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“Malicious” Employer Conduct leads to Significant Aggravated and Punitive Damages Award

MT+Co. Workplace Law Group - March 4, 2021 under Business Advisory

Aggravated and punitive damages are reserved by the courts for exceptional circumstances. In December 2020, the BC Supreme Court found that twenty-six-year-old Carly Fobert’s experience when she was dismissed from her employment at MCRCI Medicinal Cannabis Resource Centre Inc. (“MCRCI”) was one such exceptional circumstance. Ms. Fobert’s case (full decision here) also tackles other important employment law issues, including whether employees can make claims in multiple forums, and how employers may be held liable when multiple entities work closely together.

What happened?

In December 2017, Carly Fobert signed an employment agreement with MCRCI. In April 2019, MCRCI underwent a corporate restructuring and Global Health Clinics Ltd. (“Global Health”) assumed ownership. A month later, Ms. Fobert and several other employees were told that MCRCI was terminating their employment without cause. Ms. Fobert was offered two weeks’ pay in lieu of notice, which was short of the 30-days’ notice or pay in lieu of notice she was entitled to under her employment agreement. She immediately brought this to her employer’s attention and was told that the legal team would review her case.

Ms. Fobert was then invited to a meeting to finalize her termination. She was told by Global Health representative, Mr. Liu, that they were closing out the contract with “no severance and whatnot”.[1] Mr. Liu also accused her of being involved in misplacing $90,000 and threatened her, saying the company had:

“taken a hard-nosed approach of just saying we don’t care anymore. Like, we’re willing to go to court, willing to sue, and we have endless resources to do so.” [2]

When Ms. Fobert tried to discuss proper severance, Mr. Liu offered her $500 and told her that:

“…any other person I’ve had the conversation with, I just told to f*** off. So you can go through the employment board … we’re not worried about that. So you can – or you can take the 500 and sign the document and we can both go our own ways.”[3]

Ms. Fobert left the meeting shaken but submitted a complaint to the Employment Standards Branch (“ESB”) and filed a claim with the BC Supreme Court (“BCSC”).

Can you make two claims?

Ms. Fobert’s complaints with the ESB resulted in a settlement agreement. When her claim proceeded to the BCSC, the defendants argued that the ESB settlement agreement had already settled all of Ms. Fobert’s claims. However, the BCSC held that the settlement agreement only covered claims for breaches of the ESA and did not bar Ms. Fobert from pursuing other claims.

What was the reasonable notice?

The BCSC held that Ms. Fobert was entitled to common law notice because the 30-day notice term in her employment agreement did not comply with the ESA’s minimum requirements. At common law, reasonable notice is assessed based on the nature of the employment, the employee’s length of service, the age of the employee, the availability of similar employment, and the employee’s training and qualifications. Ms. Fobert was 25 when terminated, her job was not specialized, and she found a new position quickly. Based on these factors, the Court decided that damages should be assessed on an eight-week notice period, less the two weeks provided for in the ESB settlement agreement.

Why were aggravated and punitive damages awarded?

Aggravated damages are awarded in employment law when an employee has suffered damage due to the unfair or bad faith conduct of their employer. The BCSC found that Ms. Fobert’s employer breached their duty of good faith by withholding her severance pay and through Mr. Liu’s “appalling, harsh and reprehensible” conduct.[4]  Ms. Fobert suffered anxiety as a result of this behaviour and attended counselling. The Court determined that $25,000 in aggravated damages was appropriate compensation.

When determining whether punitive damages were appropriate, the Court assessed whether the employer’s conduct deserved to be punished because it was “harsh, vindictive, reprehensible and malicious”[5] and whether the aggravated damages alone achieved the objective of deterrence. The BCSC found that due to the employer’s “complete disregard for the most basic rights of an employee”[6], $35,000 in punitive damages was proportionate.

Who has to pay?

The BCSC found that Global Health and MCRCI were jointly and severally liable for the damages owed to Ms. Fobert. Under the “common employer doctrine” corporate entities with a close relationship can be regarded as one for determining liability. This typically arises if corporate entities have an element of “common control” and protects employees by allowing them to recover damages from any common employer, in a situation where one does not have assets.

Want More?

Terminations can be difficult for all parties involved, but we are here to help you navigate them. If you’re an employer seeking to terminate an employee or if you are an employee that believes they may have been wrongfully dismissed, please feel free to contact Ryley MennieLou Poskitt or Connor Levy from our Workplace Law Group.

A special thank you to our articling student, Linette Lubke, for her contributions to this blog post!

Endnotes:
[1] Fobert v MCRCI Medicinal Cannabis Resource Centre Inc., 2020 BCSC 2043 (“Fobert”), at para 26.
[2] Fobert at para 26.
[3] Fobert at para 26.
[4] Fobert at para 101.
[5] Fobert at para 113.
[6] Fobert at para 127.


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