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In a recent decision, Morningstar v. WSIAT, the Divisional Court overturned a decision of the Workplace Safety and Insurance Appeals Tribunal (“WSIAT”), finding that the Workplace Safety and Insurance Act (the “WSIA”) does not bar claims for civil constructive dismissal related to workplace harassment and allowed a claim for related aggravated, moral and punitive damages.  

Ontario’s No-Fault Workplace Insurance Scheme 

The Ontario workplace insurance scheme provides no-fault benefits based on collective employer liability.  Under the WSIA, workers receive insurance benefits by proving that their injury or disease is work-related, without having to prove that their employer was at fault for their injury or disease.  In exchange, employers are protected against civil suits for work-related injuries by paying into the accident insurance fund, thus diluting, and reducing liability for any individual claim. The WSIAT, an appellate forum that hears appeals from final decisions of the Workplace Safety and Insurance Board, has the exclusive jurisdiction of the WSIA to determine whether an employee has a right to sue an employer listed in Schedule 1 of the WSIA. 

Morningstar v. WSIAT 

Background

Ms. Morningstar (“the employee”) was employed by Hospitality Fallsview Holdings Inc. (“the employer”) in its housekeeping department. In 2018, the employee brought a civil action under the Employment Standards Act, 2000, for constructive dismissal. She alleged that harassment, bullying and abuse she endured during her employment created mental distress and forced her to resign from her position. 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 which was governed by section 13(4) of the WSIA.

Section 13(4) of the WSIA 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.”

History of the Case 

In responding to the employer’s application, the WSIAT agreed with the employer that the fundamental nature of the employee’s civil action was a claim for personal injury arising from a work accident, namely the workplace harassment suffered by the employee. As it was a workplace injury, the claim fell within the exclusive jurisdiction of the WSIA, and no civil claim could be pursued. According to the Tribunal, however, not all claims for wrongful dismissal and constructive dismissal are statute-barred by the WSIA. An employee can bring a claim for wrongful dismissal and constructive dismissal when the cause of action is “inextricably linked” to the work injury” governed by the WSIA. The Tribunal’s decision was further upheld by the Vice-Chair on appeal.

Divisional Court Decision 

The employee sought judicial review from the Divisional Court alleging that her claim for constructive dismissal had been improperly barred by the WSIAT. The Divisional Court partially overturned the WSIAT decision. In reviewing the policy behind the WSIA and the “historic trade-off” of the workers’ compensation regime, it found that the purpose of section 31 was to prohibit would-be plaintiffs from trying to disguise their cause of action as a tort claim and attempt to side-step the guiding policy behind the WSIA. Constructive dismissal claims, however, which are grounded in the employment relationship and a different legislative scheme, are different. According to the Court:

“Bona fide claims for constructive/wrongful dismissal should be permitted to proceed, as they are not tort actions and are distinct from personal injury claims, and attract damages for which the Act offers no compensation.”

In considering the employee’s claim, the WSIAT had failed to consider that the employer’s alleged treatment of the employee could also be construed as a constructive dismissal and an intention to no longer be bound by the employment contract. The remedy for wrongful dismissal is damages in lieu of notice and the WSIA does not provide this remedy. A cause of action for wrongful dismissal is therefore not within the purview of the WSIA. As the Court stated:

“…so long as a plaintiff does not sue in constructive dismissal improperly to get around the limitations of the Act, the claim should be permitted to proceed, even where tort aspects of a claim are barred.”

Therefore, while the employee’s claim for harassment was statute-barred by the WSIA, her claim for constructive dismissal and aggravated, moral and punitive damages could proceed.  

Redefining the “Inextricably linked” Test 

In finding for the employee, the Court redefined what it means for facts to be “inextricably linked” to workplace harassment, such that a cause of action would be statute-barred. The Court stated that an action for personal injury can be properly statute-barred, but it would be unreasonable to bar an action for constructive dismissal “simply because the same facts that relate to that action also incidentally support an action for personal injury.” The Court found that the purpose of the workers’ compensation regime and the wording of the WSIA requires more analysis than simply a test involving a mere “factual linkage.”

What Does This Mean for Employers?

In overturning the WSIAT decision, the Court effectively narrowed the types of claims that may be statute-barred under the WSIA. It specifically recognized that the WSIA does not bar claims and remedies founded in employment or contract law. This may make it more difficult for employers to successfully argue that an employee’s claim for constructive dismissal based on workplace harassment, or another claim grounded in employment law, is entirely statute-barred by the WSIA. Despite past decisions of the WSIAT in favour of employers and limiting claims based on section 31, employees may cite this case as giving them the “right to sue” their employer for wrongful or constructive dismissal where the nature of their claim is chronic mental stress arising from workplace harassment. 

Contact Mississauga Employment Lawyers for Constructive Dismissal and Workplace Harassment Matters

At Bader Law, our Mississauga employment lawyers have considerable experience representing employees in workplace disputes. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

At Bader Law, our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.