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A Flawed Investigation is a Recipe for Trouble

Submitted By Firm: Roper Greyell LLP

Contact(s): Gregory J. Heywood, James D. Kondopulos


James D. Kondopulos

Date Published: 2/1/2013

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“There is no specific standard of investigation that employers must follow ...

Nevertheless, how the employer reacts is subject to judicial scrutiny.  Its responsibilities do not give it licence to conduct an inept or unfair investigation or behave in malicious, vindictive, or outrageous ways.”

Majority of the Alberta Court of Appeal, Elgert v. Home Hardware Stores Limited, 2011 ABCA 112, at paras. 88 and 89.

A workplace investigation must be conducted in a way that is fair and appropriate in all of the circumstances.  A flawed investigation of alleged employee misconduct is a recipe for trouble and can, in fact, result in a substantial damages award against an employer.   

The employer in Elgert v. Home Hardware Stores Limited, 2011 ABCA 112 learned this the hard way.  In the wake of a shoddy workplace investigation, the employer was sued by one its former employees, Daniel Elgert, and in a stunning jury award, ended up having two years’ pay in lieu of notice, $200,000 aggravated damages, $300,000 punitive damages, interest and costs awarded against it.  

While the Alberta Court of Appeal ultimately set aside the award of aggravated damages and reduced the award of punitive damages to $75,000, the Court dismissed the appeal in all other respects.  An application for leave to appeal to the Supreme Court of Canada was dismissed with costs. 

The facts in Elgert v. Home Hardware Stores Limited were as follows.  

Elgert was a 48-year old supervisor working at the employer’s distribution centre.  One of the employees under his supervision was Christa Bernier – who, not insignificantly, was the daughter of Elgert’s boss. 

Bernier was a problem employee.  She had a romantic interest in a male co-worker, and would follow him up and down the aisles and organize her work so that the two of them could spend time with one another.  This resulted in job performance issues and complaints. 

In early 2002, Elgert determined that he had to transfer Bernier to a work area away from her male co-worker.  In February and March 2002, Elgert made unfavourable comments about Bernier on her performance review.  

Bernier was not happy about this.  At least two co-workers heard her say she would get even with Elgert and make him pay for transferring her. 

Shortly afterwards, Bernier told her father about an incident that allegedly took place around four months earlier.  She said that Elgert had followed her up some stairs into a storage room, bumped her against a table and put his legs between hers.  Bernier said she yelled and left after another employee entered the room.  

A formal sexual harassment complaint was not filed against Elgert but, when Bernier’s story came to the attention of senior management in a rather circuitous way, an investigator from inside the organization was assigned to conduct an investigation.   

The investigator, who was a long-time friend of Bernier’s father, was untrained and inexperienced.  He did not know how to investigate a complaint of sexual harassment.  He did not obtain a written statement from Bernier, neglected to interview at least one key witness and, in addition, interviewed witnesses with no first-hand knowledge of the alleged incident involving Elgert.  The investigator failed to examine the wider relationship between Bernier and Elgert and did not consider motive and the possibility of fabrication.  In short, he did not gather and weigh all relevant evidence and make the necessary credibility assessments. 

In a meeting with Elgert, the investigator dealt with him in an accusatory manner.  Elgert asked what he was alleged to have done, and was told that he knew.  Elgert explained that he did not know and pleaded for particulars of the alleged wrongdoing.  No particulars were provided.  No questions were asked as to his side of the story.  Elgert became upset and broke down in tears. 

Elgert’s request for a careful investigation of the alleged sexual harassment fell on deaf ears.  Notwithstanding the fact that he had worked at the distribution centre for nearly 17 years, he was immediately suspended from employment, escorted out of the building and not allowed to collect his belongings (which, incidentally, included a log book that detailed Bernier’s job performance problems and could not be located after the commencement of litigation). 

On the heels of Elgert’s suspension, the investigator told Elgert’s son, who also worked at the distribution centre, that his father would not have been suspended for sexual harassment had the investigator not been 100 percent sure of Elgert’s guilt. 

Elgert never returned to work.  He was dismissed from employment for cause and provided with a termination letter that cited the grounds for dismissal as sexual harassment and insubordination (because in the period of time following his suspension, he refused to meet with the employer in the absence of his legal counsel). 

Elgert responded by commencing an action for wrongful dismissal and defamation.  

The jury sitting on the trial found that Elgert was not guilty of the alleged sexual harassment and, as noted previously, awarded two years’ pay in lieu of notice, $200,000 aggravated damages, $300,000 punitive damages, interest and costs.  The jury also awarded $60,000 for defamation against Bernier and one of her friends. 

On appeal, the Court of Appeal overturned the aggravated damages award, noting that there was a “paucity of evidence showing actual damages” in support of “the claim for aggravated damages”.  The Court also reduced the punitive damages award to $75,000 on the basis that “the jury award was inordinately high and unnecessary to convey the message intended”. 

Notwithstanding this, the majority of the Court of Appeal reviewed the various deficiencies in the employer’s investigation and was critical of the employer’s “failure to conduct an appropriately broad investigation that took account of Bernier’s possible motives against Elgert”.  The majority found it surprising that while this was described “as the most serious allegation of sexual harassment ever at Home Hardware”, an investigator “who had no training or experience in investigations” was dispatched to do the investigation. 

The majority of the Court made the following statement which will be instructive for employers that are dealing with allegations of sexual harassment or, for that matter, similar forms of employee misconduct: 

There is no specific standard of investigation that employers must follow; what is required will vary depending on the facts surrounding the employer, its policies, sophistication, experience and the workplace.  Courts must not require such a high standard of investigation that there is a chilling effect on employers’ manner of dealing with allegations of sexual harassment. 

Nevertheless, how the employer reacts is subject to judicial scrutiny.  Its responsibilities do not give it licence to conduct an inept or unfair investigation or behave in malicious, vindictive, or outrageous ways. 

Cases like this one make it clear that an employer must conduct a workplace investigation that is fair and appropriate under the circumstances.  Here are some basic pointers to avoid running into the same problem as the employer in Elgert v. Home Hardware Stores Limited

  1. Use an impartial investigator.  When Elgert met with the investigator, his case was prejudged and the termination of his employment already a fait accompli.  
  2. Apprise the employee under investigation of all allegations against him or her.  This is a matter of fairness.  It gives the employee the opportunity to hear the allegations and, in effect, tell his or her side of the story. 
  3. Gather and weigh all relevant evidence, even if you have to interview multiple witnesses, and be sure to meet with both sides’ witnesses.  
  4. Make the necessary credibility assessments, remaining mindful of the inherent dangers of hearsay evidence, motive and the possibility of fabrication. 
  5. Keep accurate, detailed records of interviews.  Consider asking the individual being interviewed to review and sign any statement that he or she has provided.
  6. Perhaps most importantly, use a skilled workplace investigator.  Give serious consideration to hiring an independent, third party investigator from outside your organization.

For further information, contact:
James D. Kondopulos
Partner (Practising through a law corporation)
Roper Greyell LLP

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