Personal liability of managers for workplace harassment

By Marisa Victor and Lydia de Guzman

Canadian employers, like those in the United States, are required to deal effectively with sexual harassment in the workplace. But managers have usually been personally liable only in the worst cases.

A new decision may signal a change in this. The Human Rights Tribunal of Ontario decision in Farris v. Staubach Ontario Inc. shows you can’t hide behind a corporation as a shield against personal liability. Two manager-owners were held personally liable for failing to take action against harassment in the workplace.

Facts

Katherine Farris worked as a commercial real estate agent for Staubach Ontario Inc. for over nine years. She was regularly subjected to sexual comments in the workplace, including being called a “crazy bitch.” Coworkers also spread a rumor that she was having a sexual relationship with Harry McKeague, her manager. As a result, other coworkers presumed she was receiving favorable treatment and the harassment was perpetuated.

Farris initially raised concerns in 2001 to McKeague and Michel Leonard, the two manager-owners. In response, the company hired a psychologist with experience in workplace conflict issues to investigate and make recommendations. Codes of conduct were adopted, but the harassment persisted.

Farris became further isolated from her colleagues. Ultimately she was terminated on the basis that she didn’t work well with others.

First human rights tribunal decision

The tribunal found that Farris was subjected to a poisoned work environment and differential treatment based on sex. The tribunal found Staubach liable but not the individual manager-owners. She was awarded $30,000 for injury to dignity, feelings, and self-respect.

But Staubach had been dissolved in 2007 and was therefore unable to pay.

Judicial review

Farris sought judicial review of the decision. The Ontario Divisional Court decision highlighted two fundamental principles of human rights law:

1. A finding of corporate liability isn’t meant to act as a shield against finding individual liability; and
2. The focus of human rights legislation is to provide an effective remedy to the complainant.

The court found the tribunal’s decision inconsistent. While the tribunal found that the manager-owners had individually violated the code, it didn’t find McKeague and Leonard personally liable.

The court sent the case back to the tribunal for reconsideration. The tribunal was required to:

• Consider the need to provide an effective remedy; and
• Consider the use of the corporation as a shield against individual liability.

Second tribunal decision

Using the criteria set out by the court, the tribunal revised its decision. It found McKeague and Leonard personally liable for $22,500 of the $30,000 award.

Their personal liability was based on three key findings:

1. McKeague and Leonard were responsible for the creation of the poisoned work environment;
2. McKeague and Leonard failed to adequately recognize and respond to Farris’ concerns, which exacerbated the poisoned work environment; and
3. The poisoned work environment was a factor in McKeague’s and Leonard’s decision to terminate Farris.

Significance

Employers must keep in mind that the court and tribunal accepted that corporate liability shouldn’t be a shield for personal liability. The door has now been opened wide for further findings of personal liability of managers in appropriate cases. As such, individual managers have greater incentive than ever to take appropriate action to address human rights violations in the workplace.