political party without reporting it to the RCMP, for making public statements contrary to RCMP’s procedures in respect of media appearances, and improper use of the corporate credit card. He claimed that as a result of his political affiliations, he was harassed and bullied. He commenced a claim against the RCMP and several managers for damages for mental distress caused by the bullying and harassment.

On February 28, 2017, the trial judge determined that the tort of harassment exists in Ontario.  The Court determined that there were four questions that needed to be addressed in order to establish the tort of harassment:

  1. Was the conduct of the defendants toward the plaintiff outrageous?
  2. Did the defendants intend to cause emotional distress or did they have a reckless disregard for causing Merrifield to suffer from emotional distress?
  3. Did Merrifield suffer from severe or extreme emotional distress?
  4. Was the outrageous conduct of the defendants the actual and proximate cause of the emotional distress?

The trial judge determined that each of the elements had been established by Merrifield. The trial judge determined that Merrifield suffered from depression and post-traumatic stress disorder as a result of the RCMP’s actions, and also concluded that the elements of a separate tort, intentional infliction of mental suffering, were also established, being conduct that is (1) flagrant and outrageous; (2) calculated to produce harm; and (3) results in a visible and provable illness. Merrifield was awarded $100,000 in general damages and $41,000 in special damages along with $825,000 for legal costs. As a result of the decision, a new tort of harassment was available for employees.

The RCMP appealed the decision to the Ontario Court of Appeal. The Court of Appeal rejected the establishment of a new tort of harassment in Ontario. The Court noted the importance of incremental changes to the common law consistent with the changing needs of society, and ultimately concluded that there was insufficient judicial support or legal precedent for the creation of new tort of harassment in Ontario. At the same time, the Court recognized that the well-established tort of intentional infliction of mental suffering was more difficult to establish requiring subjective intent to cause harm (opposed to reckless disregard) and a visible and provable illness (opposed to “extreme mental distress”). The Court of Appeal concluded that the tort of intentional infliction of mental suffering was sufficient to address claims of harassment and bullying in the workplace and rejected the need for a separate, new tort of harassment.

 

The Court of Appeal also rejected the trial judge’s conclusion that intentional infliction of mental suffering had been established. Importantly, the Court of Appeal rejected the finding that the initiation of a Code of Conduct investigation by the manager constituted flagrant and outrageous conduct. She made palpable and overriding errors in rendering her judgement.  As a result, the appeal was allowed and the trial judgment was set aside.

For employers, the Court of Appeal has narrowed the scope of potential claims about harassment in the workplace. The established tort of intentional infliction of mental suffering remains available to employees if there is outrageous and flagrant conduct in the workplace, which is calculated to produce harm and which results in a visible and provable illness. While employers still need to be cognizant of statutory obligations in respect of harassment and violence in the workplace, and must ensure that there is a safe workplace for its employees free from harassment, the expansion of a new common law tort of harassment was rejected by a majority of the Court of Appeal.

Nurse Reinstated after Theft of Narcotics from the Workplace

On January 10, 2019, Arbitrator Larry Steinberg released a decision reinstating a nurse who had violated numerous workplace policies, committed theft and falsified medical records.

The grievor worked on a full-time basis as a Registered Professional Nurse at a long-term care facility.  She had been employed with the employer for approximately 14 years. The grievor had a strong performance record, until she began to suffer from a kidney condition which necessitated the use of narcotics to control the pain, which led to an addiction to pain killers.  The grievor testified that she “diverted” narcotics from the employer’s premises in order to get through each day at work. Following an investigation, the employer terminated the grievor’s employment on the basis of falsification of records, breach of trust and gross misconduct. She had misappropriated narcotics for her own improper purpose over a two-year period, while at the same time falsifying medical records in conjunction with each theft.

The Union grieved the termination and asserted that the employer had discriminated against the grievor based on her addiction. The employer argued that the addiction was not a factor in the decision to terminate the grievor’s employment. After the termination, the grievor entered a 35-day treatment facility to address her addiction. She was successfully discharged and completed the program. She was also following an outpatient treatment plan. The College of Nurses of Ontario (CNO) had prohibited the grievor from the practice of nursing, but reinstated her after the completion of her treatment under various conditions. Medical evidence at the arbitration confirmed that the grievor had a “…significantly diminished capacity to resist urges to engage in behaviours that supported her addiction.” Some evidence also suggested that there was a risk of relapse.

