Court overturns decision on Workplace Safety and Insurance Act

by Rhonda B. Levy and Barry Kuretzky of Littler

In 2020, the Workplace Safety and Insurance Appeals Tribunal (WSIAT) confirmed that when a claim for constructive dismissal is based on harm sustained due to harassment and bullying in the workplace, the claim falls within section 13(4) of Workplace Safety and Insurance Act (WSIA), which entitles the claimant to benefits under the insurance plan for chronic and traumatic stress. Decision No. 1227/19, 2019 ONWSIAT 2324 (Decision No. 1227/19). Accordingly, the WSIAT decided that the right to bring a civil action in constructive dismissal against an employer for the same conduct and to claim related damages is barred by statute.

Recently, however, the Ontario Divisional Court in Morningstar v. WSIAT, 2021 ONSC 5576 (Morningstar) judicially reviewed Decision No. 1227/19 and Decision No. 1227/19R, which reconsidered and upheld the original decision.  In Morningstar, the court reasoned that the WSIAT unreasonably barred the applicant’s action for constructive dismissal and related damages, and quashed the portions of both the WSIAT’s original and reconsideration decisions that disallowed these claims. 

Background

After filing an application with the Human Rights Tribunal of Ontario (HRTO) alleging discrimination, bullying, and harassment in employment because of sex and disability, the employee resigned claiming that she had been constructively dismissed.  She then commenced a civil claim seeking punitive, aggravated and/or moral damages for the employer’s breach of the Occupational Health and Safety Act due to “bullying, harassment and the creation of a poisoned work environment and/or the tort of harassment.”  The employee’s HRTO application was dismissed on the ground that the civil claim raised substantially the same allegations and sought damages for the same violations.1 

Original WSIAT Decision (Decision No. 1227/19)

The employer filed a “right to sue” application under s. 31 of WSIA seeking a declaration that the employee’s right to bring a civil action against it was barred by s. 13(4) of WSIA, which, as noted above, provides entitlement to workers’ compensation benefits for chronic and traumatic stress.  In Decision No. 1227/19, WSIAT decided in favour of the employer. 

Reconsideration (Decision No. 1227/19R)  

The employee sought a reconsideration of Decision No. 1227/19.  The resulting decision, Decision No. 1227/19R, upheld the WSIAT’s initial conclusion. 

Judicial Review

The employee sought judicial review in the Ontario Divisional Court of both the original WSIAT decision and its reconsideration, conceding that WSIA properly barred her claims relating to injury, but arguing that the WSIAT had incorrectly barred her claim for constructive dismissal. 

In Morningstar, the court sided with the employee, holding that the WSIAT unreasonably barred her action for constructive dismissal and claims for related aggravated, moral and punitive damages.  The court quashed the portions of both Decision No. 1227/19 and Decision No. 1227/19R that barred them from proceeding. 

Although the court recognized the “historic trade-off” that is the foundation for the statutory bar in the WSIA (for workers, a streamlined scheme of compensation for workplace accidents, but freedom from lawsuits for employers), it emphasized that while the WSIA properly bars an action for personal injury, it was unreasonable to bar a claim for constructive dismissal only because the facts relating to it incidentally support an action for personal injury.  To do so would ignore Canadian law, which allows different causes of action to be advanced based on the same facts. 

The court also emphasized that the purpose of the broad wording of the restriction is to spot personal injury claims disguised as other claims, and to prohibit them from proceeding; the intention of the restriction is not to prohibit a bona fide non-personal injury claim such as a constructive dismissal claim, for which WSIA offers no compensation, merely because the facts relating to it happen to support an action for personal injury.  The court held that the employee’s constructive dismissal action and her claims for aggravated, moral, and punitive damages should be permitted to proceed. 

Bottom Line for Employers 

Employers that wish to assert that an employee’s claim is statute-barred under WSIA, are encouraged to focus on the nature of the damages and the remedy sought.  If the damages claimed are not for a personal injury, and the remedy could not be awarded under the WSIA, it may be difficult for employers to successfully bring a s. 31 application to obtain a declaration that the claim is statute-barred.  Given the court’s holding in Morningstar, this difficulty may exist in respect of a civil claim for constructive dismissal and related aggravated, moral and punitive damages stemming from allegations that an employee has been bullied and harassed by coworkers and/or managers in the workplace. This could change, however, if Morningstar is successfully appealed; we will report on any such developments that may transpire.  In the meantime, employers are encouraged to seek the assistance of experienced employment counsel to determine whether a s. 31 application to obtain a declaration that a claim is statute-barred under WSIA can be made.