Ontario employers beware:  owners and managers of a defunct corporation may be personally liable under the Human Rights Code for damages awarded against the corporation.

We thank the law firm of Whitten & Lublin in Toronto for directing us to a significant new case in Ontario with wide implications for owners of companies.  Seems that over 9 years, a female employee at a commercial real estate agency was subjected to slurs and harassment, such as being called “crazy”, “psycho,” and “bitch,” and having false rumors spread that she was sexually involved with her boss. Efforts by the owners to resolve the situation were unsuccessful and the company fired her claiming that “she did not work well with others.”  She received a severance payment of $42,000, but still sued.

She was awarded $30,000 against the company, but by the time of the award the company had been long dead.  However, she appealed to the Ontario Divisional Court which directed the Human Rights Tribunal of Ontario to consider personal liability against the owners – which it did, and assessed them $22,500 of the $30,000 award because they did “not act effectively to stop their employees from harassing Ms. Farris and creating a poisoned work environment.”   The Court held that the purpose of the Human Rights Code is to give effective remedies.

Based upon this case, Whitten & Lublin provide employers with some good, sound advice, which we quote from their newsletter:

“Where collection against a corporate employer is not possible, the individual managers and owners have a greater personal exposure.  Although personal liability under the Human Rights Code has always been possible, the law is now strongly encouraging it where the corporate employer cannot satisfy a damages award.   The decision in this case is a reminder that businesses need to:

  • Ensure their officers and directors are appropriately insured;
  • Take complaints of harassment and poisoned work environments seriously, by effectively investigating and disciplining reported misconduct; and
  • Prevent problems before they start, with appropriate policies and training on harassment and discrimination, including how to handle complaints.”