The arbitrator ultimately concluded that there was a nexus between the termination and the grievor’s substance abuse disorder, and was therefore, prima facie discriminatory. The arbitrator stated that compulsive behaviour and impaired judgment are symptoms of the mental illness and substance abuse disorder. She testified and it was accepted by the arbitrator that “she could not stop”. The arbitrator rejected the argument that the trust required for the position had been irreparably harmed or that accommodation could not be provided.

The employer argued that the grievor could not be accommodated, given that her position required the trust of residents, their families, and other healthcare professionals, many of whom had been deceived by the grievor, and that having independent access to controlled drugs (including administering drugs to patients) was too great a risk. The employer argued that it had a legitimate business interest in protecting residents and providing quality care. The employer argued that the risk of relapse was too great a risk for the employer and its patients. The arbitrator disagreed and held that the employer had not accommodated the grievor to the point of undue hardship.

While we disagree that all of the actions by the grievor were explained by the addiction (for example, she could have reported her addiction immediately and taken any number of steps to ensure that patient care was not compromised as it was), the case is unique in two respects: (1) following the termination, the grievor immediately sought treatment for her addiction to address the substance dependency issues; and (2) the CNO as a professional regulatory body was actively involved in terms of ensuring that the grievor had recovered and was fit to practice. The CNO imposed significant conditions on her practice, but ultimately determined that she was fit to practice. The arbitrator put a significant weight in these two factors in support of reinstatement.

Severance Pay Threshold under the Employment Standards Act, 2000 Limited to Ontario Payroll

Under section 64 of the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”), employees who are terminated without cause are entitled severance pay. Under the ESA, an employer who has a payroll in excess of 2.5 million must pay additional severance pay to employees with more than five (5) years of service upon termination of employment. Generally speaking, this amounts to a week of salary up to a maximum of 26 weeks’ pay.

In a recent decision from the Ontario Labour Relations Board, Doug Hawkes v. Max Aicher (North America) Limited (“MANA”) raised the question of whether the 2.5 million payroll threshold should include Ontario payroll only or alternatively, should it include international payroll.  MANA was a steel company incorporated in the province of Ontario and was a wholly owned subsidiary of a German company headquartered in Bavaria (“MAG”). The employee had been working for the company (or its predecessors) since 1977. Its payroll in Ontario was below 2.5 million.

The argument made by the employee was that the total payroll of MANA and international payroll including the payroll of MAG should be used in order to determine whether the 2.5 million payroll threshold was met.

Prior to the release of a decision the Ontario Court in 2014, Paquette v. Quadraspec Inc., the calculation was limited to Ontario payroll and there were many cases supporting the position that only Ontario payroll ought to be included since the reach of the ESA is limited to Ontario as provincial legislation. In Paquette, the Court ruled that the employer’s national payroll should be included because the ESA did not limit the calculation specifically to Ontario payroll. It did not consider international payroll.  MANA argued that Paquette was wrongly decided. MANA relied on previous cases that illustrated that the payroll calculation was limited to Ontario.

The Board distinguished Paquette, and indicated that the decision did not consider section 3(1) which provides that the employment standards only applies to employers and employees for work performed in Ontario, or if it is performed outside of Ontario, is a continuation of work performed in Ontario. The Board concluded that the ESA is directed at Ontario-based employment, and that it would be inconsistent with the scope of the legislation to include payroll from outside of Ontario. The Board stated that it agreed with the pre-Paquette line of reasoning and refused to follow Paquette because it did not consider the interrelationship between section 3(1) and the severance pay provisions. The Board stated that “it is only Ontario-based employment and operations that is captured by section 3 and therefore, section 64 of the Act.”  As a result, only MANA’s Ontario payroll could be considered in the 2.5 million payroll calculation.

The case is good news for employers who may have businesses located across the country or who are global. A more narrow view of the 2.5 million threshold limited to Ontario payroll is logical given the scope and jurisdiction of the ESA. Having said this, due to the conflicting case law (between the Ontario Court and the Ontario Labour Relations Board), there is a possibility of judicial review of the decision. We will continue to monitor the case and provide updates on any important decision.

