Curated Content Canada: Ontario Divisional Court Overturns WSIAT Decision, Affirms Employees Have Right To Sue After Workplace Harassment

The Ontario Divisional Court in Morningstar v. WSIAT, 2021 ONSC 5576 (CanLII) ("Morningstar") recently overturned the Workplace Safety and Insurance Appeals Tribunal's ("WSIAT") Decision No 1227/19 and its reconsideration in 1227/19R (together, the "WSIAT Decisions"), in which an employee's workplace harassment-related claims were found to be statute-barred.

Background

Decision No 1227/19 came almost two years after the Workplace Safety and Insurance Act ("WSIA") was amended to include "mental stress" as an insurable injury. The amendment meant that workers could claim for benefits under the WSIA if they experienced mental stress arising from and in the course of their employment.

Notably, the WSIA stipulates, in section 26(2), that entitlements to benefits under the legislation are "in lieu of all other rights of action" in respect of a workplace accident.

Speculation followed the passage of the WSIA amendments. It was thought that the new provisions would effectively categorize mental stress as a workplace injury, and that the section 26(2) "statutory bar" provision could protect employers from mental-stress related civil claims.

The WSIAT Decisions

The WSIAT Decisions involved a supervisor who, following an alleged 17-month course of bullying and harassment by her colleagues and managers, filed a Statement of Claim in the Superior Court of Justice claiming damages for constructive dismissal, bullying, and harassment. With respect to constructive dismissal, the employee claimed that the harassment she experienced at work forced her to take an extended leave of absence, which effectively amounted to a constructive termination of her employment.

In response, the employer filed a "right to sue" application with the WSIAT, arguing that the 2018 amendments to the WSIA meant the employee was not permitted to bring these claims in civil court. The employer argued that because mental stress was now an insurable injury, the employee should have filed a claim for benefits under the WSIA for the mental stress she experienced at work, and not a statement of claim in the Superior Court of Justice.

WSIAT agreed with the employer in Decision No 1227/19. It found that because the factual underpinning of the employee's claims (or the "fundamental nature of the action") was the mental stress she experienced in the workplace, all of her claims, including her claim for constructive dismissal, fell under the WSIA's jurisdiction and were thus not actionable in civil court.

The employee sought reconsideration of Decision 1227/19. A different Vice-Chair affirmed the first WSIAT decision in Decision 1227/19R. Both decisions have now been partially overturned by the Divisional Court. 

The Divisional Court Decision

The Divisional Court reviewed the WSIAT Decisions, taking into consideration all the circumstances of the case to determine whether the Vice-Chairs' findings were reasonable and consistent with the rationale and purview of the WSIA.

In making its assessment, the Divisional Court considered the policy behind the WSIA - in particular the "historic trade-off" built into the legislation, in which employees receive benefits from the WSIB by proving that their injury or disease is work-related, without having to prove that their employer was at fault. In exchange, the WSIA protects employers from civil suits for work-related injuries through the statutory bar provision. In reviewing the relevant WSIAT jurisprudence, the Divisional Court highlighted the following key principles:

• Claims for torts causing work-related injuries will generally be statute barred. The purpose of the statutory bar provision in the WSIA is to bar lawsuits for such torts and to root out tort claims that are disguised as other types of actions. 
• Notwithstanding the above, employers should not be permitted by the WSIA to insulate themselves from legitimate claims outside of the realm of torts;
• It is only in the "exceptional case", "where the circumstances of the wrongful dismissal claim are inextricably linked to the work injury", that a wrongful dismissal claim will be barred by the WSIA.
• When non-tort claims are barred, there is often an indication that the plaintiff is attempting to improperly disguise a tort action as another kind of action so as to escape the limits of WSIA. 
• In determining whether a claim is statute-barred, the origin of the injury is not decisive, rather, it is the bona fidesof the civil action that is determinative. 
• Genuine claims for wrongful dismissal and constructive dismissal should be permitted to proceed, as they are not tort actions, are distinct from personal injury claims, and attract damages that are not compensable under the WSIA framework (e.g. pay in lieu of notice).
• For civil cases that are not barred by the WSIA but involve facts that overlap with a workplace injury, there must be a genuine cause of action for wrongful dismissal or of appropriate damages. In these situations, the claims should be incidental to the personal injury that occurred.

Taking the above into account, the Divisional Court found that the Vice-Chairs in the WSIA Decisions did not "heed to the existing jurisprudence". In particular, they did not make any assertion that the employee's claim for constructive dismissal was a bad faith attempt to circumvent the WSIA (this issue was neglected by the Vice-Chairs completely), and they did not address the fact that the WSIA provides no means of compensating for claims relating to the alleged constructive dismissal (e.g. the wrongful dismissal, aggravated, moral, and punitive damages claims made by the employee). Further, the Vice-Chairs placed too much focus on the shared facts underlying the personal injury and constructive dismissal claims, effectively ignoring the well-established principle in Canadian law that the same facts can support concurrent liability in more than one cause of action.

The Divisional Court ultimately held that the employee's harassment claim was properly barred under section 26(2) of the WSIA, but that it was unreasonable for the WSIAT Vice-Chairs to bar the employee's claims for constructive dismissal and aggravated, moral, and punitive damages.

Impact

In the past, the WSIAT has regularly found that the right to bring an action for wrongful dismissal was not removed by the WSIA. As a result, the WSIAT Decisions came as somewhat of a surprise to employers (albeit a helpful one). The Divisional Court's findings, however, re-establish consistency with WSIAT's past jurisprudence. As a result, employers will now have to be mindful that if any mental stress-related claims are filed against them by an employee, particularly in the context of a constructive dismissal, these claims are no longer likely to be statute-barred.

The Divisional Court decision also serves as an important reminder that when WSIAT makes "right to sue" decisions, it must look to the substance of the claim, and not strictly at how the claim is framed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.