In a decision that employers should find troubling, the Superior Court of Justice recently noted that sexual harassment, intimidation and other “improper conduct” at work are not connected to employment and are therefore not covered by a full and final release executed by a former employee.
In Watson v. The Governing Council of the Salvation Army of Canada (2018) ONSC 1066 (“Watson”), the plaintiff, Emma Watson, was employed as a manager of the Salvation Army of Canada’s thrift store in Cambridge. When her employment ended in August 2011, Ms. Watson received a payment of $10,000, and signed a Memorandum of Agreement and a Full and Final Release.
In August 2016, Ms. Watson commenced an action against the Salvation Army and David Court, who was employed by the Salvation Army as its National Director of Operations for its National Recycling Operations Division while Ms. Watson was employed by the Salvation Army. Mr. Court was terminated for cause in June 2015. In her claim, Ms. Watson alleged sexual harassment by Mr. Court during her employment with the Salvation Army in 2011, and sought damages for negligence, intentional infliction of emotional harm and breach of fiduciary duty.
Mr. Court brought a summary judgment motion, seeking a dismissal of the action against him on a number of grounds, including the bar created by the Full and Final Release (the “Release”) executed by Ms. Watson. The Memorandum of Agreement signed by Ms. Watson and the Salvation Army states as follows:
…The Employer and Employee … wish to resolve any and all claims, complaints, actions, disputes, etc. between them arising out of the employment relationship or the termination of that employment…
The Release executed by Ms. Watson provides as follows:
2. In accordance with the terms of settlement outlined in the attached letter dated August 8, 2011, I, Emma Oliveira Watson, agree to release any and all claims I have or may have against The Salvation Army, past, present or future, known or unknown, which arise out of or which are in any way related to or connected with my employment or the ending of my employment.
3. The release of all claims shall include any claims against anyone or any organization in any way associated with The Salvation Army which arise out of or which are in any way related to or connected with my employment or the ending of my employment.
9. I declare that I have read over and fully understand this document and I voluntarily accept the terms of this document for the purpose of making a full and final settlement of all claims as set out above.
In dismissing Mr. Court’s summary judgment motion, the Court found that the Release was unambiguous in that the words “… arise out of … my employment” define the scope of the Release. While Mr. Court’s alleged conduct occurred at the place of employment, and possibly because of employment, the Court concluded that sexual harassment, intimidation and “other improper conduct” are not connected to employment, but are rather completely separate from employment. It is not clear whether the alleged actions are completely separate from Ms. Watson’s employment, Mr. Court’s employment, or both.
In further support of its findings, the Court also relied on the fact that in 2011 the settlement between Ms. Watson and the Salvation Army was negotiated by the Salvation Army’s human resources manager, but cases involving sexual misconduct at the Salvation Army are handled by the Director of Employee Relations.
The Court noted that specific language would need to be added to releases to bar claims related to sexual harassment, intimidation and other improper conduct.
Employers should find this decision troubling on a number of fronts. The effect of the decision is to require employers to use specific language to bar claims for sexual harassment, intimidation and “other improper conduct." However, an employer is only likely to use specific language if the employer is aware that certain conduct occurred. There is no indication in the Watson decision that the Salvation Army was aware of Mr. Court’s alleged conduct when the Release was drafted and signed by Ms. Watson in 2011. If it was not aware of the conduct, it would have no reason to include it in Release. In addition, the Court did not specify what “other improper conduct” may be, leaving employers to either guess, be over inclusive or take a risk when releases are drafted. Lastly, it remains unclear how an employer can have liability for conduct that was not connected to employment.
Unless and until further clarification is provided by Ontario courts, employers are well advised to be over-inclusive when drafting releases, and specifically include conduct such as sexual harassment, intimidation, and other conduct that may arise in the workplace, as conduct which is explicitly covered by a release signed by a departing employee.
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