An Employer’s Duty to Accommodate Drug Use in a Safety-Sensitive Position

A recent arbitration decision concerning an employer’s duty to accommodate a medical cannabis user rendered in Newfoundland has recently been judicially reviewed and upheld. The arbitration decision, Lower Churchill Transmission Construction Employers’ Assn. Inc. and Valard Construction LP v. International Brotherhood of Electrical Workers, Local 1620 (Tizzard), 2018 CarswellNfld 198, 136 C.L.A.S. 26, dealt with a grievor who had applied for two positions with the employer and was denied. The positions required that the grievor undertake a drug test as the positions were safety-sensitive positions.

At the time of taking the drug tests the grievor was being prescribed medical marijuana on account of his osteoarthritis and Crohn’s Disease. He would take the medical marijuana in the evening after work; he would use a vaporizer to consume approximately 1.5 grams per day. The dose of THC content was approximately 22%, but it did not specify the dose or frequency of use. When taking the test, the grievor informed the employer that he used medical marijuana. The employer decided not to hire the grievor on the basis of safety concerns and particularly, that the grievor’s cannabis use would impair his ability to perform those jobs safely.

The employer argued that the grievor could not be accommodated due to the risk of possible impairment in a safety-sensitive position. In his decision, the Arbitrator determined that once a risk of possible impairment had been established, the employer was entitled to demand medical information which demonstrated to the employer’s reasonable satisfaction that the grievor could perform the job safely. In this case, the medical evidence confirmed that residual impairment would continue for at least 24 hours after the use of the medical marijuana and as result, there would be a safety hazard if the employee were provided either of the positions. The Arbitrator determined that undue hardship existed because of the safety risk and because it was not possible to determine the level of impairment of the grievor.

On judicial review, the Court accepted the Arbitrator’s decision entitling an employer to require further medical information to its reasonable satisfaction to ensure that the Grievor could perform the job safely, placing the onus on the grievor to establish to the satisfaction of the employer that he could safely perform the job.  The decision is a positive one for employers who have many safety-sensitive positions. However, it is important to note that while an employer may decide not to employ an individual who is required to take impairing medication in a safety-sensitive position; it does not alleviate employers from their initial requirement to determine whether or not they are able to accommodate the employee. If you have any questions regarding your duties to accommodate employees with disabilities, please do not hesitate to contact us.

Ontario Court of Appeal rules that Uber Arbitration Clause is Unconscionable

In the recent decision, Heller v. Uber Technologies Inc., [2019] O.J. No. 1, the Court of Appeal decided on whether an arbitration clause in the services agreement provided to Uber drivers is enforceable under Ontario law. The claim in Heller is a proposed class action against Uber alleging that Uber drivers should be categorized as employees and as such, governed by the provisions of the Employment Standards Act, 2000 (the “ESA”). Uber successfully advanced a motion to stay the claim on basis of an arbitration clause, which required any disputes to be resolved by arbitration in the Netherlands.

Uber requires that drivers accept a Services Agreement before being able to offer the service, which contains an “arbitration clause”. Effectively, the clause required that any driver that had any dispute or conflict with the agreement must submit the matter to arbitration in the Netherlands. In doing so, a driver would be required to pay approximately $14,500.00 US dollars in order to participate in the arbitration. The driver argued that the arbitration clause was invalid because it amounted to contracting out of the ESA which is prohibited under section 5(1).

For the purposes of this decision, the Court assumed that the drivers were employees. On this basis, the Court concluded that requiring an employee to go to arbitration creates a contracting out of the provisions of the ESA, and in particular, section 96 which provides an employee with a statutory right to file a complaint with the Ministry of Labour if an “employee” believes that the Act is being contravened. As a result, the Court determined that the paragraph was void as it was contrary to section 5(1) of the ESA.

The Court also considered whether the clause was unconscionable at common law and therefore, void. Typically, the Court will set aside a contractual provision on the basis of unconscionability if the provision is grossly unfair, imposed without the benefit of legal advice, in the context of an overwhelming imbalance of power and where the other party is particularly vulnerable. In this case, the arbitration clause was unconscionable for the following reasons:

  1. It required an individual with a potentially small claim to incur significant costs of arbitrating the claim under the applicable agreement;
  1. Uber was much better positioned to incur the costs associated with the arbitration procedure;
  1. The clause required that each claimant individually arbitrate the claim in Uber’s home jurisdiction completely unconnected to where the drivers live and perform their duties;
  1. It required that the rights of the drivers be determined in accordance with the laws of the Netherlands, not the laws of Ontario, and the drivers were given no information as to what the laws of the Netherlands were;
  1. There was no evidence that the drivers had any legal advice prior to entering into the services agreement, nor is it realistic to expect that they would have, and there is no reasonable prospect of being able to negotiate the terms of a services agreement;
  1. There is a significant inequality of bargaining power; and
  1. The conclusion could be drawn that Uber chose the arbitration clause in order to favour itself and take advantage of its drivers who were clearly vulnerable to the market strength of Uber. They did so knowingly and intentionally.

