Ontario Divisional Court Allows Employee to Sue for Constructive Dismissal in Morningstar

In the recent decision in Morningstar v WSIAT, the Divisional Court overturned a surprising Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) decision and held that a constructive dismissal claim for chronic mental stress arising from a poisoned work environment, as well as claims for related aggravated, moral and punitive damages, are not statute-barred by the Workplace Safety and Insurance Act (“the WSIA” or “the Act”).

Background

Hospitality Fallsview Holdings Inc. (“the employer”) employed Ms. Morningstar (“the employee”) in its housekeeping department. In 2018, she resigned from her employment and filed a claim for damages for harassment, constructive dismissal and breaches of the Occupational Health and Safety Act and the Employment Standards Act, 2000. In particular, she alleged that the harassment, bullying and abuse she endured during the course of her employment, as well as resulting mental distress, forced her to resign from her position.[1]

In response, the employer filed an application under section 31 of the WSIA for a declaration that the employee’s civil action was statute-barred as it was effectively a claim for chronic mental stress governed under section 13(4) of the WSIA. Section 13(4) provides that “a worker is entitled to benefits under the insurance plan for chronic or traumatic mental stress arising out of and in the course of the worker’s employment.”

In Decision No. 1227/19, the WSIAT agreed with the employer and held that the fundamental nature of the employee’s civil action was a claim for personal injury arising from a work accident consisting of alleged workplace harassment and the employer’s failure to address it.[2] As such, the claim fell within the jurisdiction of the WSIA and was statute-barred. In its decision, the WSIAT noted that the “right to sue” an employer for wrongful or constructive dismissal is not removed by the WSIA; however, this right could be taken away where the cause of action is “inextricably linked” to a workplace injury governed under the WSIA. The employee applied for reconsideration in Decision No. 1227/19R, where a different Vice-Chair denied the request and upheld the initial decision.