This past year, the courts have left us important employment law decisions about fiduciary liability, mitigation, overtime, non-solicitation clauses, injunctions, just cause, summary judgment and CERB deductibility. This article is a short summary of some important employment law decisions...
This past year, the courts have left us important employment law decisions about fiduciary liability, mitigation, overtime, non-solicitation clauses, injunctions, just cause, summary judgment and CERB deductibility.
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This article is a short summary of some important employment law decisions in Alberta in 2023, separated roughly into subcategories. It does not focus on cases from other jurisdictions, although many of those can have persuasive weight here. It also does not address developments in human rights and labour (union) law.
Fiduciary Liability
In Breen v Foremost Industries Ltd, 2023 ABKB 552 (Justice Yamauchi), a former CEO employee sued for wrongful dismissal. However, the employer turned the tables on him and successfully counterclaimed a large sum against the employee. The employer successfully established that the CEO employee had ignored their expenditure guidelines, resulting in losses for which the employee was responsible. In addition, the employee had effectively paid himself secret funds by paying money from his employer to a Russian agent who then paid a portion back to the employee as a “gift”. In total, the employee was liable for around $450,000 in pecuniary damages and $50,000 in punitive damages. Not surprisingly, the Court also found the employer had just cause to terminate his employment.
Mitigation
In Dunbar v Northern Air Charter (PR) Inc, 2023 ABKB 171 (Justice Woolley), the plaintiff employee was successful in a Provincial Court trial for wrongful dismissal severance. Then the employer appealed to the Court of King’s Bench. The employer argued on appeal that it had “laid off” the employee. The Court disagreed and said it was a termination of employment. The employer had also made the employee an offer to return to work about 2.5 months after it had terminated his employment, but the employee turned that offer down. The employer argued it was unreasonable for the employee to turn down the offer, and therefore damages should be capped at 2.5 months. The Court again disagreed, saying it was reasonable for the plaintiff to refuse to return because the employer had not offered back pay for the unemployment period. As well, if the plaintiff had taken the offer, he would have had to stop his legal action and would be out-of-pocket for 2.5 months.
In Plotnikoff v Associated Engineering Alberta Ltd, 2023 ABCJ 200 (Justice Higa), the plaintiff’s employment was terminated, and he sued for wrongful dismissal. He did not look seriously for re-employment, with the Court describing his efforts as “rather leisurely”. The defendant employer argued that the plaintiff’s insufficient effort should lead to a finding of “failure to mitigate” where the Court can reduce the employee’s damages for not doing his part to get re-employed. The Court rejected this argument because there was no evidence there were any jobs the employee could have secured if he had looked seriously. To succeed with an argument for failure to mitigate in wrongful dismissal, an employer must prove both an insufficient job search effort and that the plaintiff likely would have secured a job if they had sufficiently searched for one.
Overtime
In Scheffler v Mourtis Trucking Ltd, 2023 ABKB 139 (Justice Little), an employee brought a claim for 719 hours of unpaid overtime against his employer. Normally employees bring these claims under the Employment Standards Code. However, in this case, the employee was seeking overtime stretching back more than the 6 months referred to in the Code, so he brought his claim in the Court of King’s Bench. The Court allowed the claim, even though it would not be allowed under the Code. This decision is significant because the employee was using the Code to establish a right to overtime but going outside the Code restrictions to receive a higher amount. There is also some prior Alberta caselaw contrary to what the Court allowed in this decision, making the case even more significant.
Non-Solicitation Clauses
In Catch Engineering Services Partnership v Mai, 2023 ABKB 279 (Justice Armstrong), an employee was found liable to pay the employer damages for several reasons, including breaching a non-solicitation clause. While employed, the employee’s job was to work solely on one client’s projects. Catch had him sign a non-solicitation agreement to prevent certain things, including him becoming a direct employee of the client. The non-solicit obligations included that he was not to solicit customers of Catch while employed or for 12 months after termination. The employee resigned 11 months into his employment and asked the customer if they wanted to hire him. The Court found this was a breach of the clause. The Court also found this was an enforceable non-solicit clause because it was clear and reasonable. This finding is significant because Courts very often declare non-solicitation clauses to be unenforceable for being vague, too broad, or otherwise unreasonable.
Injunctions
In Mark Fairbanks Prof Corp v TG Michelson Prof Corp, 2023 ABKB 53 (Justice Neufeld), a dentist partly owned a dental practice called Dimension Dentistry. When he separated from that practice, he signed a settlement agreement with Dimension where he agreed not to solicit patients for 2 years and employees for 6 months. His wife then posted a message on Facebook that arguably breached that agreement and non-solicitation clause. His new employer also launched a Google ad campaign that captured searches for “Dimension”. When the dentist learned of this, he asked his new employer to stop, and they did.
Dimension sued, claiming breach and seeking an interim injunction to compel the removal of the Facebook post (now 7 months old), to prohibit the use of their name in advertising, and to compel the dentist to stop practicing dentistry for six months. The Court refused the injunction application, mostly because there was no evidence of a “continuing breach” or likelihood that there would be further breaches. The Court felt the issues should be resolved at trial. This case illustrates that even with fairly clear evidence of a breach having occurred, a party still needs to convince a Court that an injunction is necessary to prevent further harm.
Just Cause
In Aleyew v Council for Advancement of African Canadians, 2023 ABKB 113 (Justice Lema), an employer initially terminated an employee without just cause. When the employee sued for wrongful dismissal, the employer defended by claiming it had just cause for dismissal. The employer argued it had been a mistake to terminate without cause and that it had discovered information after dismissal which resulted in “after-acquired” cause. The employer was not successful in persuading the Court that the employer had made a mistake or that it had significant new information after termination of employment. The Court did not allow the employer to “change horses” from the position it had taken when it terminated the plaintiff’s employment. This case is a stark reminder for employers: although there are risks to claiming just cause at the time of termination, you may lose the ability to do so in Court if you do not.
In Rooney v GSL Chevrolet Cadillac Ltd, 2022 ABKB 813 (Justice Feasby), an employer changed an employee’s work duties. The employee secretly recorded a meeting with his employer about the change in duties. The employee soon resigned, sued for constructive dismissal, and tried to use the recording as evidence in the trial. The employer argued the secret recording should be inadmissible for public policy reasons and that the recording gave the employer just cause for dismissal. The Court allowed the recording as admissible evidence. The Court also said that making a secret recording could be misconduct in some cases but it was not here. It was not considered misconduct in this case because the recording occurred at a time when the relationship was already frayed and when the employer was imposing unilateral changes on the employee.
Summary Judgment
In McDonald v Sproule Management GP Limited, 2023 ABKB 587 (Justice Marion), the Alberta Court of King’s Bench awarded 18 months in severance to a 56-year-old Controller with 13 years of service with his employer. The case concluded by way of “summary judgment”, which is a cheaper and more efficient process than an ordinary trial. While wrongful dismissal cases can proceed by summary judgment, what made this case important was that the employer alleged just cause for dismissal and the parties did not agree on material facts that required findings of credibility. This argument often forces a case to go to a full trial, but not here. This case is a significant win for plaintiffs, especially where they are dismissed employees.
CERB Deductibility
In Oostlander v Cervus Equipment Corporation, 2023 ABCA 13, the Alberta Court of Appeal determined that CERB benefits received during a reasonable notice (severance) period are not deductible from wrongful dismissal damages. This case is really important because it reverses previous decisions in Alberta on this subject and brings the Alberta cases in line with the binding cases in British Columbia and Ontario.
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DISCLAIMER The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.
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