The Courts have held that there is a power imbalance between employers and employees generally and therefore, employment contracts can be challenged on the basis of unconscionability. Employers often include arbitration clauses in employment contracts as a means of providing a more expedient, cost-effective manner in which to resolve disputes with employees. As can be observed by the reasons provided by the Court, Uber was in a unique position of power vis-à-vis its drivers and failed to provide them with any chance to obtain legal advice. Employers can mitigate the risks of such an unconscionability challenge by taking some simple steps such as providing employees with a reasonable amount of time to consider a contract and allowing an employee the opportunity to seek independent legal advice before the contract is accepted.

Employee not Entitled to Rescind Notice of Resignation after Acceptance by Employer

In English v. Manulife Financial Corporation, the Ontario Court of Appeal considered whether an employee who has resigned from her employment by written notice was entitled to rescind the notice of resignation after it had been accepted by the employer.

The employee worked for Manulife (previously Standard Life) for 10 years. She was a Senior Customer Relationship Manager. She was 66 years of age. On September 22, 2016, she met with her supervisor and advised him that she would be retiring on December 31, 2016. She provided written notice of resignation to Manulife confirming her intention to retire on December 31, 2016.

Approximately one month later, the employee advised Manulife that she wanted to rescind her notice of resignation. By this time, Manulife had begun to make plans to manage her retirement including the assignment of files to other managers. Manulife advised her that they would respect her decision to resign on December 31, 2016, and would not allow her to rescind the notice of resignation.

The Court found that the employee clearly and unequivocally resigned from her employment. She was not under any duress and did so of her own volition. The issue is whether she could resile from that resignation after it has been accepted by the employer.   Generally speaking, an employee can resile from a notice of resignation before it is accepted by the employer, provided that the employer has not relied on the resignation to its detriment (for example, hired a replacement).  In this case, the employee was not entitled to rescind her notice of resignation because it had been accepted. The Court found that the employee was not induced in any way, shape or form to tender her notice of resignation and that she did so willingly and freely. It was accepted by the employer.  The Court concluded that there was a binding contract between the parties which required her resignation.

If an employee provides notice of resignation (verbally or in writing), employers should provide written acknowledgement and acceptance of the resignation given the legal significance attached to the employer’s acceptance of the resignation.  In this case, it is notable that there was not any dispute about the resignation or acceptance by the employer.

Employee did not fail to Mitigate Despite Retirement and Rejection of Reasonable job Offer

In Dussault v. Imperial Oil Ltd., the Ontario Superior Court of Justice held that two employees who had worked for Imperial for more than 39 years and 36 years respectively were entitled to 26 months’ notice of termination. Both employees participated in a defined benefit pension plan.

The employees, who both worked in Imperial’s retail store division, were advised in 2015 of a possibility of a sale to Mac’s Convenience. Both employees were offered positions with Mac’s. The offers of employment from Mac’s guaranteed the same salary for the employees for 18 months in comparable management positions, with participation in a defined contribution plan and group benefits. The benefits were considered to be less favourable than the benefits enjoyed with Imperial. Imperial also offered to pay the employees a gratuitous lump sum payment to compensate the employees for these reduced benefits but refused to disclose the exact amount of the payment until after they accepted employment with Mac’s.  After 18 months, their salaries would likely be reduced. Both employees refused to accept the offers of employment from Mac’s considering the terms of employment to be less favourable. Both employees elected to retire and started collecting from pension benefits. Unsurprisingly, neither had found new employment since their terminations from Imperial.

Imperial argued that the employees should have accepted the offers of employment from Mac’s. The duty to mitigate, according to the Supreme Court of Canada, requires an employee to make reasonable efforts to find alternative sources of income that flow from the loss of employment. The law only requires employees to search for comparable employment. The law also places the onus on the employer to prove that reasonable steps were not taken by the employee. The Court found that there were “sufficient differences” to make the rejection of the offers reasonable. The Court found that the benefits and salary were less favourable. On benefits, there seemed to be consensus that the benefits offered by Mac’s were less favourable, but Imperial offered to pay a lump sum to offset that difference. Imperial did not disclose the amount of the lump sum payment, and this was a problem for the Court. The salary was viewed as the Court as less favourable, even though it was to be the exact same salary for 18 months. Mac’s would not tell the employees what their salary would be after 18 months, and the releases would have precluded a lawsuit against Imperial for any differences. The Court said that this factor alone rendered the offer as not comparable. Respectfully, the decision is flawed and is inconsistent with principles of mitigation that have been recognized by the Supreme Court of Canada. The result is that an employee must be offered a guaranteed position, guaranteed term and guaranteed salary for the duration of an entire notice period, in order to be “comparable”, according to the Court.

Employees Entitled to Damages for Pension Losses during Notice Period

Following the initial decision in February 2018, the parties were unable to resolve the issue of damages during the 26-month notice period surrounding the employees’ defined benefit pension plan. In particular, the Court considered whether the employees were entitled to contributions that Imperial would have made during the 26-months’ notice and whether the damages should be reduced for the increase in the commuted value of their pension.

Generally speaking, the basic principle is that a terminated employee is entitled to compensation for all losses arising from the failure to provide proper notice of termination. This includes compensation for all salary and benefits that the employees would have received had they received notice of termination. Notably, following the terminations, both employees chose to retire and started receiving pension benefits. Imperial argued, with the support of an expert, that the commuted value of the pensions was actually higher than it would have been had they received 26 months of notice. Imperial argued that damages ought to be reduced as a result. The Court noted that the only reason the value of the pension was higher was because the employees started receiving payments earlier, and therefore, refused to offset the differences from damages.

At the same time, the Court rejected the employees’ demand for contributions that would have been made by Imperial. The employees suffered no pension loss. Indeed, the employees may have been in a better position financially as it pertained to the pension. The Court rejected the claim for damages equivalent to contributions that Imperial would have made during the notice period.

 

 

 

 

 

Claim for Sexual Assault and Harassment Statute Barred

As of January 1, 2018, important policy changes were implemented to workers’ compensation in Ontario which provided for entitlements relating to claims for workplace harassment, including sexual harassment.  As a result, employees with workers’ compensation coverage can pursue benefits arising from mental stress that is caused by workplace harassment. At the same time, employees who have access to these benefits cannot sue their employer (or executives of the employer) for the same injuries suffered in the course of employment.  This has been described as the “historic trade off” whereby employees get benefits for workplace injuries under a “no fault” system in exchange for giving up the right to sue employers for negligence that may have caused those injuries. More specifically, section 26 of the Workplace Safety and Insurance Act, 1997 (the “Act”) provides that entitlement to benefits arising from a workplace accident (which now includes workplace harassment) is in lieu of any right of action that an employee may otherwise have against the employer or executives of the employer.

Recently, in Decision 3096/17, the Workplace Safety and Insurance Appeals Tribunal (the “Tribunal”), considered whether a civil claim for sexual harassment could proceed against the employer and owner of the business given section 21 of the Act. The worker started a civil claim against the employer, owner and supervisor for damages she attributed to sexual harassment and sexual assaults by her supervisor.  The supervisor was charged criminally and ultimately pleaded to criminal charges. The decision did not impact the civil claims against the supervisor. She also claimed that the employer and owner were negligent by failing to have appropriate policies and procedures in place with respect to the conduct of employees in the workplace and by failing to provide her with a safe working environment.  The employer and owner brought an application to the Tribunal asserting that her claims were statute barred.

The Tribunal confirmed that the employee’s right of action was taken away and that she could not proceed against the employer and owner with her civil claim. The employee argued, unsuccessfully that the allegations of sexual harassment and assault did not fall within the meaning of “accident” as required under the Act, and that her claims ought to proceed. The Tribunal found that the case law clearly established that sexual assault against a worker in the course of employment is considered to be an accident within the meaning of the Act, and therefore, her claims were statute barred. The Tribunal recognized that the bar to actions against employers is a necessary and integral component of workers’ compensation, which has been recognized by the Supreme Court of Canada.

For employers, it is important to recognize that workers’ compensation claims can now include claims related to workplace harassment. Important policy changes were made to chronic mental stress and traumatic mental stress policies which specifically define workplace harassment and set out the conditions that must be satisfied in order for an employee to be entitled to benefits, including appropriate medical diagnosis and a strong causal link between injuries suffered and workplace harassment. An employee who has workers’ compensation benefits is not entitled to pursue a civil claim against the employer in respect of the same allegations of workplace harassment. Employers with workers’ compensation coverage for employees should be vigilant in ensuring that the statutory bar is applied when employees seek to pursue civil claims based on allegations of workplace harassment.

Bill C-86 Receives Royal Assent – Changes Canada Labour Code and New Pay Equity Act

Bill C-86 Receives Royal Assent – Changes Canada Labour Code and New Pay Equity Act

On December 13, 2018, Bill C-86 received Royal Assent resulting in many changes to the Canada Labour Code and creation of a new Pay Equity Act.  Many of the changes will be implemented on September 1, 2019. Others changes will be in force at a date to be determined by Order in Council (likely sometime in 2019).

Canada Labour Code

Bill C-86 makes sweeping changes to the Canada Labour Code including amendments related to rest periods, meal breaks, scheduling, increased vacation, added leaves, increased notice upon termination and changes to the unjust dismissal provisions, just to name a few. For example, an employer will be required to provide the employee’s work schedule 96 hours before the start of the first shift under the schedule, failing which an employee will be entitled to refuse to work any shift during the first 96 hour period following the release of the schedule. There are several new leaves such as Leave for Victims of Family Violence (up to 5 days of paid leave), Leave for Court or Jury Duty, Medical Leave (up to 17 weeks of absence for personal illness) and Personal Leave (up to 5 days, with 3 days being paid days) for illness or other urgent matters involving family members.

Pay Equity Act

Some of the highlights of the new legislation include the requirement for employers to create a “pay equity plan” where employers are expected to identify, evaluate and eliminate differences in compensation between female and male jobs or equal or proportionate value. The Act also establishes a Pay Equity Commissioner who will have the power to enforce the Act and make orders in respect of it.  The Act will come into force at a date still to be determined.

If you are a federally regulated employer, these changes are significant. For more information about all of the changes, feel free to contact us.

 

Sexual Harassment in the Workplace and Employment Releases in Ontario

A recent case from the Ontario Superior Court of Justice, Watson v. Governing Council of the Salvation Army of Canada, will significantly alter the way settlements and releases ought to be structured involving employees who have experienced sexual harassment in the workplace.

The employee worked for the Salvation Army as a manager from April 2011 to August 2011.  In exchange for a severance payment in the amount of $10,000, she signed a Memorandum of Settlement and Release, which provided for the full and final settlement of all claims arising out of her employment. The agreement also included a typical clause whereby the employee agreed to “…release any and all claims I have or may have against The Salvation Army, past, present or future, known or unknown, which arise out of or which are in any way related to or connected with my employment or the ending of my employment.” It also provided that a release of any claims against anyone or any organization in any way connected with the employer which arose out of or in any way were related to her employment or the ending of her employment. Finally, the agreement confirmed that the employee had the opportunity to obtain legal advice and that she fully understood the agreement.

Several years later, in 2015, Ms. Watson made a complaint of sexual harassment during her employment against her supervisor at the time. Other employees had also complained. The matter was investigated by a third party and ultimately, the employer terminated the employment of the supervisor.  Despite the Memorandum of Settlement and Release, and receipt of a $10,000 payment from the employer, the employee elected to commence a claim on August 16, 2016 seeking damages for negligence, intentional infliction of emotional harm and breach of fiduciary duty from the employer.

The employer brought a motion to have the matter dismissed on the basis of the Memorandum of Settlement and Release.  After reviewing the release, Gordon J. determined that the release did not include a claim for sexual harassment, regardless of the phrase “which arise out of or which are in any way connected to my employment”. Sexual harassment, intimidation and other improper conduct were not connected to employment, according the Court.  The Court concluded that the settlement pertained to severance only, and that specific language addressing sexual harassment was necessary in the Release to properly bar the employee’s claims.

The decision raises concerns about the finality and certainty of settlement payments made by employers in exchange for a full and final release. While it will not be onerous for employers to add specific reference to “sexual harassment” into its releases, it is concerning that the Court appears to have ignored the principles of finality and certainty. There does not appear to be any allegation in this case that the employee was forced to accept the settlement payment or that she did not understand the nature of the settlement. To the contrary, it confirms that she had the opportunity to seek legal advice about it and that she understood its terms. However, in light of this decision, employers should take care to address issues of sexual harassment specifically in releases to ensure that certainty and finality is achieved by settlements that are reached with former employees.